In the fast-paced world of e-commerce, one truth remains constant: sustainable growth depends on a steady influx of new customers. While retaining existing customers is crucial, it's the acquisition of new ones that fuels revenue expansion, ensures market penetration, and guarantees long-term sustainability. Let's dive deep into why new customer growth is vital and how you can transform your e-commerce brand into a customer acquisition powerhouse.

The Importance of New Customer Acquisition

The Reality of Customer Loyalty

It's a hard pill to swallow, but the truth is, most customers aren't as loyal as we'd like to think. According to a study by Gorgias, repeat customers only account for 20% to 40% of all purchases on average. This means that a staggering 60% to 80% of your overall customers are one-time buyers.

While repeat customers tend to have a higher Average Order Value (AOV), the math clearly shows the critical importance of continually acquiring new customers. Don't believe us? Take a look at your "First-time vs returning customer sales" in Shopify.

The numbers don't lie.Here is an example of one of our clients from 2019 - 2023 

The implications of this reality are significant. Without a steady stream of new customers, your business risks stagnation. Even if you have a loyal base, natural attrition occurs as customers' needs change or they explore other options. New customers bring fresh revenue, potential for word-of-mouth marketing, and opportunities for expanding your market share.

The Downward Spiral of Stagnation

Without a consistent influx of new customers, your e-commerce brand risks entering a downward spiral. As your customer base naturally erodes over time, revenue begins to dwindle, and it becomes increasingly difficult to maintain cash flow. This can lead to a series of negative consequences:

1. Reduced marketing budget, limiting your ability to reach new customers
2. Less capital for product development and innovation
3. Pressure to cut costs, potentially affecting product quality or customer service
4. Decreased competitiveness in the market

The solution? A robust strategy for new customer acquisition. By focusing on bringing in fresh customers, you can offset natural losses, fuel growth, and maintain the vitality of your business.

Strategies for Generating Steady New Customer Growth

Let's explore some proven strategies to keep your customer acquisition pipeline flowing:

1. Product Launches

Developing and launching new products is crucial for keeping your brand relevant and interesting. New products not only entice existing customers to return but also attract new buyer personas who might not have been interested in your previous offerings.

Product launches offer several benefits for new customer acquisition:

• They create buzz and excitement around your brand
• New products can address different customer needs, expanding your market
• They provide fresh content for marketing campaigns
• They can attract media attention and increase brand visibility

Pro Tip: Plan several product launches throughout the year, strategically timing them outside your normal peak periods to maintain steady growth. Consider creating a product launch calendar to ensure consistent innovation and marketing opportunities.

2. Expanding to New Markets

Venturing into new geographical markets can significantly boost your new customer base. While this strategy comes with inherent risks, thorough market research can help mitigate these and set you up for success in new territories.

When expanding to new markets, consider:

• Cultural differences and local preferences
• Regulatory requirements and compliance issues
• Logistics and supply chain adaptations
• Localization of your website and marketing materials
• Partnering with local influencers or businesses

Successful market expansion can lead to exponential growth in your customer base and diversify your revenue streams.

3. New Offers (Discounts, Bundles, etc.)

Creating new offers is an ongoing process that should be a top priority in your customer growth strategy. The key is offering the right product, at the right price, at the right time. With a solid understanding of your unit economics, you can structure offers that attract new customers without sacrificing too much profit margin.

Effective offer strategies include:

• Limited-time discounts to create urgency
• Product bundles that increase perceived value
• Free gift with purchase promotions
• Loyalty programs that incentivize first purchases
• Referral programs that turn existing customers into advocates

Remember, the goal is to attract new customers while maintaining profitability. Analyze the lifetime value of customers acquired through different offer types to optimize your strategy.

4. Upper Funnel Marketing

Allocating a portion of your marketing budget to upper funnel placements can be a game-changer. Platforms like YouTube and non-conversion optimized campaigns on social media can help you reach potential customers who aren't yet familiar with your brand.

Upper funnel marketing focuses on:

• Building brand awareness
• Educating potential customers about your products or industry
• Creating emotional connections with your audience
• Positioning your brand as a thought leader or innovator

Key Focus: Develop brand awareness-centric content that showcases your unique selling points (USPs) and what you want to be remembered for. This could include educational videos, behind-the-scenes content, or stories that align with your brand values.

