How to Achieve Negative CAC

Customer acquisition costs can ruin a business. Some merchants limit acquisition spend to the gross margin of the first sale. Others look to customers’ lifetime value.

Yet Taylor Holiday, CEO of the agency Common Thread Collective, profits from acquisition marketing. He calls it “negative CAC.”

Taylor first appeared on the podcast in 2020. In our recent conversation, he explained his acquisition strategy, experiences with employee ownership, and more.

The audio from our entire discussion is embedded below. The transcript is condensed and edited for clarity.

Eric Bandholz: Give us the rundown.

Taylor Holiday: I’m the CEO of Common Thread Collective, an ecommerce marketing agency that helps brands grow predictably and profitably. We’ve been at it for over a decade. Recently, we partnered with Acacia, a private equity firm, to expand our platform and pursue the next phase of growth.

We operate with an employee stock ownership plan, an ESOP. Our company took a bank loan to buy 20% of equity from existing shareholders and placed it in a trust for employees. Shares are allocated annually based on each employee’s salary as a percentage of total payroll. For example, if payroll is $1 million and you earn $100,000, you’d get 10% of each share allocation.

Employees receive shares tax-free, with no purchase cost. If they leave, the company must buy back their shares, making them relatively liquid. ESOPs can buy out partners or provide owner liquidity, but they require education, vesting schedules, and carry liabilities on the balance sheet. Well-known companies like King’s Hawaiian are fully employee-owned.

Bandholz: Would you do it again?

Holiday: Probably not. Employees didn’t fully understand the ESOP, and it didn’t change behavior as I’d hoped. Plus, it complicates an eventual sale of a business, and the operational challenges are significant.

There’s a book on “community capitalism” that explores alternatives to pure capitalism and socialism. Capitalism can overly concentrate wealth, while socialism has its flaws. Many people sense the shortcomings of both systems but haven’t found a perfect alternative. For me, the ESOP wasn’t that solution. It was a noble attempt, but I don’t believe it resolves the core issues — and maybe nothing fully can, given human nature.

Bandholz: Before this interview, you referenced negative customer acquisition costs. Can you talk about that?

Holiday: Negative CAC means our marketing generates profit instead of being a cost. Initially, our podcast, videos, and email newsletter were purely for lead generation — effective but costly to scale. We realized these were valuable media assets for which companies, especially software vendors in our space, would pay to access our audience.

By selling sponsorships to our podcast, email list, YouTube channel, and social content, we offset production costs and, in some cases, made them profitable. This shift turned marketing into a profit center, improving margins and fueling growth.

There’s currently high advertiser demand, but a limited supply of quality, ecommerce-focused media. A small group of creators dominates sponsorships because they have niche authority. However, most operate independently with fragmented sales processes and no funding for new content creation.

I see an opportunity to unite strong content creators, build a shared sales engine, and package sponsorship offerings, similar to how The Ringer network scaled before being acquired by Spotify. Whether it’s launching new shows or helping others monetize existing ones, it’s about building the pipeline, finding sponsors, and providing the resources many creators lack.

Many brands turn costly activities into content that drives sales. For example, Vktry (pronounced “victory”), a performance insole company, outfits entire sports teams, such as UCLA volleyball. Vktry films the training sessions and uses that authentic, authority-rich footage as ad content. What would typically be a sales or training expense becomes a marketing asset, fueling ads and reducing acquisition costs.

Another example is Alex Hormozi, co-founder of Acquisition.com, a business education firm, who hosts high-ticket weekend seminars. Attendees pay to learn, and he films the sessions for ongoing distribution. He’s essentially getting paid to produce content that generates more revenue, creating a self-sustaining cycle.

In contrast, most ecommerce brands spend heavily on production, then on distribution, and hope the ads meet their CAC goals. Finding ways to subsidize or monetize production upfront can turn marketing into a profit driver rather than a cost center.

Bandholz: Where can people follow you, learn from you, and use your services?

Holiday: Our website is CommonThreadCo.com. I’m on X (with open DMs) and LinkedIn.

Prime Day’s Mobile AOV Challenge

Amazon’s Prime Day 2025 event set a new benchmark outside of the popular marketplace.

