Three Best Practices to Reduce Acquisition Costs and Increase Lifetime Value
In the current market where consumers are calling for higher regulations on data privacy while requesting deeper personalization from brands, it’s no wonder the costs of acquisition are on the rise. For many retail and DTC brands, it’s imperative to implement methodologies that reduce the cost of acquisition without sacrificing the engagement and loyalty of their customers.
Retail media networks have a significant role to play in helping DTC brands engage with their audiences while bringing down customer acquisition costs. To reduce user acquisition costs while driving lifetime value, brands also need to figure out exactly what to measure and how to understand target customers.
How Retail Media Networks Can Support your Brand
Retail media networks are a new and massively fast-growing business model. In fact, studies forecast that US Retail Media Networks will exceed $52 billion in ad sales by 2023. Target, Walmart and Home Depot are only a few big retail media network players.
When leveraged appropriately, RMNs are a cost-effective way for DTC brands to engage with target consumers and keep down customer acquisition costs. Retail media networks are a great asset because traditionally, the retail industry has had compressed margins, but RMN margins are much healthier — almost media-like margins. RMNs use their usually profitable margins to invest back into their brand’s retail sales model.
Working with RMNs helps brands collect and analyze customer data, which offers brands a window into customers’ purchase history, brand engagement, in-store activity, and much more. D2C and commerce companies can use RMNs to their advantage by scaling and streamlining their customer acquisition process and engaging with an audience that is primed to purchase products.
Knowing What to Measure: Performance Data is King
Analysis paralysis hits all marketers at one point or another. A great way to prepare for this setback is to establish exactly what your team is measuring. Performance data is a great starting point when figuring out what to measure. The single most consistent finding is that companies need three things when it comes to performance data:
- Consolidation – to streamline and package
- Simplification – make it understandable for everyone
- Suggestion – data is only as good as the recommendation tied to it
Performance data insights offer a clear analysis of what is and what isn’t working in your company’s marketing plans. Unfortunately, there is no universal punch list of metrics marketers can rely on to steer their businesses in the right direction. As the rules of modern marketing and the capabilities of new platforms continue to grow, flexibility is now the name of the game.
Today’s marketers must be prepared to pivot measurement tactics whenever necessary to support specific (and often evolving) goals and prove success. However, there are some key performance metrics categories that should be included in every marketing team’s roster to measure and report ROAS:
- Website Engagement
- Social Media Engagement
- Content Engagement
- Click-through rates
- Conversion Rates
- Pipeline Growth
Knowing exactly what to measure in a campaign is a best practice that helps reduce acquisition costs while increasing reach, ROI, and engagement because clients want to be able to review their campaign tools and assess what worked immediately. Note that some in-house analysts cobble together real-time data, but most seem to have gaps in 1) what they can get from retailers, and 2) their ability to see the whole picture and understand the data.
Understanding Your Customer Should Be at the Core
Privacy changes by Apple and Google are making it much harder for retailers, and brands especially, to understand customers. Building and storing first-party data is a major challenge across the board. Navigating these headwinds to develop an understanding of your consumer and their expectations is important for brands that want to combat costly customer acquisition.
A better view of customers helps establish loyalty and trust because it shows a brand is actively listening to its target audience. Simple ways to create this first-data strategy are through leveraging preference centers, implementing robust omnichannel engagement strategies, and utilizing a centralized data collection system to gather insights in real-time.
In the modern market, where consumers are constantly inundated with marketing messages, brands must create unique and highly personalized user experiences that reach consumers when and where they spend their time online in order to stand out. Leaning into these strategies will enable brands to develop a deep understanding of customers and provide the level of personalization that they are looking for.
With all these best practices in mind, marketers can keep customer acquisition costs down and focus on bringing value to customers through other imperatives such as improving products and keeping pace with new trends as the market evolves.
Jay Kulkarni is the founder and CEO of Theorem.
