JEBCommerce recently analyzed data from some of the fastest-growing digital retailers online covering sectors from health and beauty, travel, sports/outdoors and fashion retailers.
Our goal was to understand what makes these high performing digital retailers different than everyone else when it comes to customer acquisition costs and acquiring new customers.
We also supplemented the quantitative findings with insights and advice shared by our very own affiliate program expert Jamie Birch, to provide three proven customer acquisition strategies digital retailers use:
Advanced Commission Structures
Our first CAC strategy comes from a leading beauty and skincare company. They are a multi-channel retailer that generates $250,000,000 annually.
Using a comprehensive audit of the affiliate program, they found that the highest return on spend came from focused promotions and placements with a select group of affiliates.
In order to leverage these findings, the health and beauty leader reduced the publicly available base rate commission from 10% to 5%.
By focusing on an advanced commission structure strategy they were able to:
- strengthen partnerships with high producers
- lower the customer acquisition cost
- continue to grow the revenue driven through this channel
Producing a 46% increase in ROI through the channel and a 31% overall cost reduction in the first year.
One of the most important metrics is Customer Acquisition costs, learn what that means for marketing managers in this article about calculating CAC.
Our second strategy features a men’s clothing and shoe retailer with catalog, brick and mortar retail locations.
After a full network review, they relaunched their affiliate program on ShareASale, utilizing Conversion Lines and Leap Frog technology.
Their new set-up ensured affiliates entering the path to purchase AFTER the customer placed their items in the shopping cart (thus not performing any activity to intentionally generate the purchase) did NOT earn a commission.
Sales continued to grow and the men’s fashion company saved an incredible $95,000 by not paying commissions that fell outside of their new commissioning rules.
Re-investing the saved budget into focused paid placements with affiliates lead to a 64% increase in YoY revenue.
Promotional Structures and Planning
Third strategy worked wonders for a well-known retailer with stores in 45 states.
By developing a margin-conscious, profitable promotion strategy they were able to generate $44,000,000 in revenue at a lower customer acquisition cost than any other digital channel.
An initial analysis of the client’s current campaigns showed two key areas for improvement:
- Performance was not up to par, last-minute placements were driving up costs with little ROI to justify the spend.
- Lack of planning ahead, communicating merchandise calendars and budget guidelines until the last minute was driving up their cost of acquisition.
With JEBCommerce’s help, this national retailer generated $1.5M in revenue in the first month.
The results keep pouring in, 6 years later the company has achieved 46% sales lift – without degrading its brand value – outperforming its ROI and customer acquisition targets.
The Bottom Line
There are many ways to decrease your customer acquisition costs and acquire new customers. Ensuring your affiliate program is operating as effectively as possible can help.
From improved commission structures and advanced technology to preplanning unique promotions, JEBCommerce has helped national retail brands achieve their goals with the highest ROI possible.
Dive in deeper to the strategies outlined here by reading our article on strategies to lower customer acquisition costs