Winning Customer Acquisition Strategies From Top Online Fashion Retailers
Custora recently analyzed data from some of the fastest-growing online fashion, accessories and lifestyle retailers in North America — brands such as Bonobos, Crocs, Trunk Club and The Tie Bar. Our goal was to understand what makes these high-performance online retailers different than everyone else across customer acquisition and retention, resulting in a growth rate that's almost double that of the overall average for the e-commerce industry. We also supplemented the quantitative findings with insights and advice shared by some of the retailers included in the study.
Three customer acquisition strategies top fashion retailers use:
1. They win in online search marketing (SEM). Online search (free and paid) stands out as the top channel driving the most e-commerce transactions for the retailers researched in our study. It drove almost four out of 10 orders (39.9 percent).
Retailer story: “Search marketing has always been a primary acquisition driver for us," said David Nagy, vice president of marketing at Live Out There. "We’re not the biggest player in our market, but we’re the most aggressive one in paid search. We focus on very specific long-tail keywords, and our campaigns are extremely horizontal and broad. We don’t advertise for “winter jackets,” which is too ambiguous. We focus on keywords that are further down in the purchase funnel, like “North Face ski jacket.” In general, we do very little paid marketing at the top of the funnel.
2. They optimize for the right metrics. The top retailers we researched drive long-term profitability by optimizing paid channels (e.g., SEM, Facebook advertising) for customer lifetime value (CLV) instead of cost per action or cost per click.
Retailer story: “We’re trying to transition into a type of marketing that produces customers who are going to be more loyal, rather than optimizing for the initial sale," said Tim Grace, vice president of e-commerce, The Tie Bar. "We’re doing that through two venues. The first is changing our acquisition channel mix. We expanded beyond paid search to other channels like social and audio advertising. We ran some successful experiments with Pandora, and niche podcasts around tech and sports. The second is coming up with a product and site experience that cultivates loyalty. For example, we now give incentives for users to create an account with us as opposed to checking out as guests.”
“We run a lot of contests on Facebook," added Nagy. "The prizes and other attributes of two contests might be very similar, but the quality and CLV of the leads and customers coming from these two contests can be very different, and it’s important to understand them.”
3. Experimentation and A/B testing. The top retailers test and measure continuously with new channels, creative and campaigns.
Retailer story: Using A/B testing, Crocs was able to identify “pockets” of discount-sensitive customers in its email program. It then created segments of these customers within its email marketing platform to ensure they received messages that didn't include coupons, resulting in a two-time lift in revenue per user.
“We’re beta partners of Google and Facebook, and always try the new ad products they’re launching, almost on a monthly basis," said Vishal Agarwal, executive and chief marketing officer, Choxi. "We have the ability to quickly jump onboard to test them. We work with agencies, but we also make sure we have acquisition knowledge in-house — core knowledge of the campaigns, products and how it’s all working together. That way when we try out a new ad format, we have good visibility to data in-house, and we’re able to analyze it quickly and understand what’s working. We experiment a lot, but we’re careful not to spend too much money on experiments that don’t work.”
Parting Thoughts
Stellar e-commerce performance isn't driven by one single factor. There's no silver bullet leading to immediate success. The fastest-growing fashion retailers excel in a variety of ways across customer acquisition and retention, and optimize all online marketing channels to drive revenue and profit. On the acquisition side, this means savvy retailers should be testing and improving across different tactics. Every acquisition team member should drive incremental improvements within their domain, ultimately adding up to a meaningful improvement.
Netta Kivilis is the head of marketing at Custora, a predictive analytics platform that helps online retailers acquire, retain and segment their customers.
