The pressures on retail marketers are mounting with each passing year. There is a growing need to ensure that the pipeline is full of new (and typically young) customers with money to spend. However, marketers must achieve this without alienating their current (and typically older) customers.
Striking this balance is challenging enough, but when you add in the fact that advertising costs are rising and it is becoming increasingly difficult to stand out in a crowded digital marketplace, the situation can feel impossible. Given these rising pressures, is it possible to acquire new, younger shoppers without shutting out those customers who have been shopping with you for decades?
It’s Costing More To Acquire New Customers Through Advertising
SheerID recently asked digital marketers to share their biggest hurdle when it comes to customer acquisition and nearly half pointed to the rising acquisition costs from online and social advertising networks.
Every marketing team from small startups to major corporations understands the necessity of advertising on platforms like Google and Facebook. But as more and more companies advertise on those networks, it inevitably leads to higher costs. According to an analysis of Facebook impressions, the median cost-per-click for Facebook News Feed ads rose from $0.43 during the second quarter of 2018, to $0.64 during the second quarter of 2019, for example.
And unfortunately, higher costs are not translating into higher conversions. Retail is generating, on average, a 3 percent conversion from lead to customer. This sets retail behind nine other industries.
Differentiation Is A Struggle In A Noisy Market
Given the fact that there are so many people playing in the digital sandbox, it is extremely challenging for retailers to separate themselves from the pack. In 60 seconds on the internet:
- Facebook will have 1 million people logging in
- YouTube will get 4.5 million videos viewed
- Google will see 3.8 million search queries
- Instagram will have 347,222 people scrolling it
- Giphy will serve up 4.8 million gifs
All of that activity leads to decreased engagement. According to one study, just 5% of branded content earns 90% of online engagement. So nearly 19 of every 20 pieces of digital branded content receive little to no engagement at all.
Personalization Is The Answer To Customer Acquisition
For retailers to not just survive – but thrive – they must attract new customers all the time. And typically, that means attracting younger shoppers. However, aggressively pursuing Millennials and Gen Y shoppers can potentially alienate Baby Boomer customers who have been loyal to a retailer for decades. New customers are necessary for survival, but real growth is only possible when existing customers are nurtured, as well. It costs significantly more to acquire a new customer than it does to grow an existing customer.
Fortunately, personalizing advertising both online and offline is possible thanks to data. Retailers can customize messaging based on demographics and unique customer profiles in digital marketing, social media advertising, email marketing and direct mail. When messaging is personalized, every customer feels valued and no one feels excluded. Through data modeling and testing, retailers can perfect their messaging to deliver the right messages at the right time to nurture existing customers and attract new shoppers.
Personalization can also help solve the problems of increasing advertising costs and standing out in a noisy digital marketplace. By modeling, testing and learning, retailers can find the right mix of media and hyper-target their ideal customers (and nurture existing ones) and generate real ROI on every dollar spent.
Balancing new customer acquisition against best customer retention has always been a challenge, but the right strategies can ensure marketers are able to achieve that balance. If you are looking for solutions to your customer acquisition challenges, contact us today to see how we can help you get over the hurdle.