Ecommerce Growth

22 (Really Specific) Ways to Reduce Customer Acquisition Cost in eCommerce

January 12, 2024

22 (Really Specific) Ways to Reduce Customer Acquisition Cost in eCommerce

In research as recent as 2022, it was shown that the average customer acquisition cost (CAC) for eCommerce businesses has increased by 222%.

In 2013, if merchants lost $9 for every new customer acquired, in 2022 that number had leapt to $29.

So, if you are looking for tested strategies and examples to lower your CAC—you're in good company.

Let’s go!

22 Tested Strategies to Reduce Customer Acquisition Cost (CAC)

1. Double down on customers from top locations

The quickest way to reduce your eCommerce customer acquisition cost is to dive deeper into locations where you already have a presence.

Here’s how you do it:

Study your target audience more closely

Look at metrics like traffic, micro conversions & purchases.

Research the competition

Find what works for them in terms of discounts/offers/ads, and take cues.

Conduct monthly audits to find seasonal patterns in your audience

Incorporate the above into your customer acquisition strategy to lower cost per conversion and CAC.

2. Find your top categories/products

The goal is simple—reduce customer acquisition costs by keeping production & storage costs low.

Here’s how you drive lower CAC:

Design your product pages for conversions

Sync up product images, descriptions, recommendations, and social proof to nudge the shopper to buy.

Focus on creating paid ads only on best-selling products/categories

Create dedicated landing pages for these specific ranges—you can also include back-in-stock products.

Highlight social proof for these products at key junctures

Include product pages, homepage, quick view box of category pages as well as cart pages.

Offer deep discounts with a sitewide clearance sale

Offer it up on slow-moving/non-performing products to clear up inventory—note how Casper does this:

Casper announces frequent clearance sales to lower customer acquisition cost

We recommend you to read: 25 Secrets To Running A Successful Clearance Sale, With Examples

3. Track your top traffic sources

Increasing traffic is expensive—however, engaging traffic isn’t.

Here’s how you can engage traffic and maintain a low customer acquisition cost:

Maintain relatability with social media handles

Showcase results, before-after instances, display UGC videos, and more.

Drive conversions with email

Assess which offers & promotions are working, build personal connections, and offer early access & discounts to drive exclusivity.

Leverage organic search

Drive long-form content and product pages with personalized quizzes, discounts, easy navigation, smart filtering, and brand videos.

Create targeted ads

Target or remarket to shoppers dropping off / only checking out competitor brands.

Check out: 11 Guaranteed Ways to Boost Revenue per Visitor (eCommerce)

4. Ensure you’re selling to the RIGHT audience

Given that 65% of a brand’s sales come from repeat customers, selling to the right audience can’t be highlighted enough.

Here’s a quick checklist of to-dos:

Track the campaigns you run closely

Keep a close eye on the evolving preferences and behaviors of your target market.

Create a target persona document

Add details like region, demographic, occupation, goals, motivations, lifestyle preferences, challenges, etc.

Find the right channels that drive maximum conversions

Connect with your target audience through surveys—note what they interact with, why they’re likely buying from you, etc.

Talk the language of the audience you’re catering to

For example, if your skincare products are meant for women over 35, Gen Alpha lingo won’t work.

Ensure your product content is conversational and answers relevant questions

Here’s why—77% of B2C marketers agree that the right kind of content helps increase ROI by 24%.

Personalize your emails to the last detail

That includes the subject lines, product recommendations, discounts, and birthday celebrations.

5. Build a solid cart abandonment strategy

Retaining existing customers costs 6 to 7X less than acquiring new customers—but almost 70% of all carts are abandoned.

Thus, one of the biggest ways to reduce eCommerce acquisition costs is by implementing a cart abandonment strategy.

Here’s what you need to keep in mind:

Maintain transparency on costs

Assess what additional costs are necessary and offer a cost split-up in the cart itself—or create an attractive free shipping threshold.

