How CPG Brands Can Lower Their Customer Acquisition Cost?
Few industries are as crowded as Consumer Packaged Goods, with brands competing against not just other newcomers but established brands and private-label products. When margins are tight, it is a significant challenge for brands to take up digital market share — and at a cost that makes sense. Especially when costs are volatile, and there is a clear need for cost reduction, optimizing your digital marketing strategy to make it more efficient is necessary. By learning about the root cause of high customer acquisition costs for CPG brands, you can discover real opportunities to reduce CAC without sacrificing growth.
Know Your Real Numbers: Start with Better Attribution
It’s challenging to create an effective strategy to reduce costs if you don’t know your real costs—that is not to say real costs are being ignored. Instead, real costs are often mis- or under-reported because of major cross-channel attribution challenges. When customers purchase CPG brands online, such as through Amazon, as well as at retail stores and direct-to-consumer, compiling the actual numbers can be a massive undertaking.
However, by starting with more thorough attribution, CPG brands can better understand the customers they procure, learning how much they spend and for how long the customer stays with the CPG brands. Considering the lifetime value in the context of customer acquisition is critical because it can offer more insight into the customers you’ve acquired. By only focusing on short-term gains, the impact of a long-term loyal customer is left out, which could negatively impact real CAC numbers.
Aligning Product-Market Fit with Media Strategy
Knowing your audience is crucial to wisely spending your marketing dollars! Without knowing your target market, you may be wasting ad spend on an audience that will never buy your product. By doing a little research to discover how and what your market is looking for, you can better align your product and marketing strategy to be the answer they seek.
Utilize focus groups, first-party data, surveys, and reviews to refine your positioning and learn more about your market and what they want in a product. Once armed with that information, you can develop a strategy that incorporates their needs and matches acquisition channels with the purchase intent of your customers.
Scale What Works: Focus on High-Intent Channels
Especially for large-scale CPG brands, the pressure to utilize every marketing channel at a high level is substantial. The perpetuated myth that it’s necessary to be everywhere and on all channels probably stems from a time when there weren’t so many! One action to reduce CAC is capturing email and SMS information on the first site visit.
The overall message is that instead of stretching your spend too thin by trying to be everywhere at once, focus on the channels that offer you the best bang for your buck. By prioritizing performance media like search, shopping, and affiliates, you can accomplish multiple tasks simultaneously, making your customer acquisition cost double duty by helping with brand recognition, SEO optimization, and more.
Landing Pages & Offers That Convert
Customizing your marketing to your customers is key, especially for CPG brands that need to know who you are and why it matters to them. Ensure you have landing pages that meet your target market’s needs. In order to sell to your customers, you need to THINK like your customers and consider what they want. Generic landing pages are going to absolutely kill your CAC efficiency.
High-performing CPG landing pages have some pretty clear-cut traits, like an obvious value proposition, so customers know exactly what they can expect, social proof, where customers can trust that your brand does what it says it will, and subscription or bundle options to keep them coming back and happy with the value. Additionally, you can give customers limited-time offers and product sampling, which will boost initial conversation.
Retail & DTC Synergy: Lower CAC Beyond the Click
Another avenue CPG brands like yours can take to lower their customer acquisition costs is to maximize their direct-to-consumer channels to drive in-store purchase behavior. While digital marketing is crucial, knowing physically where your product sells best can help you get ahead.
Focus on local sales campaigns to target retail purchasers over online shoppers—but don’t do so haphazardly. Collect retail customer data to pinpoint successful areas, target your campaigns there, and use that data to fuel digital re-engagement later. Remember, lowering your customer acquisition cost isn’t just about slashing your spend. It should be about making smarter decisions and spending wisely.
Build a Brand Engine: Long-Term CAC Reduction
Long-term customer acquisition costs can be lowered with brand equity and media efficiency. When people know your brand, marketing it to consumers in a way that isn’t salesy is key. This means optimizing strategies to derive organic results through review, storytelling, and other user-generated content. Consider influencer partnerships, especially on social media apps like Meta and TikTok, where the possibilities are endless, and shopping is built into the app, as methods to help lower customer acquisition costs.
Final Thoughts: Lower CAC is a System, Not a Tactic
Lowering your customer acquisition cost is possible, but your end strategy shouldn’t be just to reduce the number. The goal should be more intelligent allocation with data-driven results. It will be critical to continuously monitor performance, make changes to optimize as needed, and reevaluate strategies for a successful future. The CPG brands that win tomorrow are investing in CAC efficiency today. Need help? Get a quote to lower your CAC from Idea Marketing today!