Leveraging Google Ads for New Customer Acquisition

Google Ads offers powerful tools to transform your campaigns into new customer generating machines. Here's how:

1. New Customer Tracking Script

Implement Google Ads' new customer tracking script to gain insights into the split between new and returning customers at the campaign level. This data is invaluable for optimizing your acquisition efforts.

Benefits of using the new customer tracking script:

• Accurate measurement of new vs. returning customer ratios
• Ability to optimize campaigns specifically for new customer acquisition
• Insights into which ad groups or keywords are most effective for attracting new customers

2. Bidding for New Customers

Enable the "Only bid for new customers" setting in your campaigns. While this may result in a smaller percentage of existing customers, it often leads to an increase in new customer acquisition.

Best Practice: For search campaigns, run an A/B experiment before enabling this setting across all campaigns. This allows you to measure the impact on both new customer acquisition and overall campaign performance.

In almost all cases we are seeing a smaller % of existing customers, but compared with before we have in 8/10 instances seen an increase of new customers through the campaign where “only bid for new customers” is enabled 

For search campaigns, I recommend making an A/B experiment before enabling the setting on all campaigns 

Yes - you are right - there is a large RED info box in the screenshot that mentions something about an audience segment. 

This is intentional as this brings us to the next area - defining existing customers with customer match 

3. Customer Match

Utilize the Customer Match feature to upload your existing customer list. This helps Google find more new customers and enhances Smart Bidding performance.

Customer Match allows you to:

• Exclude existing customers from acquisition-focused campaigns
• Create lookalike audiences to find new customers similar to your best existing ones
• Tailor ad messaging based on customer status

Expert Tip: If you use Klaviyo for email marketing, integrate it with Google Ads to sync past customers in real-time. This ensures your Customer Match lists are always up-to-date, improving the accuracy of your targeting.

4. Negative Brand Keywords

While not directly related to new customer focus, implementing negative brand keywords in your non-brand/generic campaigns can significantly improve their performance in attracting new customers.

Benefits of using negative brand keywords:

• Prevents cannibalization of brand searches by generic campaigns
• Allows you to tailor messaging for new vs. existing customers
• Improves the efficiency of your ad spend on non-brand terms

I’ve written a little something about it in this blogpost – Your Guide to Negative Keywords

Frequently Asked Questions

Q1: How quickly can I expect to see results from these new customer acquisition strategies? A: Results can vary, but most businesses start seeing improvements within 3-6 months of consistent implementation. Some strategies, like targeted Google Ads campaigns, may show results more quickly, while others, such as market expansion, may take longer to yield significant results.

Q2: Is it worth investing in new customer acquisition if my retention rate is already high? A: Absolutely. Even with high retention, new customer acquisition is crucial for long-term growth and offsetting natural customer attrition. It also provides opportunities for expanding your market share and discovering new customer segments that could benefit from your products or services.

Q3: How much of my marketing budget should I allocate to new customer acquisition?
A: While it varies by industry and business model, a general rule of thumb is to allocate 60-70% of your marketing budget to acquisition efforts. However, this can vary based on factors such as your business stage, market saturation, and customer lifetime value.

Q4: Can these strategies work for both B2C and B2B e-commerce businesses? A: Yes, while the specific tactics might differ, the core principles of new customer acquisition apply to both B2C and B2B e-commerce models. B2B businesses might focus more on relationship-building and thought leadership content, while B2C might emphasize product variety and quick conversions, but both can benefit from strategic new customer acquisition efforts.

Q5: How do I measure the success of my new customer acquisition efforts? A: Key metrics include Customer Acquisition Cost (CAC), New Customer Growth Rate, and the ratio of new to returning customers in your sales data. Additionally, track metrics like Customer Lifetime Value (CLV) to ensure that your acquisition efforts are bringing in valuable, long-term customers.

Conclusion: Prioritizing New Customer Growth

For long-term relevance and success in e-commerce, making new customer growth your top priority is non-negotiable. While aspects like retention, product development, customer service, and financial management are crucial, steady new customer growth is the foundation upon which all these elements thrive.

By implementing a mix of strategies—from product launches and market expansion to targeted Google Ads campaigns — you can create a robust system for continually attracting new customers to your e-commerce business. Remember, the key is to consistently test, measure, and refine your approaches to find what works best for your unique brand and market.

Ready to supercharge your new customer acquisition? Our team of experts is here to help create a tailored plan and provide guidance on what to focus on for maximum impact.

We conducted a lot of new customer growth strategies over the years, and if you need some professional help with this, we’re happy to help you create a plan and be the adviser who tells you what to focus on - find more information HERE

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