Customer Acquisition Cost: How to Lower eCommerce CAC with UGC

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Customer Acquisition Cost: How to Lower eCommerce CAC with UGC

Feeling like you spend way too much money trying to bring in new customers?

You’re not alone – eCommerce customer acquisition cost can get pretty crazy if you aren’t going out of your way to keep that cost low. Before we get into how to cut CAC costs, let’s look at two important metrics that help you understand your brand’s relationship with customers…

Customer Acquisition Cost (CAC) Definition: Customer Acquisition Cost is the total amount that your company spends acquiring a new customer. This is a crucial metric for your brand, as it helps you understand how much goes into bringing in new customers.

By tracking this metric, you can truly learn to lower the amount you spend attracting new customers. And in this post, we’re going to be talking about one of the best strategies for doing just that:  User Generated Content (UGC).

Ready to discover exactly how your eCommerce business can cut customer acquisition cost and win more paying customers with UGC?

Let’s dive right in.

Why not check out these 10 social media advertising tools to help you gain a competitive edge in social media advertising here.

How to Cut eCommerce Customer Acquisition Cost with User Generated Content

Use UGC in Facebook and Instagram ads to boost conversion rates and win more customers

If you’re a bit skeptical about using UGC in your social media ads, consider this:

Facebook ads with UGC result in a 300% higher click-through rate, a 50% lower cost per click, and a 50% lower cost per acquisition.

In other words, you’ll get a much better return on your advertising investment if you incorporate some kind of UGC in your Facebook ads, this can be easily done through an advanced UGC platform such as Flowbox. Check out one of our case studies that proves it.

And you’ll see similar results on Instagram, where ads featuring UGC convert better than traditional, professionally styled ads.

Now, you’re probably wondering:

What types of UGC should I use on Facebook and Instagram?

Here are a few great options:

Customer videos

Not too long ago, I was scrolling down my Facebook feed, and something caught my eye.

It was a video of a woman using an exfoliating face mask – the kind that’s supposed to open up your pores and make your skin look brighter.

She didn’t appear to be filming herself with any professional equipment – she was someone just like me, and she was using a company’s product and giving an honest review of it during the process.

That video was being used as an ad for a company that sells face masks.

And let me tell you – it was super effective at convincing me to give the product a try. Probably because it gave me the opportunity to see a real person’s experience using it!

So, if you’ve got a product that can be used on camera, partner with one of your customers and have them film a video of themselves using and talking about the product.

That way, potential customers get to see your product in action and imagine the results they could achieve if they bought your product.

Customer photos

Much like customer videos, you can use customer photos to make social media ads that convert. Not only do they allow your potential customers to see what it’s like to use your products – they also make it easy and convenient for you to create a high-converting ad. No more spending tons of time and money creating custom graphics!

Here’s a great example of UGC used in a Levi’s Facebook Ad. The brand used images submitted by consumers for its advertising campaign:

customer acquisition cost

If you want to try this strategy for your eCommerce business, use Flowbox to start collecting customer photos about your brand, curating that content, and interacting with your loyal customers. Then, you can analyze the results of your User Generated Content with the analytics suite. That way, you can quickly understand how customers are interacting with your UGC and tailor your marketing efforts to your audience in a way that improves sales.

 Customer reviews

If you want to lower your eCommerce customer acquisition cost by getting potential customers to trust your brand enough to buy your products, you need to share your positive reviews in your ads.

Here’s how Life BEAM did it in one of their Facebook ads:

customer acquisition cost

With the glowing review and five-star rating, it’s easy to understand why this ad effectively persuades people to click the “Shop Now” button.

If you’re not sure what kind of UGC to use in your ads, consider testing your options to discover which one works best at converting your audience. Once you figure it out, you’ll be well-equipped to consistently create Facebook and Instagram ads that convert!

Use UGC on your website to increase conversion rates and win more customers

When someone visits your site to purchase a product, they’ll have pre-sales questions they need answered before they can confidently make a purchase.

For example, if you sell women’s dresses, these are some of the pre-sales questions your customers might ask themselves before buying a dress:

  • Is this dress high-quality, or will it end up tearing apart after a few uses?
  • I’m not built like the models in the professional images on this site. What will this dress actually look like on me?
  • Does the picture accurately represent the color of the dress?

If you can answer these kinds of questions for people who visit your site, there’s a good chance you’ll be able to convert them to paying customers without having to hire more customer service employees or software.

The best way to do that?

User Generated Content. More specifically, photos and reviews.

Back to the women’s clothing example – take a look at this dress for sale on the Modcloth website:

customer acquisition cost

You can see that it has over 2,000 reviews – and most of them are positive. On top of that, there are 83 outfit photos from actual customers.

Not only do those UGC elements answer pre-sales questions like the ones I mentioned above – they also build trust and help potential customers overcome objections that might cause them to not buy the product.

