In the competitive world of ecommerce, every dollar counts. If you're pouring money into attracting, engaging, and converting new customers but not seeing the returns you need, it's time for a change – high customer acquisition costs can easily drain your resources and stifle growth.
Here’s where PayPal comes in. Read on to learn how PayPal can streamline your checkout process, attract a wider audience, and lower customer acquisition costs.
Acquiring new customers in 2024 is more complex and costly than ever before. Several factors have converged to create a challenging environment for businesses, including:
The customer acquisition cost formula is:
Customer acquisition cost = total cost of customer acquisition / number of new customers acquired
Here, the total cost of customer acquisition includes all of the costs associated with how a business attracted, engaged, and converted its new customers, such as marketing, sales, and customer service. The number of new customers acquired is the number acquired during a specific time period.
Industries with recurring revenue models, such as SaaS companies or businesses with high customer lifetime value, often have lower customer acquisition costs.4 This is because the recurring revenue stream or high Customer Lifetime Value (CLTV) offsets the initial acquisition expense over time.5
There’s no one-size-fits-all answer, as a “good” customer acquisition cost depends on various factors like your business model, industry, and target audience.
However, a general benchmark is that your customer acquisition costs should be lower than your customer acquisition cost value. This ensures that the revenue generated from a customer over their lifetime exceeds the cost of acquiring them.
While there are more online shoppers to attract to your business than ever before, casting a wide net isn't enough. You need to reach the right customers – those who are genuinely interested in your products or services and likely to convert.
PayPal is designed to help businesses pinpoint and connect with these shoppers more effectively. By leveraging data from over 22 billion transactions and 435+ million active PayPal and Venmo accounts, PayPal offers deep customer insights for merchants to better understand shopper preferences and drive sales across physical, online, mobile, and third-party channels.1
A clunky, confusing checkout process is a surefire way to lose potential customers. Every extra click, form field, or unexpected fee can create friction that leads to abandoned carts and missed sales.
Streamlining the buying journey is crucial, but it can be tricky to balance security with convenience. PayPal's suite of checkout solutions aims to solve this problem, making it easier for customers to complete their purchases without extra hurdles.
For example, PayPal can help:
You spend a lot of time, energy, and effort to win new customers. Don't leave hard-won revenue on the table by losing them at the finish line.
With PayPal, you can offer your customers a range of flexible payment options, including credit/debit cards, buy now, pay later (BNPL), and digital wallets. When customers have a positive checkout experience, they are more likely to return for future purchases.
Meanwhile, PayPal's familiar interface helps create a sense of trust and convenience, making it the preferred choice for repeat transactions. Indeed, PayPal customers make purchases 60% more often than non-PayPal users, and businesses see a 20% increase in repeat buyers among those who use PayPal.3
In other words, not only do you enjoy higher customer lifetime values with PayPal, but lower churn means you spend less time and money on costly reacquisition efforts.
In the quest for customer retention, don't rely on costly trial and error. Keep the systems and partners that work well, and let PayPal optimize those that don’t. This continuous innovation ensures that your offerings remain competitive and appealing to both new and returning customers.
Let's talk about how PayPal can power your growth.
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