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Lowering Customer Acquisition Costs via E-Commerce CRO

May 16, 2023
Ryan Stogran

Summary of Key Points:

  • High customer acquisition costs (CACs) hinder growth and reduce profit margins, while low CACs lead to higher profits and reinvestment opportunities.
  • Lowering CACs involves strategies such as targeted advertising, content marketing, SEO optimization, email marketing, and referral programs.
  • Conversion rate optimization (CRO) directly impacts revenue and growth by improving the percentage of website visitors who complete desired actions.
  • Key CRO strategies include A/B testing, user experience optimization, personalization, social proof, and clear calls-to-action.
  • Applying key CRO principles to our work with U Vape led to a 348% increase in conversion rates, 1296% growth in gross sales, 1540% increase in organic traffic, and 6549% growth in email revenue. The takeaway? Investing in improving conversions makes it much easier to acquire and retain customers.

As a Shopify business owner, one of the key elements to improving your e-commerce business is to lower your customer acquisition costs (CACs). It’s not only possible to do this while maintaining or increasing your conversion rates—in fact, improving your conversion rates efficiently often lowers your CACs as a direct result.

But what are the best ways to optimize your conversion rates so that you can bring down the costs of acquiring new customers? Below, we’ll dive into some of the strategies we’ve successfully used in the past, and share a case study from one of our clients who saw their conversions increase by 348% during our work with them.

Infographic explaining what makes up customer acquisition costs.

Understanding Customer Acquisition Costs (CACs)

What Are CACs (& Why Are They Important for Successful Businesses)?

CACs represent the total expense incurred in acquiring a new customer, including advertising, marketing, and sales efforts. High CACs can reduce profit margins and hinder growth, while low CACs can lead to higher profits and the ability to reinvest in the business.

Effective Digital Marketing Strategies for Lowering CACs

To lower your CACs, you’ll want to make use of the following strategies:

  • Targeted Advertising: Utilize platforms like Facebook, Google, and Instagram to reach your ideal customer through demographic and interest-based targeting.
  • Content Marketing: Create valuable, engaging content that educates and entertains your target audience, improving organic traffic and brand recognition.
  • SEO Optimization: Optimize your website for search engines to increase organic traffic and reduce your dependence on paid advertising.
  • Email Marketing: Build a strong email list and use personalized, targeted campaigns to nurture leads and improve customer retention.
  • Referral Programs: Encourage satisfied customers to refer friends and family, leveraging word-of-mouth marketing and reducing CACs.
Magnet attracting blocks with drawings of people on them to symbolize conversion rate optimization.

Every digital marketing campaign should include the above—but how you implement them determines the extent to which they’ll pay off. We’ll get into that when we show you our case study.

Understanding Conversion Rate Optimization (CRO)

What Is CRO (& Why Does it Matter for E-Commerce Businesses)?

CRO, or Conversion Rate Optimization, is the process of improving the percentage of website visitors who complete a desired action, such as making a purchase or subscribing to a newsletter. CRO directly impacts revenue and growth.

By focusing on CRO, businesses can maximize the value of their existing traffic, improve customer satisfaction, and reduce the pressure on marketing efforts to constantly acquire new customers.

Popular CRO Strategies & Best Practices

Some popular CRO strategies and best practices include:

  • A/B Testing: Experiment with different website elements, such as headlines, images, and call-to-action buttons, to determine which versions lead to higher conversion rates.
  • User Experience (UX) Optimization: Improve website navigation, page load times, and mobile responsiveness to create a seamless user experience—this lowers bounce rates and increases the amount of time people engage with your site, increasing their likelihood of converting.
  • Personalization: Use customer data to create personalized shopping experiences, tailoring product recommendations and content to individual preferences.
  • Social Proof: Showcase customer testimonials, ratings, and reviews to build trust and credibility with potential customers.
  • Clear Calls-to-Action (CTAs): Ensure that CTAs are prominent, concise, and visually appealing, guiding visitors towards completing the desired action.

U Vape: Our Case Study

U Vape is an online e-commerce retailer selling vape products and accessories. They were founded in 2016 by a pair of entrepreneurs dedicated to helping people quit smoking by providing high-quality, hand-picked products.

U Vape’s mission was admirable and their products were great, but they engaged us to help them grow more quickly and sustainably. As we began to collect data, we discovered a number of areas to address regarding both their CACs and conversion rates.

Our CAC & Conversion Rate Challenges

At the start of our work with them, U Vape had almost no data on their CACs—so the first challenge we faced was to set a benchmark CAC that we could optimize over time. It’s important to note that we fully expected this number to go up at first, as U Vape saturated their local market and had to reach new customers in other areas—but if this happened, we’d know we were doing our job correctly.

To do this, we’d also need to improve U Vape’s conversion rates, which were being held back by their website. The site wasn’t branded effectively and its user experience was compromised by broken links, incomplete product pages, and ineffective primary navigation. Its inventory also didn’t accurately reflect what U Vape had on hand and was available for purchase.

RS Creativ’s Goals for the Project

In addition to fixing the issues mentioned above, we set three primary goals for U Vape when we started working with them:

  • Optimizing their catalog across all products and collections: By giving every item proper titles, descriptions, and photos, we created a higher-quality online shopping experience for users that was consistent no matter what product they were looking at.
  • Expanding their loyalty program to include greater benefits and a VIP rewards system: This encouraged visitors to sign up for U Vape’s mailing list and start a long-term relationship with the brand, increasing both their likelihood of making a purchase and their overall customer lifetime value.
  • On-site SEO: By optimizing U Vape’s existing site content and running content marketing campaigns that focused on qualifying and converting leads through in-depth education on vaping products and practices, we set out to make the site more visible in SERPs and more effective for long-term brand building.

RS Creativ’s Approach to CRO for U Vape

We set out to achieve the goals above by optimizing conversions in the following ways:

  • Redesigning the Website to Enhance UX: Completing and improving the product pages was critical here, but it wasn’t the only thing we did. We also tackled the primary navigation so that users could find what they were looking for on the site more easily, cleaned up broken links, and added social proof to product pages via customer reviews.
  • A/B Testing of Key Website Elements: Using tools like Google Analytics for A/B testing (where you measure the performance of one site element against another so that weaker ones can be improved with aspects of the stronger ones) helped us identify areas of the site that weren’t converting effectively and bring them in line with those that were.
  • Using Customer Education to Address Pain Points & Solve Problems: Our focus for U Vape’s site and blog content was customer education rather than direct sales—think product reviews, comparisons, and device-specific FAQs. These also included clear and strong CTAs to inspire users to take action once the content had engaged them and helped them solve their problems.
  • Cart Abandonment Recovery Strategies: brief email reminders to customers who had provided us with their contact information before abandoning a purchase helped personalize their experience and created an opportunity to retain their business.

The Results of Our Project

During the course of our work, U Vape experienced the following changes:

  • +1296% gross sales in the first year
  • +348% conversion rate
  • +1540% organic traffic
  • +6549% email revenue

The takeaway here is clear: investing in CRO helps e-commerce businesses grow. The easier you make it for your store to convert customers, the less effort (and ultimately money) you have to spend acquiring them.

Optimizing Conversion Rates for Your Shopify Store

The strategies discussed above were based on specific data we gathered about U Vape and how its online store was performing. While the lessons can be broadly applied to Shopify stores of all kinds, it’s worth having your store audited to discover the most efficient ways to keep it growing.Get a clearer picture of your site’s strengths, needs, and opportunities when you contact our team for a consultation. We’ll be happy to apply our expertise to your unique business and create a plan tailored to help you achieve your goals.