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Jul 22, 2014
Article

Ecommerce Research Chart: Acquisition cost per customer

SUMMARY: Free shipping. Product listing ads. Pay-per-click advertisements.

There are many tactics marketers can invest in to acquire customers, and they all have some form of cost.

How much should it cost to acquire a customer? There is no single correct answer. However, in this MarketingSherpa Chart of the Week, we'll take a look at your peers' overall trends to give you a rough idea of where acquisition costs are trending.
by Daniel Burstein, Director of Editorial Content

In the MarketingSherpa Ecommerce Benchmark Study survey, we asked respondents to:

Q. Please indicate the 2013 level of the following metrics and their ongoing trend.

One of the metrics we asked about was acquisition cost per customer, not only for the monetary value, but also if that coast was rising, steady or falling. You can see the resulting data below.

View Chart Online

Click here to see a printable version of this chart



Acquisition cost trends

Overall, the acquisition cost trends skewed toward rising costs:
  • Rising — 31%

  • Steady — 54%

  • Falling — 16%

Acquisition cost factors to consider

Marketers often ask about metrics like average acquisition cost, and what reasonable costs they can target, which is why we provide this information.

However, first let me provide a giant caveat — the most effective cost level for your company may have nothing to do with the overall average for ecommerce sites. Having these averages helps only if you ask this essential question: Why is our cost different?

There are many valid reasons why your costs may be different, which include:
  • How expensive your product is

  • Whether it is a highly considered purchase

  • How established your brand and ecommerce site is

  • How competitive your marketplace is

  • What your overall company strategy is (e.g., do you choose to sacrifice margin or even profit in the short term to grow customer base for the long term?)

So, for example, if your average cost is higher and you are selling diamond jewelry in your ecommerce store, that makes sense. It is an expensive, considered purchase where you really have to build trust with customers, so your company should have a higher cost than the general ecommerce average.

Average acquisition cost per customer

Here are the numbers that are represented in the chart:
  • Rising: Median $25, Mean $109

  • Steady: Median $12, Mean $82

  • Falling: Median $14, Mean $72

You'll see that the mean (average) is very different from the median (50th percentile). This indicates that there are some ecommerce companies with very high acquisition costs that are skewing the average.

Overall, there is a divide between the companies facing rising acquisition costs and companies facing steady or falling costs — which may be due to market pressures for certain products, or simply inefficient strategies at some companies.

Or, it may be due to changes in the channels they use to market their ecommerce sites, as this Benchmark Survey respondent indicated:

"Pre ecommerce, we had almost total control over our marketing. Now we [feel] the effect of changing and unknown algorithms, and conflicting interests. For example, our AdWords PPC went up since we can no longer have separate campaigns for mobile and tablets. Our cause-effect ratio is slowly and steadily shifting. Since our PPC was incredibly granular it gave us an edge we no longer have as they and other sites, in their short-term best interest, continue to level the playing field. This has resulted in a steady increase in CPA over the years."

For more data about how acquisition costs are changing by channel use, download your free copy of the MarketingSherpa Ecommerce Benchmark Study, made possible by a generous research grant from Magento, an eBay company.

Related Resources

Ecommerce Research Chart: Which department owns the mobile experience?

Ecommerce Research Chart: How marketing budgets are changing for successful companies

Ecommerce Research Chart: Does customer responsiveness correlate with success?

Ecommerce Research Chart: How can companies increase conversion rates? [Video]


See Also:

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