Customer acquisition cost (CAC) is a crucial metric for any Shopify store - the lower, the better. It’s often said that acquiring a new customer is 10 times more expensive than retaining one (credits to Ryan from The Office). CAC measures how much you're spending to bring in new customers, and when managed effectively, it can greatly enhance your store's profitability.    replace this - Customer acquisition cost is a critical metric for any Shopify store. The lower the CAC the better, they say the acquisition is 10x more expensive to acquire a customer as against retaining a customer (credits - Ryan, The Office). CAC tells you how much you're spending to acquire a new customer and - when managed properly, can significantly impact your store's profitability.

With increasing competition in ecommerce and rising advertising costs, reducing CAC has become a top priority for many Shopify store owners. In this post we explore seven effective strategies to help you lower CAC while driving sustainable growth for your Shopify store.

1. Leverage High-Performing Traffic Sources

One obvious way to reduce CAC is by focusing on the traffic sources that bring in the most profitable customers - doubling down on a channel which works is key. Different channels might give different kinds of returns for you - and you will find out more only if you test this out. Every marketing channel behaves differently, and understanding which ones drive the best ROI is key to efficient spending.

Start by reviewing your analytics and identifying your top-performing channels - whether it’s organic search, paid search, social media, or email marketing. Rather than spreading your budget thin across multiple channels, concentrate your efforts on the platforms that yields the best results - high conversion rates, low cost per leads etc

Example - if your Google Ads campaigns are yielding a lower cost per acquisition than Facebook Ads, consider shifting more of your budget there. Similarly - if organic search drives higher-quality leads, investing more in SEO (manpower, tools etc) might be a smarter long-term strategy.

Additionally, geo-targeting is another way to leverage high-performing traffic sources. By focusing your ad spend on specific regions / countries where your customer acquisition is stronger, you reduce the likelihood of wasted ad spend on areas with poor conversion potential.

2. Optimize Product Pages for Conversions

A well-optimized product page can drastically reduce the number of touchpoints needed to convert a customer, ultimately lowering your CAC. Product pages are where customers make their final purchasing decision, so they need to be clear, compelling, and trustworthy.

Here are a few ways you can enhance product pages to lower CAC:

• High-Quality Images and Videos: Use clear, high-resolution images, 360-degree product views, or videos that showcase your product’s features. This reduces hesitation and answers questions that customers might have before buying.
• Detailed Product Descriptions: Highlight the unique selling points of your product and include information that answers potential customer questions. Make sure your copy is persuasive and focuses on the benefits rather than just the features.
• Customer Reviews and Testimonials: Social proof is one of the most powerful tools for influencing purchase decisions. Positive reviews and testimonials help build trust with potential buyers, leading to faster conversions and reducing the need for repeated marketing efforts.
• Scarcity and Urgency Triggers: Show limited stock or time-sensitive deals to create urgency. When customers feel they may miss out on an offer, they’re more likely to purchase quickly, reducing the number of retargeting ads you need to run to close the sale.

Optimizing your product pages not only improves conversion rates but also enhances the overall shopping experience, making it more likely that first-time visitors will become customers with minimal marketing spend.

3. Utilize Shopify’s Built-in Tools and Apps

Shopify offers a variety of tools and apps that can help you reduce CAC by streamlining operations and enhancing the shopping experience. Shopify's ecosystem is rich with solutions for everything from cart abandonment recovery to customer loyalty programs.

Some of the key tools to explore include:

• Shopify Email: Email marketing is one of the lowest-cost channels for reaching your customers. With Shopify Email, you can send targeted campaigns to different customer segments at no additional cost. Targeting warm leads through email often results in higher conversions at a fraction of the cost of paid ads.
• Shopify Abandoned Cart Recovery: This tool automatically sends follow-up emails to customers who added items to their cart but didn't complete the purchase. It’s a proven way to recover lost sales without spending additional money on customer acquisition.
• Upsell and Cross-Sell Apps: Apps like Bold Upsell and ReConvert allow you to present relevant upsell or cross-sell offers during checkout. By increasing the average order value (AOV), you can offset CAC and improve overall profitability.

Shopify's vast app marketplace provides endless opportunities for optimization. However, it’s essential to focus on apps that will directly impact conversion rates and retention to lower CAC in the long run.

4. Focus on Customer Retention and Loyalty

Acquiring a new customer is more expensive than retaining an existing one - we covered that before. For Shopify stores, customer retention is one of the most powerful ways to lower CAC. If you can turn one-time buyers into repeat customers, your CAC decreases over time because you’re maximizing the lifetime value (LTV) of each customer.

