A new study reveals Customer Acquisition Cost has elevated by sixty percent in the last five years

New research by an eCommerce optimization platform, SimplicityDX has revealed that the cost of attracting new customers has significantly increased in the past few years. The increment has adversely affected the profit margin for most of the companies. Brands are on the verge of losing $29 as the cost of acquiring new customers has risen, whereas in 2013 it was only $9. So, technically there is a 222 percent increase in Customer Acquisition Cost (CAC).

Brand owners have lost millions of dollars due to such complications. For instance, the App tracking Transparency feature on the launch of iOS 14. You might have heard about this, for those who don’t know it is an important iOS update that asks for users’ approval to track their online activity upon installing any application. Although the company prolonged the update upon the appeal of app developers, right now it is available. Another complication is that by 2023 marketers won’t be allowed to track users using third-party cookies. As Google is about to get rid of those trackers on its Chrome browser and Apple has already restricted cookies on its Safari browser. So, the cookie demise will diligently impact the way advertisers manage to market brands. If you dig in, a third-party cookie is the most important way to know about the target audience, tells about how many times a user visits certain websites, or learns about purchases and preferences. Lastly, the California Consumer Privacy Act (CCPA) and General Data Protection Regulation (GDPR) also put pressure on marketers by giving more control to the consumers.

Furthermore, the study also reveals that there is a 36 percent increase in Repeat Sales. On average the repeat sales grew about $39, compared to $28 nine years before.

To get customer acquisition, businesses must collect first-party data on their websites, and ask for customers’ email IDs. In this way, they can get permission to advertise and it will scale up the brand’s profit. The director of SimplicityDX, Nicholls, says that the ideal way to gain high profitability is to catch user traffic on the brand’s website. The reason is most customers visit websites directly to make a purchase.

Moreover, another way for getting customer acquisition is to use social media for marketing purposes. Around 69 percent of shoppers like to check out on brand websites over social media. It is indeed a powerful tool to get more engagement from new customers.

In the end, the bottom line is that targeting will become difficult and the platforms will have to work hard for each acquisition. With limited data, fewer conversations are made. As a result, the cost to acquire customers elevates. The advertising prices will become ineffective due to the return on ad spend reduction.

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