Dig a little deeper into the reviews of this dress, and you can see that there’s a lot more information there about it:

customer acquisition cost

As you can imagine, showing the customer this much UGC to support the quality of your product is pretty effective at increasing conversion rates on your eCommerce website.

I’m not just saying that – research shows that customer reviews result in a 74% increase in product conversion. And one Urban Outfitters study showed that adding a UGC gallery of customer photos led to a 15% shopping rate improvement.

Those kinds of results translate directly to lower customer acquisition cost. So make sure you’re collecting UGC and displaying that UGC prominently on your product pages and website.

Why no check out these User Generated Content examples for inspiration?

Regularly display new content on your site, without dishing out tons of cash for content creation, to attract more customers

Let’s face it – content creation can get pretty pricey.

If you’re doing it yourself, you’re spending your valuable time on something that may or may not produce amazing results for your business. And if you’re having someone else handle content creation for you, you’re probably paying them quite a bit of money to get the job done right.

Why not cut the cost of content creation by using UGC?

Obviously, collecting customer photos and displaying them on your site takes much less time and effort than creating your own content. And it has been proven to drive results like conversion rates and sales.

You’ve already seen how Modcloth uses UGC on their website to help drive sales, but let’s take a look at another brand doing it a little differently.

Links of London has an entire “Share Your Style” page on their site dedicated to showing off customer photos:

customer acquisition cost

See how they’ve included a call to action at the top of the page?

That encourages even more people to submit User Generated Content in the form of photos. Then, Links of London can use those images on their website to show off more of their products and encourage potential customers to make a purchase.

Now, I’m not saying that all of your content should be User Generated. You’ll still need professional pictures, copy, and other elements that help you build a strong brand and connect with your target audience.

Just make sure you’re including UGC too. That way, you can encourage audience engagement and keep your customer acquisition cost as low as possible.

Lower content production costs on social media

Much like website content creation costs, social media content creation costs can add up. If you’re on a tight marketing budget, you might not be able to share as much as you’d like because of the financial limitations.

The solution?

Share more UGC – especially on visual social networks like Instagram.

Even big brands like National Geographic’s Lindblad Expeditions use lots of UGC on Instagram because they know it helps them lower customer acquisition cost and drive sales.

Here’s their feed:


So, if you’re looking to cut your social media marketing costs and make it cheaper to draw in a larger customer base, include high-quality customer photos on your Instagram feed regularly. Check out how 14 brands are ruling instagram with their UGC strategies by checking out these customer photo examples. 

 Bonus: Monetize Instagram – How to Drive eCommerce Sales

Partner on Instagram to boost product awareness

Running a social media ad campaign can be expensive. On top of that, you have to understand targeting, ad aesthetics, and conversion optimization to create one that drives results.

So, what should you do if you’re looking for an easier and more cost-effective way to spread the word about your product?

Simple – partner with brand ambassadors aka micro-influencers.

In the eCommerce marketing world, an influencer is someone who advertises your products on social media in exchange for something (usually money and free products from your company). They might be a blogger, a YouTuber, or just someone who has built a strong presence on social media.

When you’re choosing an influencer to partner with, keep in mind that they need a decent following, but not necessarily a huge following.

What’s most important is that their following includes your target audience.

That way, you can feel confident knowing your products are being marketed directly to people who are going to be interested in making a purchase.

Once you’ve found the perfect influencer for your business, send them a free sample of your product and have them take a picture of themselves with it. Then, they can share that photo on their feed along with your company Instagram account details.

When that happens, you should see a lot of traffic directed to your Instagram account because more people will be interested in learning about your products.

Here’s an example of an influencer who has posted a company’s product to her Instagram feed:

customer acquisition cost

Chances are, this face mask company – Tru Self Organics – sent her the product for free and then paid her to post about the product on her Instagram account.

The Tru Self Organics Instagram account also shared a picture of this influencer to their own feed, which shows potential customers that the product is popular among online influencers.

customer acquisition cost

Keep in mind that your relationships with influencers need to be mutually beneficial if you want them to be effective. You can’t expect to just send them some free products in exchange for free promotion to their big audience.

Create an enticing offers, and be sure you pay them fairly and promptly. That way, you can build long-term business relationships that help you drive consistent sales and keep customer acquisition cost low.

And yes – it’ll cost you to create and execute a brand ambassador program. But it’s a lot more cost-effective than other advertising methods, and you can definitely do it on a tight budget.

Over to you

Lowering your eCommerce customer acquisition cost doesn’t seem so difficult after all, does it?

While collecting UGC on a regular basis may take some time up front on your part, it’ll be well worth the results you’ll see in the form of higher conversion rates, a more engaged audience, and improved sales. So have your marketing team help you implement the strategies in this post. The sooner you start, the sooner you’ll be able to lower your customer acquisition cost and become more profitable!

Now, I want to hear from you. How do you lower your eCommerce customer acquisition cost? Let’s talk about it in the comments section below!