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Everything You Need To Know About CPA And CAC In Ecommerce Marketing

By August 19, 2021August 22nd, 2021Ecommerce marketing

To run your business successfully, you need to generate new leads and at the same time maintain the current audience. Therefore, companies invest a lot in their marketing campaign in the hope of attracting new customers to their business. But, the effectiveness of the marketing campaign is not 100%.

Of all the impressions that marketing campaigns have made, only a handful of audiences actually convert. This is where the concept of customer acquisition cost (CAC) and cost per acquisition (CPA) is invented.

If you operate an e-commerce business, these two metrics play an important role in determining your business’s income. To find out how businesses are using these two metrics for decision making, check out this.

What are the customer acquisition costs?

The customer acquisition cost is the total cost invested by the company to acquire a new customer. It typically includes the following:

  • Cost of advertising.
  • Salary of traders.
  • Cost of the seller.

Calculating your CAC really helps you get a number that defines your marketing investment and ensures that you are making the right business decision. If you are wondering why calculating CAC is important, then think about it, the cost of acquiring a customer is more than what you can get from the customer; your business is going to close its doors soon.

Customer acquisition strategies for sustainable growth

As traditional CAC strategies such as aggressive ads and discounts become more expensive, you need to find different ways to reduce the cost of CAC and reorganize the financial flow of the business.

1. Customer recommendations

You might not be aware that there is no better customer acquisition tool than your current customer. However, with the digital platform, most people have an online presence and take online suggestions more seriously than other forms of suggestion.

Therefore, if you are successful in convincing your customers to recommend your business to others, you will see sustainable growth in your business.

2. Brand communities

Today people want to be treated like someone special. And instead of being approached by traders to sell their products, they want to be treated as if they are part of the community. That’s why brands invest their time and energy in building communities to interact with their audiences.

Brand communities provide an excellent platform for the company to sustain its activity. The more members you have on the community page, the more members find your business credible and want to join the community.

What is the cost per acquisition?

Cost per acquisition is commonly referred to as cost per share in the market. This is a cumulative cost of the personalized chat action and converting to paying customers.

Unlike any other marketing metric, CPA is a financial metric used by marketers to measure impact on revenue. The CPA uses the following marketing materials:

  • PPC.
  • Display.
  • Affiliate.
  • Social media.
  • Content Marketing: How to Reduce CPA

How to reduce the CPA?

Most marketers plan to grow their business by maximizing traffic. But forget about a simple strategy that can instantly increase business revenue, optimizing costs.

Here are some best practices that will help you reduce CPA.

1. Landing page optimization

You need to understand that your landing page is one of the key nodes in your marketing campaign. It’s the first thing your customer sees after clicking on your ads. Therefore, optimizing your landing page will ensure that most of the customers end up converting to paying customers.

2. Payment optimization

The average rate of abandonment of purchases at the checkout is 68%. And the main reason for dropping out is the hidden costs. So if you can optimize your check-out phase by keeping everything transparent, you will be able to lower the CPA.

3. Retargeting

Retargeting is a method of targeting the same customers who have bounced off your website. Your team should closely monitor website traffic to ensure that every customer is better served. Even if the customer has bounced off your site, you should try to contact them.

To take with

So much for this article. We have tried to keep everything as concise as possible to be easy for you to understand. Yes, you may find that some information is not listed here, but it was just baggage information. If you want to know more about CAC and CPA, contact us.

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