How To Lower Your Ecom Brand's CAC

October 30, 2023

One of the number one obstacles that ecommerce brands face is their inability to profitably scale due to high customer acquisition costs (CAC). 

In 2023, margins are shrinking, shipping is going up, and ad costs are rising which means that it’s more important than ever to spend your marketing dollars as efficiently as possible to maximize your bottom line.

In this article, we aren’t going to talk about improving margins or shipping, however, we will focus on rising ad costs and what we can do to overcome them while scaling profitably!

So why are ad costs going up?

Simply put, ad bid spots are becoming more competitive. According to a report from Oberlo, Facebook ad revenue is up 13.1% this year over 2022, however there isn’t much more space for new ads. This means that advertisers are paying more for the same space which drives ad space bids up due to the simple rules of supply and demand.

Because of this, your cost per action is going to go up because you are spending more to get the same thing.

Unfortunately, there isn’t much we can do about rising ad costs!

However, we can combat those costs with better ad strategies,higher converting post-click experiences, and better retention strategies.

Let’s talk about better ads first.

Unless you’ve been living under a rock, you’ll know that broad audiences usual. Meta is smart. Like scary smart! And Meta’s machine learning knows who you’re trying to target based on what you’re selling and how people engage with your creative.

Meta has enough data to know that if you’re selling jewelry, then it needs to show your ads to people who are interested in buying jewelry.

This is where your creative, copy and offer is going to come into play.

High thumb stop ratios and CTRs (and of course, conversions) are good indicators of how effective your content and copy are. The better these metrics are, the better your ads are going to perform.

Basically, Facebook is going to show your ad to a certain number of people based on your budget. If a higher percentage of those people are stopping and clicking, the more efficient your ads are.

But what is going to make people stop and click? Here are a few angles to think about.

Problem exploitation. Show ads that exploit a problem that people have and show how your product can solve that problem. This encourages people with that problem to click!

Real customer reviews. The classic UGC ads are still alive and well! “How this product changed my life” and “Why I can’t live without” as well as more negative hook ads “don’t buy this product unless you want *amazing result*” can work incredibly well.

Social proof. “Used by 25,000+ people” is a great way to show that your product is working for other people and it’ll work for you too.

Value Props. If you have clear and unique value props such as better materials, healthier, high-performing, etc… then let your audience know!

Remember, people are scrolling so you need to hook them ASAP! Play into their emotions and use psychology to your advantage!

If you aren’t sure what angles to run, then you need to look to your customers for guidance. Look at reviews and post purchase surveys to gather insights into why people purchased.

Now that your ads are ripping, it’s time to look towards the post click experience. AKA your landing page or your product page.

Congruency between your ads and landing pages.

Where many brands go wrong is by directing visitors to a landing page that doesn't align with the ad they just saw. For example, showing them an ad for socks, and directing them to the t-shirt collection page.

Few things make people bounce faster than clicking on an ad for a specific product only to get dropped on a page where they can’t find that product!

People don’t know what your products are called and they certainly aren’t going to take the time to look for it in your store. The larger your catalog, the more important this is!

If you are using a product page instead of a landing page for your destination, make sure you are doing a good job of educating your audience as soon as possible on the page. Use a heatmap tool like Hotjar to record sessions and make sure people are actually consuming your information and learning how it will help solve their problems.

Ideally, your product page mentions that same angle that your ad calls out to create congruence.

If you are using a landing page, the goal is to match it as closely to your ad as possible.

Calling out a specific problem in your ad? Call it out in your lander and explain how your product is the bridge between their current situation and where they want to be.

Focusing on social proof? Focus on the benefits that are driving thousands of people to choose your products.

The closer your angle matches from ad to landing page, the more buy-in people will maintain throughout their buying journey.

Keep in mind that no matter how good your ads are and how good your ad destination is, you will absolutely be leaving profits on the table if you don’t have a solid retention strategy.

When someone lands on your website, it’s important to encourage them to submit their email. But their email in exchange for a 10% discount isn’t enough

Get more creative. Ask for more information to segment your audiences more effectively and give them a good offer. Discounts and free gifts work well, but you need to get more customer information.

With this zero-party data, you can tailor your emails to their specific buying behavior.

This will allow you to send more targeted emails without being “annoying”,

And quite frankly, you’ll have to send a LOT of emails to be annoying! 

The trick here is to find a balance of sales, education, and value adding emails to encourage your audience to come back.

Email traffic is a lot higher quality and a lot cheaper than paid traffic so bringing as much email traffic to your site to convert into sales is going to help lower your overall CAC. 

You already paid to bring them there! Some people just need a little more time to make their purchase so implement your email marketing system to nurture them and bring them back for the purchase.

If you made it this far, congratulations! You’re well on your way to lowering your CAC and scaling profitably.

To summarize this strategy, think of it like this:

You drive traffic from targeted ad creative to specific ad destinations that match your ad angle as closely as possible.

This traffic either buys (woohoo!), submit their email (woohoo!), or isn’t ready/won’t buy.

If they don’t buy, bring them back with an email for pennies on the dollar compared to your ad costs.

This simple strategy is exactly what the big 9-figure brands are doing which means that it works.

Don’t overthink your marketing strategy.

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