In our ongoing series about value metrics for new eCommerce stores, today we’ll take a look at 3 metrics related to acquiring new customers.

Metrics for acquiring new customers: Marketing campaign metrics

As you run different marketing campaigns for your store, you should be familiar with the below three metrics. These metrics are commonly used to determine whether your campaigns are successful, and predict the profitability of your store as it grows.

Customer acquisition cost

One of the critical numbers to consider is going to be the customer acquisition cost. Simply put, this is the cost to convert one potential visitor into a paying customer. Ideally, this cost should become lower as your store grows and your brand becomes more visible. The less it costs to acquire more customers, the higher your profit will be.

Customer acquisition cost = cost of marketing expenses / number of customers acquired

Let’s take an example. Say you run a Twitter ad campaign for $1,000 for 6 months. During this time, 10 people funnel through Twitter to become paying customers. Then, your customer acquisition cost is $100.

Here’s where this cost becomes critical. In the above example, let’s say your average order value is $150 and your average cost of goods is $50, then your gross profit will be $150 – $50 = $100. But, if this customer is funnelled through your Twitter campaign, then you’ve only broken even on that sale.

In this way, you can measure the degree of success from different marketing campaigns. More importantly, you should strive to lower your customer acquisition cost as this can greatly affect your bottom line, and determine the scalability of your business.

Click-through rate

Whether you run pay-per-click ads (such as through Google AdWords), or banner ads on your own or third-party sites, you can measure the success of these campaigns by looking at the click-through rate.

Click-through rate = number of clicks / number of impressions

The click-through rate tells you how appealing the ad/banner is, by comparing the number of people who look at the ad/banner to the number of people who click on it. A higher click-through rate means that your campaign is useful and relevant to potential customers.

Each ad or banner campaign will have its own click-through rate. The click-through rate tells you how many visitors become potential leads. The higher this number is, the more chances that a lead can be converted to a paying customer.


The last metric you can use to evaluate the success of your campaigns is revenue-per-click. This number relates how many potential leads end up becoming paying customers.

Revenue-per-click = revenue from campaign / clicks from the campaign

Over a set period, you can look at how much revenue was generated from people who clicked on a marketing campaign. This can help you determine how whether you are over-paying for a certain ad campaign and whether you make any money from it based on the cost-per-click of the campaign.

Metrics for acquiring new customers: How to improve these metrics

1. Target specific audience

As you initiate marketing campaigns online, try to target specific audiences that will have the least objections to purchasing your products. Seek out targeted regions, websites, blogs, etc. for online ads and banners where you are most likely to find sales.

Even if you sell something that a large variety of people would be interested in buying, select a smaller subset of people you can market to. This will help lower your customer acquisition cost as your brand recognition grows. In addition, more people are likely to click through and purchase your products.

2. Keyword planning

Part of targeting specific audiences is keyword planning. You can use Google’s Keyword Planner tool to see how different keywords measure in terms of popularity for specific audiences. You can use this tool before you set up ad campaigns to ensure you get the most from your ad dollars.

3. Referrals

Implement a referral program for your store to encourage existing customers to share your products with their friends. A common example of this is to reward customers whenever somebody uses a referral link they shared (think Uber and Dropbox).

People typically trust referrals more than ads they may see online.

4. Repeat customers

In addition to referrals for new customers, you can target repeat customers by providing incentive for people to continue shopping on your store over time. You can use lifecycle emails to stay in touch with customers, and provide them with promotions or exclusive content. This will help increase the lifetime customer value and have a higher click through since these customers already have a transactional experience with your store.

5. Social sharing

Make it easy for customers to share your products on social sites. Similar to referrals, people usually trust other people than a brand that’s new to them. You can piggy-back on this trust by encouraging people to share your site or products with their friends or followers.

Metrics for acquiring new customers: Plugins

There are a number of plugins that you can use to help lower your customer acquisition cost, and increase your click-through rate and revenue-per-click.

Social Login

Use the WooCommerce Social Login or the Easy Digital Downloads (EDD) Social Login extensions to enable customers to login to your store through their social information. This can take away the hassle of creating an additional profile, and make it easy for customers to share on these networks.

Automate engagement

Keep in touch with customers based on different interactions they’ve had with your store. For example, email customers who added items to their cart but never finished the purchase, send thank you emails to customers after they purchase, and more. You can automate these interactions by using the AutomateWoo plugin for WooCommerce, and MailChimp extension for EDD to automate emails.

Google Analytics

Use the free Google Analytics or the Google Analytics Pro extensions for WooCommerce to get eCommerce analytics for your store. This includes average order value, conversion rate, sales by product, and more.

Want to get this information for Easy Digital Downloads? Check out the EDD Enhanced eCommerce plugin.

This can help you get a better idea about revenue streams and funnels. You can use this information to more accurately calculate the three metrics regarding new customers.

Metrics for acquiring new customers: Summary

The cost of customer acquisition can make or break a new business. This is the metric that determines whether your store can become more profitable as you scale, and can help drive your marketing strategy as you grow. Closely related to the customer acquisition cost are the click-through rate and revenue per click. These two metrics determine how well your marketing campaigns do for converting visitors into paying customers.

There are a number of ways to improve these metrics. The main one is to target specific audiences for your products. For example, if you are selling online college preparation courses, then your target audience may be high school students or parents of such students. If you put up ads on blogs for new parents, chances are that your click-through rate and revenue-per-click are going to be low, and the cost of acquiring a customer will be high. Instead, if you are advertising through a high school ads portal or through an email campaign to parents with high school children, your campaign will be a lot more successful.

How do you improve your customer acquisition cost? Are there ad campaign tips that worked really well for you? Please tell us in the comments.

Posted by Jai Sangha

Jai is a regular contributor to Sell with WP, and helps merchants improve their WordPress eCommerce businesses with plugin reviews, marketing or customer service tips, and tutorials.

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