Do check out: 25 Proven Ways To Reduce eCommerce Shipping Costs

Create a shipping charge calculator

Clarify shipping charges & other details by the chosen delivery partner so that customers can key in their location—note how Nordstrom does this on their cart page:

Send personalized cart abandonment emails

Improve conversions by segmenting your drip flow on behavioral segmentation.

6. Optimize every step in your conversion funnel

Customers drop off from your site for many reasons—knowing where and why is critical.

Here are a few tested measures we’ve applied to deal with drop-offs:

Go through the click & navigation data

Look for issues like poor search that does not show up alternatives or related categories.

Use a dedicated tool to find & fix broken links

ScreamingFrog works well.

Use heatmaps to identify which fold(s) of a page has the most engagement

Heatmaps can also help identify form fields that cause friction.

Check for excessive scrolling

Use dropdowns, a horizontal content format, bullet points, and "load more" features.

Provide sufficient product information

‍ Make the product name, price/discount, and short one-line descriptor non-negotiable.

Assess your pop-ups and exit intent communication

Find out what’s not working—is it the CTA, the language, the offer, or when it’s being shown?

Pay attention to UX based on customer interest

For example, show product comparison to a seasoned buyer but more product information to someone new.

For more insights, read: 5 Stages of an eCommerce Conversion Funnel (+Ways to Improve Each Step)

7. Design a loyalty program for long-term conversions

90% of customers are likely to buy from brands that clearly show they know personal engagement preferences & buying behavior.

Here are a few considerations that can enhance your eCommerce loyalty program:

Start incentivizing non-transactional engagement

Offer discounts to those who finish surveys and quizzes as well as to those who make social shares widely.

Convey the benefits of joining the loyalty program clearly

Anything that’s difficult to understand or relate to can potentially create cognitive load for your customers—note how Ikea does it:

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Build customer retention by offering tiered benefits

The more they buy, the deeper the discounts & the more they refer, the greater the exclusive access.

Personalize the rewards based on data

For example, one member might want early access to product launches but another might expect to be told about a flash deal early.

Do read: Why Is Your Conversion Rate Low: Possible Causes + Solutions

8. Start a “sticky” referral program

According to statistics, 92% of shoppers can trustingly rely on a brand people they know have referred.

Here’s how you can create a referral program, with low-cost customer acquisition and retention:

Offer clear instructions & real-time updates

These can be effective at getting more customers interested in the incentives.

Gather social proof from shoppers who’ve participated in the program

Create a quick three-question survey that asks them about the ease, the experience, and the incentives—you can highlight snippets of these to market the program.

Create combined experiences for the referrer and the referred

The best way to do this is through email as a medium marking them both declaring discounts, offering recommendations, etc.

Reward promptly

Ensure that the referrer and the person get their rewards simultaneously—ensure to update them on the points, discounts, or cash back they’ve earned.

9. Get smarter with pricing

Here’s a fact you may not know:

Only 21% of shoppers start their research right before they buy.

So, to draw them and then retain them, you’ll have to develop a robust pricing strategy:

Draw attention to higher priced products through decoy pricing

Apply the central fixation bias to sell products that aren’t cheap or too expensive and hence unattractive.

Introduce tiered discounts based on the cart value

Offer choices like buying more of the same product and adding relevant upsells to increase the cart value.

Create premium pricing around limited availability product releases

Bring out product differentiation including ingredients, make, and technology to make the price seem convincing.

Apply charm pricing as a psychological tactic

Research says charm pricing can bring in 24% more revenue versus other pricing counterparts.

10. Apply smart bundling tactics

When you ‘smart bundle’ fast-selling products and slow-selling products to give it away at an attractive (discounted price), it’s a win-win.

Here are a few tips that can help you move towards lowering your eCommerce customer acquisition cost:

One or more products are of a higher price

This can instantly make the shopper perceive the "bundle" as superior to independent purchases.

Make sure the products fit together

For example, bundling a tongue cleaner with a toothpaste and toothbrush is way more relevant than bundling with a torch.

Introduce labels that are relevant & attractive

When you place a smart bundle under the “bestsellers” section and give it this label, potential customers experience greater trust & confidence.

