What is Shopify Customer Acquisition Cost & How to Reduce It

Running an online store on Shopify can be very rewarding, but it also comes with its own set of challenges. One of the biggest challenges is keeping the cost of acquiring new customers as low as possible. This is often referred to as Shopify customer acquisition cost (CAC). If you can keep your CAC low, you can increase your profits and grow your business more effectively.

This blog post will explore simple and effective ways to optimize your Shopify customer acquisition cost for long-term growth.

What is Shopify Customer Acquisition Cost (CAC)?

Shopify Customer Acquisition Cost (CAC) shows how much it costs to get a new customer. It includes expenses like marketing, ads, and sales commissions. To calculate shopify customer acquisition cost, add up these costs over a period and divide by the number of new customers acquired.

For instance, spending $1,000 on marketing monthly and gaining 10 customers means a $100 CAC. Understanding Shopify customer acquisition cost helps businesses decide where to invest for efficient growth.

Why Reducing Shopify Customer Acquisition Cost is Important?

Optimizing the cost of getting new customers on Shopify is really important for your online store. Here are four simple reasons why:

Save Money

By making sure you spend your money wisely on ads and marketing, you can lower the amount you pay to get each new customer. Therefore, you will be able to retain more of your earnings and reinvest them in your business.

Boost Revenue

When you spend less on getting new customers, you make more profit from each sale. Lower costs mean higher profits, which helps your business grow faster and become more successful.

Stay competitive

By keeping your acquisition costs low, you can offer your customers better or more value, making them choose your store over others.

Better Use of Budget

If you know exactly how much it costs to get a new customer, you can plan your budget better. You can put more money into things that work well and cut down on things that don’t. This helps you get the most out of every dollar you spend.

Strategies to Reduce Shopify Customer Acquisition Cost

Use Social Media Ads

On Facebook and Instagram, you can aim your ads at certain people based on who they are and what they like. This makes it easier to find customers and costs less to get them to buy from your online store.

Email Marketing

Send emails to potential customers with special deals or product updates. This method is cheap and effective for bringing in new customers.

Improve Website SEO

Make your website more accessible on search engines like Google. Use good keywords and create useful content to get more visitors without paying for ads.

Read more about How to Rank Shopify Store on Google

Referral Programs

Ask your current customers to refer new ones by offering them rewards like discounts. This way, happy customers help bring in new ones at a lower cost.

Create Good Content

Create interesting and helpful content, such as blog posts and videos. This will naturally attract visitors and reduce the need for expensive ads.

Retargeting Ads

Show ads to people who visited your site but didn’t buy anything. These reminders can bring them back to make a purchase, reducing your customer acquisition cost ecommerce.

Read more about How to Run Retargeting Ads for Shopify

Better Landing Pages:

Keep your landing pages simple and appealing. A good landing page that turns visitors into buyers can lower your customer acquisition cost ecommerce.

What is Average Ecommerce Customer Acquisition Cost

There are wide variations in the average ecommerce customer acquisition cost. Generally, it ranges from $68 to $129, depending on the industry.

For instance, the average ecommerce customer acquisition cost is about $68, but it can be higher in niches like health and beauty, fashion, and home goods, averaging around $129. The CAC can reach up to $377 in specialized sectors such as electronics. The niche and the marketing strategies used to influence this variation.

How to Decrease Customer Acquisition Costs

Focus on customer retention

It’s cheaper to keep customers than to find new ones. Use loyalty programs to reward repeat business. Offer great customer service to make them happy. Stay in touch through emails or social media to keep them engaged. This way, your customers feel valued and will keep coming back.

A/B Testing

Test different ads, images, and messages to see what gets more customers at a lower cost. Try out variations and see which ones work best. Keep testing until you find what brings in the most sales or sign-ups while spending less money.

Also read about Shopify AB Testing

Optimize Ad Spend

Keep checking your ad budget. Put more money where ads do well and less where they don’t. Use Google Ads and Facebook Ads Manager to track spending. Adjust as needed to reach more customers and get better results.

Enhance Product Listings

Make your product pages full of good info and high-quality pictures. Clear product descriptions and happy reviews make people trust your stuff more, making them more likely to buy. This helps you spend less money to get each customer.

Implement Upselling and Cross-Selling Techniques

To make more money, suggest fancier stuff and related items to customers. Customers earn more when they buy the pricier option or add more stuff to their cart, which helps cover the cost of getting new customers. So, by offering these extras, you make more cash from each sale. Keep it accessible for customers and gently guide them to buy more.

Shopify apps like iCart Cart Drawer Cart Upsell can help you with upselling and cross-selling.

Conclusion

To grow your Shopify store and make more money, spend wisely on getting new customers. These simple strategies will help you do that and keep customers coming back. Keep them happy so they stay and buy more. Remember, it’s not just about spending less but getting great customers who love your brand. That’s how you make lots of money in the long run!

FAQs

1. How to calculate customer acquisition cost in Shopify?
To calculate Customer Acquisition Cost (CAC) in Shopify, divide total marketing and sales expenses by the number of new customers acquired in a period.

2. What is a good CAC for eCommerce?
A good CAC is ideally 3 times lower than your customer lifetime value (CLV). So, it’s good if your CLV is 15$ or less and your customer acquisition cost is 5$ or less.

3. What is a good customer acquisition cost?
A good CAC ensures profitability, ideally lower than the Customer Lifetime Value (CLV).

4. What is the average customer acquisition cost?
According to a report by IMAP India, the average customer acquisition cost was around $15-20 USD, depending on factors like marketing strategy and market competition.