Here are some strategies to improve customer retention:

• Loyalty Programs: Shopify apps like Smile.io or Yotpo allow you to set up loyalty programs that reward customers for repeat purchases, social shares, or referrals. By incentivizing customers to come back, you lower the overall cost of acquiring new customers.
• Personalized Email Marketing: Segmented email campaigns that cater to customer preferences and past purchases can significantly increase the likelihood of repeat purchases. Shopify integrates with powerful email marketing tools like Klaviyo to help you create personalized experiences that drive retention.
• Exceptional Customer Service: A customer-centric approach, with fast shipping, easy returns, and responsive customer service, encourages brand loyalty. Happy customers are more likely to refer others, lowering your CAC through organic word-of-mouth marketing.

Level explains their loyalty program on their loyalty programs page

The more effort you put into customer retention, the less you need to spend on constantly acquiring new customers, allowing you to reduce CAC over time.

5. Deploy Referral and Ambassador Programs

Referral marketing is an incredibly cost-effective way to acquire new customers because it leverages your existing customer base to generate leads. Customers who are referred by someone they know and trust are more likely to convert and tend to have a higher lifetime value.

To set up a successful referral program:

• Use Referral Apps: Shopify apps like ReferralCandy or Talkable make it easy to set up referral programs. These apps automate the process by providing customers with a unique referral link they can share with their friends.
• Offer Compelling Rewards: Provide incentives that motivate both the referrer and the new customer to take action. This could be discounts, free products, or store credit.
• Track and Optimize: Continuously monitor your referral program’s performance. Are certain customers generating more referrals? Tailor your outreach to these “super-referrers” to maximize the effectiveness of your program.

Referral marketing allows you to lower CAC because your current customers are doing the marketing for you, and you're only paying for successful conversions.

6. A/B Test Your Marketing Campaigns

Testing different elements of your marketing strategy can reveal insights into what drives the highest conversions at the lowest cost. A/B testing is a method in which you compare two versions of a webpage, ad, or email to determine which one performs better.

Some areas to A/B test include:

• Ad Creatives and Copy: Test different visuals, headlines, and calls-to-action (CTAs) in your ads to see which resonates more with your audience. For example, one version of an ad may highlight free shipping, while another focuses on product quality. The version with the higher click-through rate will reduce your cost per click and ultimately your CAC.
• Landing Pages: The design, layout, and messaging on your landing pages can have a significant impact on conversions. Test various elements like CTA buttons, product descriptions, or even the placement of reviews to see what leads to higher conversions.
• Email Campaigns: Test subject lines, email content, and send times to optimize open and click-through rates. Small tweaks in your email marketing strategy can lead to significant improvements in your overall marketing performance.

By continually optimizing your campaigns through A/B testing, you can identify the strategies that generate the highest return on investment and reduce your CAC over time.

7. Bundle Products and Offer Discounts

Offering product bundles or volume discounts is a smart way to increase the average order value (AOV) while minimizing your CAC. When customers purchase multiple products in one transaction, you spread the acquisition cost across several items, reducing the cost per item sold.

Here’s how to make bundling work for you:

• Create Value-Added Bundles: Offer complementary products as a bundle at a discounted price. For instance, if you sell skincare products, bundle a cleanser, moisturizer, and sunscreen together. Customers feel like they’re getting a deal, and you benefit from higher AOV.
• Offer Free Shipping Thresholds: Encourage customers to spend more by offering free shipping for orders over a certain amount. This reduces the likelihood of cart abandonment and increases the total value of each purchase.
• Limited-Time Offers: Use urgency to drive purchases by offering limited-time discounts or flash sales. Customers are more likely to purchase now if they believe they’re getting a good deal for a short period.

By increasing AOV, you dilute your acquisition costs and improve the profitability of each customer, helping you lower your overall CAC.

Summing up

Reducing customer acquisition costs is a critical goal for Shopify store owners, especially in today’s competitive eCommerce landscape. By leveraging high-performing traffic sources, optimizing your product pages, utilizing Shopify’s tools, and focusing on customer retention and referrals, you can dramatically lower your CAC while driving sustainable growth. Additionally, continuous A/B testing and strategic product bundling can further optimize your store’s performance and make your marketing spend more efficient.

By implementing these seven strategies, you can ensure that your Shopify store remains competitive while improving profitability and reducing the costs associated with acquiring new customers.