Top 5 Things Your Ecommerce Brand Can Do to Decrease Customer Acquisition Cost


Did you know that it costs around six times more to acquire a new customer than keep an existing one?

If you never acquire new customers, however, you won’t be able to grow your business.

This is especially true in the e-Commerce world. As more consumers switch to online shopping, competition for their business is fierce.

One thing you can do is decrease your customer acquisition cost. How can you do that? You can try any or all of these five tips:


1. Discover Your Ideal Customer Acquisition Cost

The first step you should take to lower acquisition costs is figuring out what you should be spending. The formula for CAC is simple:

  • Divide your total cost of sales and marketing over the number of new customers

 If you spend $100 and get 10 new customers, you’ve spent $10 to acquire each customer.  Keep in mind that there is some variability in customer acquisition cost by industry.  You may be able to find some benchmarks that tell you if your CAC is high for your industry.

Knowing your current CAC will let you compare against these industry benchmarks, as well as your own budget. How much would you need to spend to acquire 200 new customers?

You may also want to factor in customer lifetime value. LTV gives you more insight into whether your marketing budget is actually paying off. Using an LTV:CAC ratio, you can see how much you’re spending on each customer versus how much they’ll spend on you.

Once you’ve realized your CAC is high, you’re ready to make acquisitions more efficient for your business.

2. Use Data to Target the Right Leads

Your next step is to make sure you’re collecting data, both about your existing customers and your leads. You’ll want to compare this data to target the leads who are most likely to convert. This can reduce your acquisition cost.

It can also increase the average LTV of your customers. In turn, you’ll not only grow your customer base, but your profits as well.

How does data help you target the right people?  It lets you compare leads to who is already buying from you.

Take a look at your best customers:

  • How old are they?
  • What is their gender?
  • Where do they live?
  • What is their household income?
  • What is their occupation?
  • What are their hobbies?

With this information, you can form an idea of what your “ideal” customer looks like. Then you can compare your leads. You can invest in developing the right leads, which will lead to more sales and higher profits.

3. Boost Your Conversion Rate

Now it’s time to put your efforts into turning those leads into sales. You may think you’ve already discovered which leads are likely to turn into loyal customers, but there’s more to do.  Now you need to prime your website for conversion.

There are plenty of ways to increase conversion rates. Instead of focusing solely on driving traffic, think about incentivizing conversions. If someone signs up for your mailing list, offer them ten percent off their first purchase.

Make sure you have optimized landing pages for when people click your ads.

The Best landing pages have a clear call to action, so your leads know what to do next.

E-Commerce brands can use personalization in email marketing to entice new customers. You can also target ads to audiences that look like their ideal customers. You can then create a sweet offer to entice them to buy.

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4. Automate Your Efforts

Remember that acquisition cost per customer is based on sales and marketing spend. If your team spends hours customizing each offer and sending out personalized emails, then your CAC is going to be sky high.

Automation can help you keep it down to earth. Marketing automation takes repetitive tasks off the desks of your employees. It can help you segment your lists, create personalized offers, and more.

Marketing automation can also help you build better customer relationships. It lets you send automatic welcome emails, so no would-be customer feels abandoned after sign up. It can also help you follow up with leads so you’re always in contact.

It can also help you generate reports and analysis, so you have a clearer view of how your marketing efforts are performing.

5. Leverage Your Existing Customers

Finally, you should work with your existing customers to help acquire new customers.

Your most loyal customers are already big fans of your e-Commerce brand. They’re happy to recommend you to their friends and family. Some people even call these customers “brand ambassadors.”

Capitalize on the work these customers are already doing. Offer them a small incentive for a referral. You can also ask for reviews, which will recommend you to other people.

If your customers are truly satisfied with their shopping experience, all you have to do is ask!  They’re usually excited to tell other people about this awesome new brand they’ve discovered.

Keep in mind that referrals and other word-of-mouth recommendations mean more to people than your ads do. People trust their friends and family. When your customers recommend your business, potential new customers are listening.

One key to getting more recommendations and referrals is keeping existing customers happy. Focus on retention and customer service. You’ll both reduce churn and improve CAC.

Lower Costs and Increase Profit Margins

In the competitive world of E-Commerce, customer acquisition cost is a key measurement for businesses. These tips will help you decrease the cost of getting new customers and more. They’ll also help you reduce customer churn and improve your LTV:CAC ratio.

In turn, your marketing efforts will pay off and your business will be all set to grow!

Ready to get better digital marketing for your business? Discover if your business qualifies for a partnership with an elite team of marketing experts. With their knowledge at your fingertips, you’ll be set to take on the competitive world of e-Commerce.


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