This post was created in partnership with Shopify
Key takeaways
- New tools can help marketers calculate customer acquisition cost but also add complexity.
- A brand’s customer acquisition cost (CAC) calculation needs to align with its use case and goals.
- Marketers need to adjust for the fragmented customer journey and experiment with different messaging and targeting strategies to drive incremental reach.
Marketers must contend with a fragmented customer journey and evolving customer behaviors when calculating customer acquisition costs.
During an ADWEEK House Advertising HQ group chat co-hosted with Shopify, marketing leaders came together to discuss ever-evolving customer behaviors and compare notes on how they price new customers.
More confusion and complexity than ever
It’s a question as old as time: How do you know your marketing spend is getting new customers?
Jess Jacobs, VP of shop growth and marketing at Shopify, answered with the adage: “I know 50% of my marketing is wasted; I just don’t know what 50%.”
Modern marketers may have more measurement techniques to wield, but the problem is that customer behavior keeps evolving. “There’s more confusion and complexity than there ever was,” Jacobs remarked.
Samir Pradhan, VP of product management at Shopify, suggested that successful marketers also keep their eyes on existing customers who haven’t yet become repeat customers.
“The key to me is to understand how much a new customer is worth, how much someone who’s bought from you before becoming more loyal to you is worth, and then adjusting how much you bid or pay for that opportunity,” he said. “Just because they bought from you once doesn’t mean that they truly are your customer.”
Scott Kramer, CMO of Naked & Thriving, uses Shopify’s analytics to identify its CAC across various channels—including Meta, Google, and more recently ChatGPT—and then excludes past customers from future campaigns on those channels.