Amazon was humming during the July 8-11 Prime Day sale. The company reported record revenue, and according to Adobe Analytics, Prime Day is now an ecommerce industry-wide sales initiative akin to Black Friday and Cyber Monday.

Not Just Amazon

U.S. online retailers generated at least $24.1 billion in sales during this year’s Prime Day period, up 30% from 2024, again according to Adobe, which tracked more than 1 trillion visits to merchant websites and 100 million SKUs — all outside of Amazon.

Adobe also reported that, for the first time, revenue from mobile devices surpassed desktops during a Prime Day event.

Smartphone shoppers spent at least $12.8 billion, or 53.2% of the total.

That percentage suggests that mobile is the primary driver of ecommerce sales, with broad implications for how merchants design shopping experiences, promote products, and manage operations.

Hence the most important Prime Day takeaway may not be total revenue but rather the device.

Small Orders

For merchants, mobile dominance could mean relatively higher per-order costs and thus thinner margins unless sellers take steps to increase average order value.

“Adobe Analytics data shows that consumers have embraced mobile shopping for purchases that are more frequent and lower in price, said Adobe Digital Insights analyst Vivek Pandya, in a separate July 2024 report.

“Adobe’s data also shows that basket sizes on mobile are 32% smaller than on desktop, which presents both a challenge and opportunity for brands to refine mobile experiences and close the gap to drive revenue, said Pandya.”

Mobile AOV Gap

Fortunately, merchants can deploy several tactics to boost mobile order values.

Merchandising

Retailers have long depended on up-selling, cross-selling, and product bundling to increase AOV. Implementing those tactics on mobile merchandising requires deliberate user experience and offer design.

For example, apparel shops could offer “complete the look” product bundles near the mobile checkout button or even in the cart itself.

Similarly, stores could introduce progressive discounts and implement a progress bar or text notifications — “Spend $10 more and get 15% off” — to show mobile shoppers how close they are to the next deal or discount.

Retention

More frequent, smaller purchases could create additional opportunities for follow-up engagement and lifecycle marketing.

Repeat customers have always been crucial to ecommerce profitability. On mobile, sellers could send shoppers post-sale reminders and follow-ups via SMS or the newer RCS, driving incremental revenue.

Fulfillment

Lower AOVs from mobile transactions result in a higher fulfillment cost percentage.

It’s more efficient to ship multiple items together than separately, as smaller and more frequent purchases lead to more packaging, more labor, and higher per-order carrier costs.

Reduced packaging is not necessarily viable, as lightweight or thin materials may save on shipping costs but also increase the risk of damage, returns, and customer dissatisfaction.

A better approach is strategies that encourage larger shipments, such as the merchandising tactics above, perhaps combined with the sustainability benefits of shipping items together.

AOV Challenge

Adobe’s Prime Day reports from the past three years show a trend toward mobile commerce and lower AOVs.

Facing an AOV challenge, merchants should encourage shoppers toward larger, more profitable transactions through thoughtful design, messaging, and fulfillment.

Why Your Loyalty Program Isn’t Working

Loyalty programs are more than the usual rewards of 10% off, free shipping, and birthday emails. Done well, loyalty incentives focus on psychological and behavioral science to deepen retention.

Smarter Segmentation

Seasoned marketers segment for campaigns, but what about loyalty impact? Try building segments based on motivational context, not just purchase history.

  • Redemption behavior. Who hoards rewards, and who redeems quickly? Target accordingly.
  • Dormancy within loyalty tiers. Users with no activity for 60 days may need a different prod than recent converts.
  • High browse, low buy customers. Use loyalty nudges to bridge the gap with non-monetary perks or risk-free trials.

Build loyalty throughout the shopping journey:

  • Acquisition. Display loyalty perks on product pages and modals, and on ad copy (Meta, Google) that speaks to exclusive benefits.
  • Onboarding. Pre-enroll customers or ask for their birth dates and unique interests early to tailor benefits faster.

Sephora’s Beauty Insider program offers tiered perks, birthday gifts, and exclusive experiences that encourage purchase frequency and aspiration.

Screenshot of the BeautyInsider page

Sephora’s Beauty Insider program encourages purchases and aspiration via tiered perks, birthday gifts, and exclusive experiences. Click image to enlarge.

