Lessons from OWN IT: brand tips that help scale ecommerce customer acquisition strategies
The last two years have forced marketers to think about customer acquisition in a whole new light.
Between stark changes in privacy regulations, post-pandemic consumer behavior, and an economy impacted by inflation and workforce reductions, marketing isn’t the same as it used to be.
And as consumer relationships with brands continue to evolve in unprecedented ways, how do ecommerce brands keep profitability in mind when growing their customer base?
During OWN IT, Klaviyo’s 3-day virtual ecommerce summit, Cody Plofker, CMO of Jones Road Beauty, shared some important learnings from the brand’s growth journey, and Kali Lorenzetti, director of account-based marketing at Klaviyo, engaged a panel of experts in a discussion about maintaining a focus on profitability while growing a customer base. Panelists included:
- Tom Coburn, co-founder and CEO, Jebbit
- Nikki Toomin, CEO and co-founder, Sticky Digital
- Ali Cassis, US partnerships director, Mention Me
- Grace Clarke, independent owner of Grace Clarke Consulting
Keep reading for the top takeaways from the session, including the importance of a customer acquisition strategy for business health, how to calculate ecommerce customer acquisition cost, key customer acquisition channels, and measuring the success of your acquisition strategy.
What is customer acquisition?
Customer acquisition is the process of gaining new customers for a business. It involves identifying individuals interested in purchasing your brand’s products or services, generating awareness with that target audience, and successfully converting them into loyal customers.
The goal of customer acquisition is to expand the customer base and increase revenue. It typically involves various marketing and sales strategies to reach potential customers, generate interest in the offerings, and ultimately convert them into paying customers.
“When you’re just getting started, early-stage customer acquisition is extremely important as you grow,” Plofker said. “Acquisition should also be rooted in retention.”
Acquisition should be rooted in retention.
Customer acquisition is a critical aspect of business growth, as it directly impacts revenue and market share. It is complemented by customer retention efforts, which focus on keeping existing customers engaged and satisfied with the business’s offerings.
But acquisition goes beyond simply attracting any customers—it’s about finding the people who will make repeat purchases and advocate for your brand. A smart customer acquisition process plays a key role in the sustainable, long-term success of any ecommerce business.
Why is an effective customer acquisition strategy important for ecommerce business health?
In the midst of a historic economic downturn, making smarter decisions around marketing resources aimed at acquiring customers is a critical component of ecommerce success.
Here are 4 outcomes of customer acquisition strategy to your ecommerce business:
Find the right customers
A customer acquisition strategy helps businesses identify and target audiences most likely to be interested in their products and services.
Increase sales and revenue
An effective customer acquisition strategy can increase sales and revenue. Search engine optimization, paid advertising, social media marketing, content marketing, and email marketing are all effective channels for lead generation. These leads can then be converted into customers.
Build customer loyalty
Acquiring new customers is important, but retaining them is equally crucial for long-term success. A well-planned customer acquisition strategy aims to build customer loyalty and attract customers who are likely to have a higher lifetime value (LTV).
A customer acquisition strategy allows businesses to track the effectiveness of their marketing efforts. By analyzing data and metrics such as customer acquisition cost (CAC), customer lifetime value (CLTV), and conversion rates, businesses can more effectively measure the success of their tactics and make more informed decisions to optimize their marketing campaigns.
How to calculate ecommerce customer acquisition cost (CAC)
To determine if your customer acquisition strategy is effective, use the following formula to calculate the cost of acquiring each new customer:
Ecommerce customer acquisition cost (CAC) = marketing spend / new customers
Marketing spend includes funds for brand awareness, paid advertising, quality content creation, and more. If your marketing spend for one quarter is $1K and you acquire 50 new customers, for example, your CAC would be $20.
Once you know the cost of acquiring a new customer, compare it to your average order value to assess the profitability of your customer acquisition strategy:
Profit = average order value – costs of goods sold – CAC
This formula calculates one-time profit. However, if customers become repeat buyers, they might make subsequent purchases at little to no additional cost. Remember, repeat customers tend to have a higher LTV.
Because acquiring a new customer typically incurs higher costs than selling to existing customers, your customer acquisition strategy needs to extend beyond the initial purchase.
