10 Ways to Reduce Customer Acquisition Cost (CAC) for Brands

Table of Contents  

This article explores ways to reduce CAC for e-commerce brands irrespective of the niche and target market. After managing multi-crores in ad spend it is clear, that creatives are the biggest lever to reduce CAC inside ad accounts and not the targeting 

Let’s get started on reducing CAC

Storytelling creative
This might seem generic and everyone says about it, but not many people say the how but just what
Let’s see the how through an example

We were helping a brand sell hair creams, and after 3 months of persistent testing of multiple creative types, benefit-driven, US vs Them, UGC, Nothing worked, in hindsight it was because the messaging in ads was poor and did not resonate with the audience

During research we understood the biggest objection to be “Why choose Hair Cream over Hair oil”, this was the exact ad headline for a carousel ad and it is still after 4 months the best-performing ad.

Storytelling creatives is one of the unique approaches we take at Bharat Mavens that is differentiated compared to other players and help our clients to stand out. So, using storytelling differs for each niche, but some common principles to follow 

  • The creative should remind the audience of something they have experienced firsthand in their life
  • It should convey a future promise, in the hair cream’s case it was stronger and shinier hair
  • It might not have a beginning, middle, and end, but it does have a hero in the form of a product or a villain as a pain
  • With a storytelling ad, you persuade the user to take a look at their current pain or desire from a new angle.

You give a new yardstick to measure their success Now, this yardstick should tie back to the USP of the product that way the association creates a story

Focus on AOV
Everyone is cribbing on rising costs, it’s inevitable in the long run, so focus on improving AOV By promoting 

  • Kits
  • Bundles
  • Tiered discounts (2 @ 10% off but 3 @ 15% off)
    There is a direct correlation between customers with higher AOV and higher LTV

Diversity of creatives
Go to your ad account and count how many creatives you have got each communicating a different angle or a reason to convince the customer

If you have less than 3 reasons, there’s an issue You need to start diversifying your creatives aka Giving more reasons for the customer to buy the product except for just ingredients, price, or offering

Questions to spark some reasons 

  • Is there any WOW/magic factor that gets customers excited about the product – Smell, Approved by celebs….
  • Is this a limited edition or something exclusive about this product?
  • Do you have a unique behind-the-scenes that people would pay a premium for?
  • Do you have a trust factor you can borrow from other sources that your audience already trusts?

Build Outside ad account awareness
Every brand that has had success reducing CAC has always invested in creating broader awareness outside the socials, using other methods like influencer, PR, and Collaboration….Influencer whitelisting

You get access to the ad account of an influencer and start running ads for your brand from it. The powerful feature is being able to create a custom audience of the influencer account in the last 1 year and market to the highly engaged community of influencers

Payment to influencers can be

  • Spend based
  • Revenue sharing
  • Fixed cost


Targeting
This has produced results with a mixed response. Look at the level of the breakdown in ad sets and pick the best breakdown mixes like best age group, gender, placements, devices and more. Isolate them and then run ad sets with these specific settings Make sure to use the best-performing creative along with these new ad sets.

According to my analysis, this tactic drives results when the bad spending on gender, and age… is highly skewed but otherwise it doesn’t perform for a sustained long period

Label people’s pain
People love to be part of a community that distinguishes them from rest and signals to others they are different. So, labeling your audience with a name and calling them out in creatives, helps create a sense of belonging with consumers

This has a cascading effect where people not part of this want to enter and creates a network effect, but a big caveat is the product/category should be more aspirational and not just pain-solving Labeling curly people is good, but not the acne people

Sampler packs and Trial Size
Reduce the risk involved for the customer during the purchase, give them a better offer with smaller sampler/discovery packs which signals “for first-timers” just from the name.

Start a new approach to determine the efficacy of ads
One way to create differentiation is to call out the bad in current products or Find a new way to determine the efficacy of the product

As Colgate did with “Salt in your toothpaste?” Digitally MamaEarth did with “Onion-based hair care” If you are a challenger brand, (all founders think their brand to be challenger but 9/10 aren’t, there is nothing bad) then this is the reason people will switch to your product

Product USP led
Building on 8th promoting a core USP, UIP (I -> Ingredient), UBP (B -> Braggable) of your product then highlight that, as people are attracted to different. Moreover the GenZ segment is highly open to experimentation with new brands once the brands appeal to them as different from the rest

Cultural-diversity based creatives
If the category has a strong cultural significance, then choose this approach of blending creatives in the culture and borrowing some trust of the tradition into building trust for your brand (The Halo Effect)
Ayurveda is trusted a lot in non-urban areas, and this is borrowed by many brands as being a cultural brand that gets the eyeballs of their target segment

Offline experience in your ad
Anytime I create a creative this is the technique I use. Think in detail about what would be the offline experience of buying this product. Then show all of them digitally

If you enter a shoe shop, you want to see the design, options, color, fit, quality…. So in a video show variety is available, color options to choose from, the material, explain the fit, do the stress test

The length of the video would never matter, some of the best videos have lengths that normally would be considered long

………..

Thank you for reading