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5 ways D2C brands can leverage technology to reduce customer acquisition costs

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A decade ago, brands and retailers had big walls between them and bigger boundaries. But thanks to the digital transformation, it does not exist anymore. Rather, retailers are in competition with their own brands, as brands have shifted to newer business models such as D2C.

Direct-to-consumer, where customers become the centre of attention. Even if you search for something as basic as sugar or as niche as premium teas, you will find a plethora of choices and brands to choose from. It is safe to say that consumers are overwhelmed with choices right now in the market and online. On the brand’s side, customer acquisition and retention is becoming more complex everyday.

A study conducted by aib.com reflects how brands are focusing more on customer acquisition now and their spendings. 

Mary Meeker, the famed internet trends analyst, also touched on this issue in her 2019 Internet Trends report, deeming the rise in customer acquisition costs “unsustainable.” Depending on the industry, acquiring a new customer can cost anywhere from 5 to 25 times more than retaining current ones – and the cost will continue to rise as marketers attempt to stay afloat in a noisy digital marketplace.  

Reducing CAC with technology

The market has changed now, and D2C brands will continue to be forced to stay hyper-focused on customer acquisition, in order to sustain and grow. It is crucial that your CAC stays low in order to maximise ROI. But with advancements in technology, and changing consumer habits, companies need to drop the spray and pray approach and implement data-backed strategies effectively.

Here are some ways that D2C brands can decrease CAC by utilising modern day technologies:

  • Lead generation

The conversion rates depend highly on the response rate. With traction coming in from so many channels, it becomes hard for agents to connect with every lead individually, that’s where automation comes in. Chatbots and live messages can help engage with customers without any delays and give you more leeway.

Moreover, live chat solutions also enable multiple conversations at the same time. It is the perfect solution to offer personalisation without compromising on the speed or conversion rates.

  • Product Recommendations

AI has been an effective tool for various industries, and D2C can also use it for their own advantage. Technologies such as AI can help decipher data to anticipate customer behaviour and then make recommendations about the products and services, depending on their needs. 

For instance, if a shopper buys some CPG product such as biscuits, they are more likely to try another flavor from the same range. If a person is buying shampoo, they might buy conditioner as well. Product recommendation and assortment can be really beneficial for digital oriented brands.

  • Big Data and CX

Similarly, data can also help build personalisation and enhance customer experience. Data analytics has various touch points such as customer preference, predicted spending etc. Big data can help reduce the guesswork and implement strategies that are more likely to bring in sales and conversions.

Big data analytics takes care of both customer-end and back-end processes such as supply chain management, inventory management, logistics and warehousing etc. It’s time brands start collecting data and make full use of it. Data has a lot of potential when it comes to retail.

  • Sales automation

Automation has been used by marketing departments all over the world, but there are barely any brands who automate their sales department. While complete automation of sales is still far fetched, some sales positions can be automated.

Improvements in AI have made it possible to reduce labor costs. If a brand implements this strategy, they can use the savings to enhance their business model and make it more robust and efficient. Getting more out of your existing staff can also help in reducing CAC and delivering better customer experiences.

  • Capitalise on social media

Brands often create social media campaigns but what is the ROI? Though it is an excellent way to capture and acquire new customers, lead generation and lead conversion are two very different things. Do not depend on your social media to make the conversion.

D2C brands are tech savvy but so are the customers. Now, instead of making a purchase blindly, consumers want to know more about the products, focus on the features, and then buy. There are customer engagement tools present now that brands should consider investing in. These tools use your social media channels and messaging apps to communicate with the potential buyers and help them find what they are looking for. Social media is a powerful tool not only for brand presence but also for increasing sales and engagement.