5 key customer acquisition channels
In marketing, a “channel” refers to a medium by which your brand engages with prospective customers. Using customer acquisition channels is an essential part of attracting and converting potential customers into paying ones.
Here are a few ecommerce marketing channels you can use to create a successful customer acquisition strategy:
Growing an email list is a common way to get up and running with a highly effective marketing channel when you first start a brand—not to mention, there’s no associated variable costs beyond the price of your email service provider. And those costs are modest compared to the value and revenue email can earn you—making this one of the most profitable customer acquisition channels.
“A number most brands aren’t aware of is that your email alone should be driving at least 30% of your overall revenue every single month,” Toomin said. “When you say that to brand managers, they’re shocked, because it’s only driving 10%. That’s a sign you have work to do on your email channel.”
Your email alone should be driving at least 30% of your overall revenue every single month.
Set up email campaigns to send a few times a week, depending on what you’re selling and how often your customers want to hear from you. Email automations, such as abandoned cart emails and welcome flows, can also be an invaluable way to educate first-time users on your brand and turn them into paying customers.
Segmenting your audiences, meanwhile, can help ensure your email messaging is personalized and resonates with your customers.
Here’s an example from Coburn: “I love snowboarding. If a brand learns how often I snowboard, who I go with, and what type of trails I do, they can send me messaging that’s way more tailored and personalized than just sending me a 30% off coupon.”
“One caveat is that ‘personalization’ is an oft-overused term,” he added. “Most brands don’t have huge financial resources to do 1:1 personalization on millions of customers. Yet just learning 2, 3, 4 things about people and putting them into one of 5 segments can give you 80-90% of the lift you’d get if you had 200 data points on every person and were running hundreds or thousands of segments at scale.”
Many brands are still figuring out SMS as a customer acquisition channel.There’s a variable cost associated with SMS, but it can decrease if you optimize your SMS strategy for efficiency.
As Toomin put it, “50% of your revenue comes from 8% of your most loyal customer base, and email and SMS are key drivers of that revenue.”
50% of your revenue comes from 8% of your most loyal customer base, and email and SMS are key drivers of that revenue.
“Their SMS marketing isn’t salesy at all,” she explained. “It’s a quiz or a piece of trivia sent every Tuesday, meant to educate users on skincare. Rather than talking about how the product makes skin better, the SMS adds value to consumers’ lives by giving them a deeper sense of their bodies. People leave that exchange with that brand feeling a little bit smarter.”
3. Social media
Social media platforms such as Facebook, Instagram, Twitter, Pinterest, Linkedin, and TikTok give businesses access to large and diverse audiences.
By regularly posting engaging content, running targeted ads, using social media analytics, and working with influencers, businesses can identify their target audience and connect with potential customers.
Clarke encouraged brands to have fun and flexibility with these platforms, citing a recent Instagram power move by Saie Beauty as an example of “show-stopping content that grabs attention.”.
“They wiped their entire Instagram feed, which on its nose is not a novel concept, as brands wipe and archive their social posts all the time,” Clarke explained. “But Saie announced they were relaunching themselves with a community-first perspective.”
Since then, all of the content the brand publishes has centered their community, Clarke explained—everything from naming their products to color swatching at home. It’s a great way to keep people engaged without constantly promoting your brand.
SEO is a popular customer acquisition method for a couple of reasons: It’s cost-effective, and it can garner incredible results if brands get their content marketing to rank.
By targeting relevant keywords, SEO helps businesses reach potential customers who are actively searching for the products or solutions they offer.
Here are a few SEO tactics you can deploy to boost the organic traffic coming to your brand’s ecommerce store:
- Optimizing your website, product pages, or landing pages for organic search
- Starting a blog and publishing articles regularly that speak to your audience
- Building quality backlinks from reputable websites
PPC, or pay per click, allows you to target your search ads to specific demographics, geographic locations, and even interests. This means you can reach a highly targeted audience that is more likely to be interested in specific products or services.
Paying for prominent ad placement on search engine results pages improves your brand’s visibility, increasing the likelihood of acquiring new customers.
Moreover, PPC platforms such as Google Ads provide a great deal of flexibility in terms of ad formats, targeting options, and budgeting. Detailed analytics and tracking tools, meanwhile, allow you to easily measure the success of your campaigns.
