It is no secret to business owners and marketing professionals that customer acquisition costs are rising. Industry estimates suggest customer acquisition costs increased by 60% in the last five years.
This trend is attributed to the increasingly tighter privacy rules established across the world, Apple’s iOS 14.5 update enabling iPhone users to opt out of tracking from apps like Facebook and Instagram, and the impending demise of third-party cookies.
“We now face the death of the cookie, and this means huge changes to audience tracking and data collation. How do you understand your audiences wishes and preferences now, personalise offers and add value to the relationship so it’s meaningful more than transactional?” said Clare Lawson, CEO of Ogilvy and speaker at Technology for Marketing 2022.
For eCommerce and marketing teams, this diminishes the luxury of relying on third-party data to target the right users or convert the high-quality leads with their ads; not to mention the crumbling trust for advertising by consumers that started long before Apple’s iOS update in 2021.
“Brands understandably opted for short term survival tactics during the pandemic but now they have to switch to building long term growth,” Clare added.
Coupled with the ‘cost of acquisition crisis’ and post-pandemic recovery, businesses this year are also dealing with challenges that are impacting both marketing budgets and consumer decisions, including supply chain fragmentation, inflation, and the words on everyone’s lips: cost-of-living crisis.
“There is every indicator we are heading into recession. And as companies brace for impact, they invariably speed up the process. It is a unique context for us all to operate in. But, just as there were during the height of the pandemic, there will be opportunity for e-commerce brands to effectively engage customers,” said Karl Lillrud, TEDx and eCommerce Expo 2022 Keynote Speaker.
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Achieving cost-effective customer acquisition and retention
Despite the struggling performance of paid social, 78% of businesses surveyed by CommerceNext will still prioritise this channel for acquisition in the next year, followed by paid search and influencer marketing.
To make the most out of your paid social spend, eCommerce and marketing teams may wish to diversify from the once tried and tested Facebook and Instagram towards other channels where costs can be lower like Snapchat, Pinterest, Spotify and the increasingly popular TikTok.
Or if you are looking for an even cheaper alternative to paid ads, content marketing tailored to specific consumer interests can help build a strong brand identity, increase authority, improve your organic search traffic, and provide new opportunities to acquire visitors from organic social media.
Once you have successfully caught the attention of a potential customer through social media, the next step in making your acquisition budgets work harder and better is by creating a positive customer experience.
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Keep it personal
“Retailers are creating detailed personas and customer profiles which allow for intelligently personalised experiences. Personalisation is a powerful tool for accelerating customer journeys. The brands that will emerge stronger over the next twelve months are those which craft compelling experiences to foster long term relationships with customers,” said Karl.
Personalisation at the stage of acquisition can come in many different forms. Consider offering discount codes, tailored product recommendations, customed webpages based on the channel your potential customers come through, and seamless payment options to avoid cart abandonment.
“Brands need to tailor their offering and messages to what people want and this will drive repeat purchase and deliver long-term value. A fashion retail brand might be able to offer a 10% discount in return for an email address, but this does not drive long term value,” said Clare.
Without third-party data, personalisation at the acquisition stage through strategies like geotargeting are becoming more challenging. It is therefore critical to convert visitors from paid traffic into subscribers of your channels. Ideally, your marketing will take an omnichannel approach, harnessing various media like your website, email, loyalty programmes, social communities, mobile apps, SMS services, or even an existing physical store incorporating your eCommerce channels.
First-party data can then be gathered and analysed using the likes of A/B testing and click-through rates, kickstarting personalised retention strategies. Marketing automation tools available in many of your existing CRM platforms can also be implemented to lower costs by reducing menial tasks and freeing up staff workloads.
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Regain trust to retain customers
It is important to remember that your consumers value their personal data as much as businesses see it as the ‘new oil’. The team at Empathy.co discovered that more than 80% of people in the UK said they had concerns about their data being tracked and sold to advertisers.
“Now it’s the time to give privacy back the importance it deserves, and for retailers to regain the trust and loyalty of their customers with technologies based on privacy and openness,” said Lara Menéndez, Product Director at Empathy.co and speaker at eCommerce Expo 2022.
If consumer data is misused, you will lose their trust and repeat custom, thus wasting away your acquisition spend and making it more cost-effective to prioritise data privacy.
“Building trust is a real challenge in both the tech industry and retail sector. The key thing is to continue to innovate on search technology while maintaining consumer trust. However, we see this as more than a challenge, we must embrace the foundational truth: the fact that individuals have the right for their privacy to be respected,” Lara added.
To build this trust and maintain retention, brands must communicate their steps to protect consumer data in a transparent and approachable way.
“Tech and digital industries have failed to understand human nature. They forget that, at the end, they need to deliver online experiences to human beings, with their feelings and particularities. Data does not always work there. The challenge is to put data at the service of the person, not the other way around,” Lara said.
Losing the fear that data alone can deliver positive results by empowering businesses to approach their consumer communications more empathetically and future-proof against evolving privacy regulations that are challenging pure data-driven marketing strategies.
Turn loyalty into advocacy
This human approach to retaining loyal consumers also extends to communicating a brand’s purpose and values.
“The cost-of-living crisis will affect consumer decisions and price sensitivity will be highest for functional purchases. But for discretionary purchase brand purpose will become more important,” said Clare.
The CEO of Ogilvy advised against self-promotional stunts and insincere communication like ‘greenwashing’ or a simple sustainability pledge in an email.
“People are looking to shop and are willing to have an active relationship with brands who share their concerns and purpose. Brands need to tailor their offering and messages to what people want and this will drive repeat purchase and deliver long-term value,” Clare added.
Through this approach, your loyal customers can become your best brand ambassadors by encouraging them to deliver user-generated content – a super cost-effective customer acquisition tool.
For more insights into achieving cost-effective customer acquisition and retention, eCommerce Expo and Technology for Marketing is the place for you. Join more than 10,000 retailers and brands at ExCeL London on 28 and 29 September 2022 – one ticket gets you access to both shows!