More Than Discounts

Discounts offer short-term gratification, but they don’t build lasting loyalty. Instead, think about what motivates long-term engagement:

  • Progress effect. People are more likely to complete a task when they feel they’ve already started. Pre-load new customers with points or status and visually highlight their progress.
  • Variable rewards. Unpredictable perks (e.g., surprise freebies, mystery discounts) can spur action and boost engagement.
  • Goal-gradient hypothesis. The closer people are to a goal (e.g., a gift at 100 points), the more effort they exert to reach it. Use dynamic emails or texts to show progress bars and remaining required actions.

For your high-value customers, consider layered benefits based on lifecycle and psychology:

  • Exclusive access. Think status and belonging, such as early drops, members-only content, and personalized products.
  • Identity-based rewards. Customers want recognition. Use first-party data (e.g., style quiz responses, dietary preferences) to personalize loyalty perks that align with their values.
  • Mission-aligned incentives. Offer donation matching, carbon offset rewards, or “choose your perk” flexibility for cause-conscious customers.

Beyond Email

Experienced teams know this, but it’s worth reiterating: An email-only loyalty program is limited and often ineffective. A little integration goes a long way in making the program feel alive, not automated.

Connect loyalty data to:

  • SMS platforms for real-time nudges (“You’re 10 points from your next reward!”).
  • Ad platforms.
  • Customer service platforms so agents can surprise and delight based on tier or behavior.

In short, customers remember the shopping experience and interaction with your brand, not points alone. Design rewards to tap into progress, surprise, exclusivity, and identity. Move from boring and predictable to habit-forming and sticky.

How Lifecycle Marketing Powers Ecom SMBs

Small and midsized ecommerce businesses can benefit from lifecycle marketing and a strategic approach to engaging shoppers.

What follows is a shopper lifecycle marketing framework for an online store selling niche print-on-demand t-shirts. Each step includes the framework and implementation details.

  • Attraction
  • Purchase
  • Fulfillment
  • Retention
  • Reorder

Attraction

The “attraction” step aims to introduce the store, products, or unique value proposition to shoppers amid a crowded digital marketplace.

An ecommerce marketer might use several channels and features to achieve this end, such as:

  • Content marketing. Shoppable videos and engaging blog posts powered by search engine optimization and structured data markup for rich snippets.
  • Advertising. Programmatic ads with AI-driven targeting on Google Ads, Meta Ads, and similar.
  • Social media. Emerging platforms, influencer partnerships (Shopify Colabs), and social commerce features on X, TikTok, Instagram, and Reddit.
  • Marketplace. Presence on Amazon and Etsy. Use social commerce on Facebook Shops, Instagram Shopping, and products on X.

Here are the t-shirt shop’s implementation steps:

  • The shop used Semrush to identify 4,200 target keyword phrases. These keywords are transformed into articles using an automation built with Zapier, ChatGPT, and Midjourney. A marketer identifies key points, AI drafts the blog article, and a human edits it.
  • The store changed content management systems to improve technical SEO.
  • Ads on Meta, Google, X, and various email newsletters.
  • The store used Shopify Collabs to connect with influencers.
  • The business is launching on X and Pinterest. Using another Zapier automation, the shop repurposes a single article into 15 social media posts and schedules them weeks in advance.

The site includes email capture on all its blog pages, so subscriptions are the top performance indicator, but site traffic and ad engagement are also measured.

Screenshot of the ad

An example of one of the ads the t-shirt shop uses to attract shoppers. Click image to enlarge.

Purchase

The “purchase” step aims to convert shoppers into customers through a seamless and secure purchasing experience.

In this step, the business collects a customer’s email address, physical address, and, if possible, permission to send text messages.

Ecommerce marketers typically excel at this step via the following tactics.

  • An optimized online store. User-friendly product pages, streamlined checkout, and mobile optimization.
  • Marketplace optimization. Using Amazon or similar to close the deal.
  • Email. Cart abandonment reminders, limited-time offers, and similar to get every order.
  • SMS. Offer text message order confirmation, delivery tracking, and special offers.

At this step, the t-shirt shop relies heavily on Shopify, its ecommerce platform. The shop can offer a variety of payment and delivery options and email and SMS for all transactional messages. It uses an “opt-out” approach to email marketing.