Choosing the right marketing mix: third-party vs. owned marketing
You can use the above channels across all touchpoints of the customer journey to bring your customer acquisition methods to life. But the question you must answer for your business is: Which channels attract the right customers?
Channels you own and control allow you to deliver highly personalized experiences that align with your unique identity, such as:
- Email marketing
- Mobile marketing
On owned marketing channels, brands have complete control over the experiences they create and the relationships they form with customers. This level of control often translates to greater customer loyalty. Additionally, the cost of acquiring customers is typically lower, as there are no third-party fees for capturing customer attention.
On the other hand, channels such as may provide a larger reach to new audiences, such as:
- Paid search
- Display advertising
- Third-party marketplaces
These channels, however, typically limit a brand’s ability to engage with their target audiences. This lack of control and effectiveness in targeting marketing efforts can lead to higher acquisition costs, as brands are forced to compete against others with potentially larger budgets.
Different channels offer varying degrees of flexibility to brands, and your investment in each one may change over time based on your needs.
“Every month, your marketing team should do a tiny recalibration of your channels,” Clarke advised. “It’s not complicated or overly laborious. It just means giving yourself an hour or two once a month to sit with the decision-making and data teams, look at the data, and be realistic about what you can do relative to where your customer is showing you they want to be engaged.”
Every month, your marketing team should do a tiny recalibration of your channels.
3 ecommerce customer acquisition strategies that drive sustainable growth
Customer acquisition isn’t just about the short-term win—it’s about creating a scalable process of finding and converting customers.
Here are 3 customer acquisition tactics the experts shared during OWN IT:
1. Focus on finding the right customer
One common mistake marketers make is being overly transactional in their customer acquisition approach. They try to capture a lead or a phone number as quickly and cheaply as possible to optimize the cost-per-lead metric.
But as Coburn pointed out, “when you drive a customer to your website for the first time, and a pop-up asks for their email for 10% off, it’s a very transactional experience for them. We would never do that in the real world. You’d never walk into a store and get asked for your email right away. We would engage you in a conversation.”
Instead of chasing as many customers as possible, consider building and nurturing long-term customer relationships—even if it means growing your customer base takes longer.
Some brands today use the Jebbit platform to create a quiz that greets the customer, asks a couple of questions, directs them to the right product based on their responses, and finally requests their email at the end of the quiz.
It’s a more meaningful engagement that drives a 20% higher lead capture rate on average, according to Coburn. You still get the leads you want, but you get them in a way that’s better for the consumer, while learning something about them in the process.
Once you know more about your ideal customer, you can better understand which channels they frequent and which messaging will resonate with them most.
2. Think about retention in terms of reacquisition
Each one of your customers is different not only from the next customer, but also from the customer they used to be.
“The customer you acquired 6 months or a year ago is not the same customer today,” said Toomin. “A couple of years ago, marketers weren’t focused on the retention piece. During COVID, brands were able to just market and people came to their websites. You didn’t have to focus on keeping them because everyone was sitting at home, doing nothing but shopping online.”
The customer you acquired 6 months or a year ago is not the same customer today.
Today, Toomin said, “we have to focus on everything we’ve learned from acquisition, parlay that into retention, and make customers loyal.”
Cassis cited a client “that kept pouring money into paid advertising, expecting results to be the way they used to be. They’re not going to go back to the way that they were. So, looking at your data and earned channels is a really important part of improving customer retention right now.”
Consumers have more choices than ever before when it comes to selecting brands to do business with. Brands need to think harder about reacquisition and understand that customer acquisition may only be temporary.
As Clarke pointed out, “brands are shifting from the thought process of ‘Once we have a customer, we have them forever,’ to ‘Once we have a customer, we get to continue to stay in a relationship with them and reacquire,’”
3. Take a test-and-learn approach to paid marketing
“Most of my clients are still heavily invested in paid, but they’re doing it in a way that’s more of a test-and-learn approach,” said Clarke. “They are diversifying their paid spend across certain channels only when they actually have learnings and feel ready.”
Imagine your paid marketing efforts on Meta have generated deep insights. You can then leverage those learnings to scale on channels like Reddit or Twitter or test new ad programs. Diversifying will allow you to make investment decisions when you have a better idea of what will pay off.
