Vol. 127 - NO. 39

Blog Startup CPG

SINCE 2019

Lowering
CAC

Dallas Crum is the Managing Director of Inspiir Media – A premier direct-to-consumer e- commerce consulting firm. Since 2016 they have been helping CPG brands supercharge their DTC e-commerce revenue using a proven 6-system framework.
The e-commerce rush of 2020 & 2021 has driven advertising prices up considerably. Thus leading to a dramatic increase in customer acquisition costs (CAC).

I could go into detail on why this is happening and the stats around CPMs but l want to cut fluff and dive right into the hard-hitting actions you can take right now to cut your CAC in half.

We’ve spent millions of dollars in digital ad spend, generated millions more in revenue, and tested almost everything under the sun to drive down CAC for our clients.

Here is are the three biggest levers you can pull to decrease your customer acquisition cost.

1. Theme

This is our internal nomenclature for “angle” or “big idea”.
David Ogilvy is known as the father of modern advertising. This is what he says about the big idea in an ad campaign

“It takes a big idea to attract the attention of consumers and get them to buy your product. Unless your advertising contains a big idea, it will pass like a ship in the night. I doubt if more than one campaign in a hundred contains a big idea.”

Once you nail the Theme that resonates with an audience, the algorithm can really go to work and find more people looking for what you’re offering.

Basically, the big idea will drive more interest and more sales. Keep it simple. Here’s a real-life example:

“Breakfast Replacement” was a theme we came across after a brainstorming session with one of our clients. Now, this isn’t the entire purpose of the product but it is a definite value prop. We wrote headlines like “Your New Favorite Breakfast” and developed ad creative around this one big idea. We watched CTR (click-through rate) and ultimately ROAS (return on ad spend) skyrocket.

2. Offer

An offer is simply how we package or bundle something incredible to get someone in the door. This doesn’t have to be a discount. It actually shouldn’t be if possible. Maybe a special bundle, or a gift with purchase.

Ex. from the same brand above. “Trial Pack” this new offer lowered the barrier to purchase and mitigated the consumer’s risk. Instead of spending $40+ on a variety pack, first-time buyers opted to purchase a Trial Pack that was $16. This new offer alone cut down CAC by over 40%. It was crazy.

Analyze your COGS and product offering to find something extremely relevant and compelling for prospects to pull the trigger and become first-time customers.

Be sure to measure the post-purchase behavior on new offers. You want to make sure that the offer is bringing customers back and consumers aren’t just taking advantage of a “good deal”.

3. Creative

This is not as simple but basically creative is more important than ever before. UGC (user-generated content) has absolutely been at the top of our list. When we analyze creative we have some quantitative metrics that we use but we also look at ads qualitatively and ask simple questions.

Is it communicating the problem we are solving and how it make the consumer’s life better? Do we need to provide an anchor point so the prospect know’s how to compare our product to the market? Do I have enough social proof? Authority? A strong/clear offer/next step?
We have actually distilled the top-performing ad creative to templates – 9 of them. There is 1 clear winner that continues to beat out all of the others, especially Top-of-Funnel. We call it the “Storyline” template.

Below is a screenshot of the template and here is a link to the Google Doc.

This template has allowed our clients to increase ad account performance 500% overnight. Give it a try, you won’t be disappointed!

Grow Your E-commerce Store Faster & More Efficiently

If you are looking to lower your customer acquisition costs and scale your e-commerce store we have created a 29-Point E-commerce Analysis that will help you identify your biggest opportunities and fastest path to growth. Use this link to schedule your analysis now.

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