DRIVING DOWN CUSTOMER ACQUISITION COSTS BY 52%

THE  COMPANY

A B2C Fashion Startup

THE PROBLEM

A startup was coming up against its runway and needed to show investors it was making great strides in improving its core business metrics, especially in reducing its cost of acquiring customers (CAC). We needed to get people to buy more and buy quickly, all while reducing the costs of the expensive home try on experience the company used to get consumers to purchase a final product.

THE APPROACH

To drive costs down (but keep customers coming in), we knew we had to do a better job at improving our paid media and getting more out of our unpaid tactics.

Optimize PPC & Retargeting We knew we couldn’t turn our spend off entirely, but we had to be better with our spend. We tested different ad networks, demographic and psychographic targeting options and ad copy. In the end, we were able to shut off inefficient networks, hone in on the targets most likely to convert, and remove underperforming ads.

Implement CRM Tactics The business had a robust email list and a host of information about the style tastes of prospective customers. We leveraged the email list and past buying experience to tailor products and promotions to audiences who we knew would bite.

We also guessed that an added personal touch would help improve conversion rates overall. We tested handwritten thank you notes and calling consumers actively doing the home try on to see if troubleshooting by phone could help them convert faster.

Grow the Direct to Consumer Channel The company had an informal program called the Brand Ambassadors, a group of women who were given unique promo codes that they could share with friends and receive a small commission for each sale.

Given the pay for performance set-up, we wanted to ramp this program into high gear. We set up regular emails to keep Ambassadors in-the-know about new products or upcoming promotions and to share tips from top-performing Ambassadors to help spread best practices. We incentivized top-performing Ambassadors to sell more by giving them short-term commission boosts, and encouraged them to recruit other top-sellers with recruitment incentives.

THE RESULTS

In just a short period of time we were able to get strong results.

  • Reduced CAC With this mix of tactics and channel optimization, we reduced CAC by 52%.

  • Direct Channel Growth We successfully grew the direct to consumer channel to be 10% of the business’ revenue. Also, by leveraging our Ambassadors, we reduced the need for home try ons, reducing our overall variable costs.

  • Improved Home Try On Conversions Our offline letter-writing and phone call tactics improved home try on conversions by 10% vs our control groups who didn’t experience these tactics.

Did You Know? Customer segmentation can play a huge role in improving your repurchase rates. The more you know about your customers’ tastes and styles (not to mention gender, age or geography) the better you can tailor your marketing messaging to their needs and the more likely they are to buy from you.