“While 80-85% of your digital budget should be invested in the tried-and-true, constantly working tactics, spend around 10% of your budget trying new things, because if one of those works, it could be a game changer,” said Plofker. “You can play around with different budget allocations and see what the business impact is.”
Spend around 10% of your budget trying new things, because if one of those works, it could be a game changer.
Testing acquisition strategies to unlock ecommerce growth
How do you decide what new things to try? Is it new channels or different creatives? Do you experiment with bundles, promotions, and products?
The key is to strategically understand potential roadblocks and what’s going to unlock growth. Here are a few strategies and tactics to try:
Offers are a significant element in terms of creating an incentive to motivate shoppers. “We were able to increase average order value by 10% on paid channels by offering a gift with purchase of a certain threshold,” said Plofker. Your audience is bound to respond to different offers than the next brand, so you can test and optimize to effectively improve your margins.
Your marketing creative can have a huge impact on the results you drive for your business—and small, strategic changes can make all the difference between high converting content and creative that falls flat. But be careful with this one. If you’re testing 20 ads a week, you won’t get much better results from testing 40 ads a week. A better use of your time would be to think about a new channel and test a new ad there.
See where other marketers and brands are finding success. Watch, learn, and think about where your customers are and what channels they might be paying attention to that your brand doesn’t yet have a presence on. Doing some market research never hurts, so invest in understanding what publications people are reading, the media they’re consuming, and how they learn about brands in your space.
How to measure the success of your acquisition strategy
Take everything you know about your consumers, set a hypothesis, and then measure your expectations to a defined forecast (either quarterly or yearly).
“You need to be brave enough to say, ‘Here’s what we expect,’ look at what’s happening across your revenue-driving channels, understand how close you’re getting, and be hungry for the moments when you’re not on track,” said Coburn.
“Our industry is so geared toward revenue at all costs—it’s the primary KPI for most marketing and growth initiatives,” Plofker said. “That can be misleading because sometimes you may make more revenue but not profit.”
Our industry is so geared toward revenue at all costs…that can be misleading because sometimes you may make more revenue but not profit.
To meet revenue expectations, set goals for your customer acquisition strategy that account for customer churn and current customer growth, keeping the following metrics in mind:
Gross margin refers to the portion of a company’s revenue leftover after subtracting direct costs. “If you have a $100 average order value and you’re shooting for a 75% gross margin, your products should cost you no more than $25 to make,” Plofker explained.
When calculating your gross margin, consider all direct costs, including wholesale costs.
Landed cost margin
Landed costs are all the variable costs associated with fulfilling an order. “If you take an order value of $100 and your gross margin per order is $75, deducting all the variable costs will help you figure out what it costs on average to get a box out to a customer,” Plofker explained.
Blended cost per acquisition (CPA)
This metric measures the total cost of acquiring a customer or user. It is calculated by dividing the total cost of all marketing activities by the number of customers or users acquired.
Marketing efficiency ratio (MER)
Divide your total spend by your revenue from new customers to arrive at your MER. “We shoot for a 5, which means 20% of our total sales should be spent on marketing—no more than that,” said Plofker.
Boosting your ecommerce customer acquisition starts here
Customer acquisition isn’t an overnight process. Building everything from brand awareness to customer referral programs takes time, but winning a lifelong customer is always worth it.
The most successful ecommerce businesses are those that are able to consistently acquire new customers through a variety of effective strategies. But simply acquiring new customers is not enough.
By providing excellent customer service, delivering high-quality products, and building a strong relationship with your audience, you can keep customers coming back for more—and establish a thriving ecommerce business.
Customer acquisition FAQs
What is customer acquisition marketing?
Customer acquisition marketing is the process of attracting and converting potential customers into first-time customers. This happens through various strategies, such as advertising, promotions, and content marketing. It involves identifying potential customers, nurturing them, and ultimately convincing them to make a purchase.
What are the 3 stages of customer acquisition?
1. Attracting leads through advertising, content marketing, and SEO.
2. Nurturing leads by building relationships and providing valuable information.
3. Converting leads into paying customers by implementing effective sales strategies.
What’s the difference between customer acquisition and customer retention?
Customer acquisition is the process of attracting and converting new customers in order to grow the customer base and increase revenue. Customer retention, by contrast, focuses on building long-term loyalty among existing customers through strategies that maximize customer lifetime value, such as personalized communication and loyalty programs.