Acquiring new customers can be the most expensive cost for retailers, especially online direct-to-consumer ones.
At Digiday’s Retail Forum in New York City on Thursday, Kelly Goldston, vp of marketing at e-commerce fashion retailer Eloquii, said a retailer must think about the lifetime value of a customer, evaluating first-party data and the value of physical stores in bringing in new customers.
Goldston said all retailers should pay attention to LTV, the lifetime value that a customer can bring to a business; and CAC, the cost to acquire that customer. The ratio of those two figures should determine how much an advertiser should pay to acquire a customer.
Just because a customer buys something online does not mean they are necessarily worth retargeting right away. “Marketers must think long-term,” Goldston said.
The answers are in evaluating all data and doing so correctly, said Goldston. Eloquii separates customer data into separate channels so it can retarget people by purchasing style.
Just looking at acquisition costs by channel can be misleading, she said. If it costs $50 to acquire a customer from paid search and $60 to acquire a customer from paid social, paid search might seem more efficient — until you consider that paid social generates higher-funnel customers at a cheaper cost.
For Eloquii, one of the best ways to acquire new customers is through its physical stores. The company is opening up its sixth retail store next week. Physical locations can be costly, especially if they are in expensive cities. Eloquii gets shoppers’ emails and then retargets them through email marketing. The idea is to stay top of mind to customers that live near physical stores, reminding them that those stores are an alternative to online shopping.
“When a store goes up in a key market, we see a lift in that overall market,” said Goldston.