Feature price anchoring

This makes shoppers more sensitive to the price difference—and hence, the savings too.

One eCommerce brand that’s known for its super-valuable bundles is Vanity Planet.

vanity planet uses price anchoring to draw customers and lower acquisition costs

Introduce price advantages for “bundling” more items

This can especially be more effective right before peak holiday season.

Use pure bundling to mobilize slow-moving products

Essentially, there will be a number of products in your bundle, but you won’t be able to buy them independently.

Here’s an example from Kylie Cosmetics—what makes it attractive is that they label this bundle as “limited edition” in their product description.

Kylie Cosmetics uses pure bundling for quicker selling and lowering of customer acquisition cost

Check out: 13 product bundling examples that convert (& 10 proven ideas)

11. Make your drip emails inspiring

According to a study a while ago, 61% shoppers liked the fact they received promotional emails weekly from brands.

However, what’s not covered in the statistic is that shoppers also anticipate quality in emails and make buying decisions based on that.

Consider the following:

Assess the intent with which you’re setting the campaign

Is it to nudge customers towards a new product launch or reminding them to checkout with products left back in the cart?

Make the introductory email trustworthy

Ensure the copy is welcoming and you’re using supporting factors like social proof, how many people have already bought from a particular product range etc.

Offer incentives if you want the customer to act fast

For example, if you want them to checkout, you may want to declare a limited-time discount.

Offer alternate suggestions to improve brand awareness

If you’re nudging customers to look at certain products, you might as well introduce alternate suggestions saying “try these instead".

Bring a balance between promotional & relationship-building content

According to some crucial customer engagement research 88% say that experience matters as much as quality of products—when you offer drip email content that personalizes and nurtures, customers want to buy from you.

Move the conversation forward

Build on the story—if you’ve been sending bestseller recommendations, take it to the next level with a discount they can act upon.

One brand that’s known to create inspiring drip emails is Patagonia.

Here’s an example of one of their newsletter sign-up welcome emails.

(Pay special attention to the aspects they’ve highlighted through the copy.)

Patagonia crafts emails to nurture customers and lower acquisition costs

For more insights: 15 amazing drip email campaigns that actually drive sales

12. Make your upsells & cross-sells compelling

While traditionally a lot of focus has been placed on what products you offer for upselling and cross-selling, through our experiments we’ve noticed that the HOW is also equally relevant.

There’s research out there already that effective upselling and cross-selling can increase up to 30% of a business’s revenue.

Here are steps in the right direction if you’ve been wanting to reduce your eCommerce customer acquisition cost:

Limit the number of upsell choices

The point is to have customers not experience choice paralysis and instead add more products to their carts.

Explore channels with higher CTRs

For example, SMS has shown to be a big grosser in terms of customers engaging with upsell & cross-sell content sent by businesses.

Highlight upsells & cross-sells with maximum reviews

This can have an immediate impact on how confident a customer feels about the suggestions being made to them.

Offer context through a short label or highlight

For example, if you’re promoting a better battery, say something like “lasts 5 times longer than…” – context helps customers convert faster. ‍

13. Create distraction-free landing pages

Landing pages are known to be 123% more effective in comparison to other forms of sign-up.

Businesses that happen to have 10-12 pages end up enjoying 55% more leads.

Put simply, effective landing pages help potential customers to move towards a purchase.

So, when designing landing pages, here are some key factors you’ll need to consider:

Feature ONE bold CTA

Make the message compelling and actionable

Make the message appear above-the-fold

Make the content easily scannable

Use minimum text and compressed images for super quick loading

Bring in grid flexibility & make room for mobile-responsiveness

Introduce checkboxes & drop-downs to enable access across devices

Note how Marley Spoon’s landing page has clean layouts, self-explanatory images, and no-nonsense copy.

Further, note how the mobile version uses a sticky menu that acts as a progress bar.

Marley Spoon focuses on landing page CX to reduce customer acquisition cost

14. Improve self help across touchpoints

According to some research by Bain & Co., when customer retention rates increase by just 5%, the profits are likely to rise anywhere between 25% and 95%.

