Customer acquisition costs are rising and hurting profitability for brands, according to a new study by SimplicityDX.
Merchants are now losing $29 for every new customer, compared with $9 in 2013 — a 222% increase.
Moreover, the study points to estimates that acquisition costs have risen by 60% in the past five years. And marketers have been affected by such complications as these:
- The introduction of iOS 14.5
- The demise of third-party cookies
- Increased consumer privacy legislation such as CCPA and GDPR
Email is no longer useful in customer acquisition given the need to have permission before contacting the prospects — the standard best practice.
Repeat sales now generate $39 on average, versus $28 in 2013 — a 36% increase.
Brands must place a renewed focus on collecting first-party data on brand websites, including email addresses — doing that and gaining consent to market are linked to brand profitability, the company adds.
Social media may be a useful tool, but comes with its own issues and costs. The firm’s quarterly State of Social Commerce study shows that 69% of shoppers prefer to check out on the brand site over checking out on social.
“Social is a massive opportunity to tap into a firehose of eyeballs by injecting shoppable content into social feeds,” says Charles Nicholls, founding director and chief strategy officer for SimplicityDX.
Nicholls adds: “it’s very clear, though, that best practice is to direct engaged traffic to the brand site to buy. It’s what most shoppers want, and it enables brands to build an ongoing relationship that turns a first-time shopper into a profitable, repeat shopper.”
This article originally appeared in MediaPost.