My Top 5 Ways To Lower Customer Aquisition Cost

Jun 17, 2024

After working with 20+ eCommerce brands, here are my top 5 ways to lower your CAC without breaking the bank.

1. Highlight Best-Selling Products

Have you ever realized that if you have to choose between two similar products, but one has a "best seller" tag and the other doesn't, you will always choose the best seller one? Why? Because it creates trust in the user's mind. If this is a "best seller," it means people are buying it more and are happy with the product. It creates a kind of social proof that helps users make a decision. Highlighting specific products as "best sellers" will help you improve brand perception. It indicates that other people are buying this product.

2. Strategize Cart Abandonment Recovery

Do you know that the average cart abandonment rate in the eCommerce industry is 70%?

Out of 100 people who reach the cart, only 30 will proceed to initiate checkout. Does that mean those 70 are not interested in your product?

No, they were interested but unsure about the purchase, so they jumped off. If you do something to make them believe that this is the best product for their needs and they will not regret it later, you can reduce it by 10% or so. Then boom, here are EXTRA purchases without spending any extra money on paid ads.

Here are a few ways we tried to reduce cart abandonment:

(a) Display Trust Signals: Add customer ratings and reviews, safe payment badges, a money-back guarantee if possible, and celebrity endorsements to make users trust you.

(b) Add a Chatbot: People might have questions after adding a product to the cart. Adding a chatbot to help them out will make users feel heard and increase trust.

(c) Enable Guest Checkout: Many people do not want to enter their details while ordering a product. For them, guest checkout can be a game changer as it reduces the steps of ordering, which is also a good thing.

(d) Email Flows and Retargeting: While most businesses do retargeting, some don't focus on email flows, which are very important to bring back cart abandoners. Besides email, try SMS, WhatsApp, or any other possible mode.

3. Strategize checkout abandonment recovery

Focusing on cart abandonment is something many businesses do, but very few focus on checkout abandonment recovery. On average, it is 45% in the eCommerce category.

So, out of 30 who reach initiate checkout after adding a product to the cart, 45% will drop off, leaving you with 16 purchases. There are many ways to reduce the abandonment rate during checkout, such as remarketing and automation flows. However, what works best for us is CRO (Conversion Rate Optimization).

Here are a few CRO steps that can help:

(a) Breadcrumb Navigation: Implement breadcrumb navigation to enhance the checkout experience by clearly indicating the user's stage within the process. It allows users to move backwards or forward without losing their progress.

(b) Update the Contact Information Section: Rename the “Email” and “Phone” fields to explain why you need these details. Customers want to know why you need their information. Explaining this helps build trust.

(c) Value Propositions on the Checkout Page: Add at least 2 Unique Value Propositions within the side menu. This has consistently proven to be highly effective.

(d) Countdown Timer during Checkout: Countdown timers create a sense of urgency by highlighting limited-time deals. This encourages customers to complete their purchases quickly, boosting conversion rates and reducing checkout abandonment.

4. Streamline User Journey
You might think that a user will land on your homepage, go to your product page, and complete the order. But in reality, users may land on your landing page, visit multiple categories, read reviews, drop off to check opinions online, look at your social media, and so on. Each user has a different journey but goes through the same channels/mediums.

By analyzing how many users drop off at each stage and why, you can focus on reducing these drop-offs. Something is missing at each step causing customers to drop off. Adding that missing piece can help reduce CAC.

Here are a few ways to analyze the user journey:

(a) Using Google Analytics: Go to Analytics, select Reports, and then select Purchase Journey.

(b) Using Microsoft Clarity: Look at each user’s actions on the website and how they browse it.

5. Loyalty and Referral Programs

Retaining your customers is 5 times cheaper than acquiring new customers. If your product is good, your existing customers will be happy to refer you to others. Just like we recommend the best restaurants to friends and family, even without any incentive. Imagine getting a special discount on your next meal if you refer someone to that restaurant. You would refer as many people as you can! Similarly, in eCommerce, asking customers to participate in loyalty or referral programs is a no-brainer. We ran a referral program for one business where the CAC was $50. We created an offer of $30/order from referrals and shared it with past customers. For the first time since launching the business, the owner saw new users coming in with a CAC of $30.

These are a few ways that helped us reduce the CAC.

These are not quick hacks but real-life strategies that work.

Hope this helps in some way. Feel free to reach out to know more about how we did each optimization. See you in the next one.

Have you ever thought of identifying what your growth barrier is in your business?

20+ DTC brands have figured out their growth barriers from the Growth Scorecard
It's your time to identify your growth barriers for absolutely free.