To improve CLV, customer experience needs to improve dramatically.

And not all of it depends on live chat or support numbers—when shoppers experience greater control through information & clarity, they’re more likely to buy from you.

Here are a few ways you could consider:

Ensure quick responses over email & on social media comments

Email automation that covers a wide range of email communication can be helpful.

Introduce a thorough FAQ & clearly categorize topics

After all, they need to know where to look for answers.

Use your website & relevant social handles to initiate discussions

This is the reason some thriving eCommerce brands have closed discussion groups on Facebook.

Introduce product selection tools

This can especially be helpful for those who haven’t shopped with your brand before—ask the right questions if it’s a quiz, and bring in criteria like size, color, and style if it’s a filtering technique.

You'll also like to read: 24 Email Automation Examples For More Conversions (eCommerce)

15. Make it easy for shoppers to share feedback

Increase trust in your customers by making it easy for them to share feedback about their browsing/ buying experience.

This reduces spending to gain shoppers’ trust while getting feedback—here’s how you do it:

Introduce a separate feedback widget

This way you can collect a lot more information on the reasons behind drop-offs. You could bring in subsections like on-site experience & customer service experience etc.

You'll love to read: eCommerce On-site Optimization: 26 Strategies To Boost Conversions

Feature a feedback link on your live chat feature ‍

This can create more ease and transparency for customers looking to give feedback right away, without going through a separate long-winded live chat conversation.

Run a 24/7 real-time customer support helpline or chat feature ‍

Waste less time responding to customers’ grievances.

Simply trigger a helping question, based on their journey, like “leaving so soon? “Want help in finding what you need?”

Fenty Beauty’s live chat feature allows customers to talk to a “beauty advisor,” that is, a real person.

Fenty Beauty features a live chat that increases engagement and lowers customer acquisition cost

You might also like: Finding The Right Target Audience In eCommerce: 16 Proven Strategies

16. Find influencers among your loyal customers

Engaged customers + Peer Approval = Lower CAC

Experts have already predicted that micro-influencers will continue to aid the growth of brands that want to grow authentically in the eyes of their customers.

Here’s how you do it:

Run regular contests on your stories to find micro-influencers from your customer base

Partner with them and gamify with a huge reward for their subscribers in exchange for participation.

Create Shoppable Live Streams On-Site

Once you get an engaged audience, invite them to an exclusive live stream on your website—ensure to invite the influencer as well.

Create an Insiders Influencer program on your site

Let influencers feature their visuals & tips for customers not only on their feed but also on your site.

Give a Shoutout

Doing this increases your visibility and shows that you are attuned to your target audience’s beliefs—note how ASOS does it:

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ASOS reduces customer acquisition cost by picking influencers from among existing customers

17. Collaborate with other brands (with similar audiences)

Amplifying brand presence and awareness is one way to ensure more potential customers get to know about a brand.

To keep eCommerce customer acquisition costs low, it’s ideal for a brand to opt for a strategic brand collaboration instead.

Here are a few ways to make eCommerce brand collaborations a reality and success:

Align on values and objectives

‍The more aligned two brands are in how they’re seen by the world, the better it—this way, the collaboration won’t look forced.

Assess the customer base that each brand brings

While assessing the outcome of the collaboration, it’s important to understand which parts of the customer base you’ll be precisely targeting.

Find a strategic topic/event to collaborate on

It could be a specific calendar day, a cultural milestone or a seasonal highlight that the collaboration will revolve around.

Use appropriate channels to spread the word

Social media, PR, advertising, and shares through micro-influencers—be clear about the channels that’ll help you gain the traction you need—note how Arby’s and Warby Parker looped in the viral factor:

The Warby Parker and Arby collaboration meant to improve the customer base and lower acquisition costs — Source

18. Create a niche

Niche eCommerce businesses see slower CAC growth, while the average customer acquisition cost for eCommerce mammoths like Amazon ranges between $150 to $180.

niche segments in eCommerce see lower customer acquisition cost

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Sounds great? Here’s how you lower customer acquisition costs with niche segments:

Use the Google Keyword Planner to focus on decently searched keywords

Very high volumes would mean higher competition.

