Customer acquisition has long been an engine of growth for e-commerce retail, especially with the expansion of low-cost digital marketing channels like affiliates and product listing ads. In the early days of e-commerce, it was a land grab — acquire as many customers as possible, for as cheap as possible. But we’ve reached a tipping point as e-commerce approaches maturity. Many brands have seen their cost per acquisition (CPA) going up as retailers saturate digital channels to reach new audiences. At the same time, the return on every new customer acquired is going down — as customers, more price-sensitive than ever, are lured away to low-cost competitors. The way for brands to break the cycle and drive sustainable long-term growth is to focus on acquiring higher-value customers.
State of the world
The world of acquisition marketing today is one of highly fragmented channels and tools. Different channels rely on different types of technology and point solutions to optimize around their own metrics — which often differ depending on the role that the channel plays in the path in the conversion. Adding to the confusion, channels frequently don’t communicate with one another — making it difficult to assemble a complete view of the customer.
If you haven’t yet had the time to read our latest book on leveraging customer analytics to build a scalable churn prevention system, here are the top takeaways.
1. Retail is evolving faster than ever before in the history of the known universe. 30% of U.S. customers say they change brands often just for the sake of variety and novelty, and 49% of customers will gladly switch brands—for a coupon.
2. The economics of saving customers from churning really adds up; repeat buyers are essential to long term growth. Preventing just 1% of your very best customers from churning can lead to an overall revenue increase of 5%. Yowza.
Last week, we attended the Decoded Fashion & Beauty Summit in New York, where fashion and beauty retail leaders gathered to explore the death of retail (as we know it), demystify data, and discuss the connected consumer.
One of the keynotes we enjoyed most was Sephora’s VP of Digital Product Lucinda Newcomb’s presentation on the connected consumer. Lucinda kicked off her talk by sharing Sephora’s mantra—”client experience is queen.” This mantra informs everything the beauty giant does across each customer touchpoint.