Round up niches that are aligned with your current business

Look within your industry as well as outside—sometimes HOW other businesses are branching out will give you ideas.

Find out problems you’d like to solve

Given that you already have a business, you’re already solving some problems—see what else aligns with your current offerings.

You'll love reading: 15 Critical Steps In eCommerce Competitor Analysis

Perform a competitive analysis

Assess what both primary & secondary competitors are doing—and what you’d need to widen into a new niche.

Figure out pricing and margins

Considering niches that will give you less than 20% margins can become burdensome on your bottom line in the long run.

You must also check out: Converting Mid-Funnel Customers in eCommerce: 14 Effective Strategies

19. Monitor your retargeting campaigns closely

There’s no point in retargeting customers, who’ve already completed a purchase—however, most marketers forget to take this into account.

Here are a few things you could do to keep your retargeting campaigns effective:

Remove the customers who've been buying repeatedly

Do an audit every 7-14 days, and it’ll go a long way in helping you make the most of your marketing dollars.

Add converted customers to another retargeting campaign

‍ One that encourages upselling, cross-selling, or even downselling.

Leverage event-based retargeting

For example, a product that was out of stock becomes available—retarget those who recently purchased products just like this one.

Also read: Brilliant eCommerce Retargeting (and Remarketing) Examples

Analyze customer objections as you retarget

For example, some customers might abandon the journey after getting confused between two similar products—see if you can retarget with clarifying information.

20. Bring in a “nurturing” content strategy

When an eCommerce business offers valuable gated content, it’s a win-win scenario.

Here are a few key considerations if you do decide to feature gated content:

Make content suggestions based on the customer journey

Look at buying behavior and browsing history to look at trends in what kind of content shoppers would find most valuable.

Center your content on “problem-solving”

This can then be a non-pushy way for you to talk about your brand and also recommend products where necessary.

Assess conversion rates to take the next steps

For example, if you find customers not creating as many micro conversions towards a larger conversion, you may want to gate some of your content.

Consider what content can be repurposed

If you’ve already noticed shoppers expressing interest in certain kinds of content, you may want to repurpose parts of it by deepening research, introducing more insights etc.

21. Avoid common A/B testing mistakes

A/B tests aren't one and done efforts. It requires constant revisits.

Why?

During the acquisition phase of any sales journey, the first couple of touchpoints are crucial in getting the visitor interested and hooked to your brand.

This in turn will make the later sales stages much easier and require less investment.

Here are a few split test mistakes you may want to avoid:‍

Running too many split tests at the same time

Too many assets being tested at the same time can create results that are difficult to interpret and conclude about.

Running a test for a short time and then giving up

There’s a reason why they talk about achieving the 95% confidence rate in A/B testing—how long you will need to run a test will depend largely on the results you expect to see.

Changing parameters in the middle of the test

Parameters include the amount of traffic that is being observed, other variants to the original list on which the test is being performed, split testing goals being altered from the original plan etc.

Want More Ideas on A/B Testing?

You’ll Love This: 153 A/B Testing Ideas for eCommerce (Homepage, PDP, Cart, Checkout)

22. Use CRO to improve UX

Unique visitors aren’t worth much if your funnel isn’t converting traffic into profit, and there’s no point in spending all those dollars acquiring customers if it doesn’t translate into revenue.

That’s exactly why CRO is crucial.

Here are a few ways CRO can make your digital touchpoints more seamless:

Improve functionality, usability and accessibility of your eCommerce website

Break your customer journeys into acquisition and retention touchpoints

Apply scientific strategies like behavioral targeting into optimizing various touchpoints

However, CRO is a complex world of data and analytics that requires a thorough understanding of user behavior, statistics, and UX — one that’s best to do with external expertise.

If you've been thinking seriously about CRO, you've got to read this.