Fulfillment

It sounds simple, but it can be difficult. An ecommerce marketer must focus on fulfilling orders and the overall purchase experience. This typically involves communication.

  • Set up order confirmations and shipping updates via email or SMS.
  • Offer customer support via AI-powered chatbots, email, and telephone.
  • Use social media to address customer service inquiries.

The t-shirt shop faced challenges at this stage because it uses print-on-demand services to fulfill orders. The company took a few steps to help.

  • Set delivery expectations on every product page and the post-purchase email sequence.
  • Send incoming messages immediately to the customer support person.
  • Implemented an AI chatbot in 2025.
Screenshot of the fulfillment disclosure

The t-shirt shop lets customers know it might take 10 days to fulfill the order. Click image to enlarge.

Retention

The “retention” phase in this shopper lifecycle marketing framework engages customers post-purchase to encourage reorders and referrals. Tactics include:

  • Email and SMS to offer loyalty program updates and exclusive offers.
  • Email newsletter to keep shoppers interested in the store’s content.
  • Referral programs to incent shoppers to share products or content with friends.
  • Review requests, encouraging testimonials and ratings.
  • Social media to develop community.

This store is launching a program where customers earn points for purchases, reviews, and social shares. Shoppers can use the points to make additional purchases. The shop also has a weekly email newsletter.

Reorder

When she returns for a repeat purchase, the goal should be to recognize the shopper and make the order even better. But it takes work to get that subsequent purchase.

With this in mind, ecommerce marketers might try:

  • Retargeting ads aimed at previous customers.
  • Personalized product-focused email marketing.
  • Targeted product placement in an email newsletter.
  • SMS deals and discounts.
  • Bonus loyal points for each order.

Here, the t-shirt shop uses its newsletter, ad retargeting, and email promotions to help garner a second sale. When a shopper completes an additional purchase, the shop sends an email sequence to recognize the loyalty.

Lifecycle Advantage

An ecommerce lifecycle marketing framework provides a roadmap for shopper engagement, which should drive both initial and repeat sales.

Wallet Passes Are a Mobile Marketing Channel

The technology powering mobile airline boarding passes also enables push notifications for retail marketers.

Mobile wallet passes are digital representations of tickets, boarding passes, and cards for auto insurance, loyalty programs, coupons, and memberships.

Stored within mobile wallet applications such as Apple Wallet, Google Pay, or Samsung Pay, these passes allow consumers to access and use them directly from their smartphones, streamlining transactions, improving security, and avoiding physical alternatives.

Marketing Opportunity

Wallet passes also work for brick-and-mortar and ecommerce shops, with three key features: persistent storage, updates, and push notifications.

Consider an airline boarding pass.

  • A traveler checks in remotely for a flight and adds the boarding pass to her wallet. The pass will remain in the wallet until she deletes it manually. Passes stay for years and, often, move from an old phone to a new one.
  • If the flight’s departure gate or time changes, the digital boarding pass updates with the most recent information.
  • Finally, the boarding pass can send notifications on a smartphone’s lock screen, informing the traveler about the new gate or departure time.
Three expired boarding passes on a mobile wallet

Expired boarding passes from the author’s digital wallet.

Imagine similar steps applied to a retailer.

  • A shopper adds a store loyalty card to his wallet to earn discounts.
  • During a week-long promotion leading up to Black Friday or Cyber Monday, the store offers daily updates with special offers and discounts. Each day, the digital loyalty card (wallet pass) shows the sale item and offer.
  • The retailer can also send push notifications directly to the lock screen on the shopper’s smartphone, announcing each day’s deal.

The store could include external links in either the loyalty card or the notification (depending on the mobile operating system), sending the shopper directly to a sales landing page to make a purchase.

In some cases, it could be a single-click checkout, where tapping the message link leads directly to the order confirmation page. Few other channels offer this level of conversion potential.

Notably, the mobile wallet pass reaches a shopper directly on her phone. It’s a potent channel during the holiday shopping season amid saturated email and advertising campaigns.

Screenshot from Apple of a hypothetical digital-wallet coupon and loyalty card.

Digital coupon and loyalty cards can link directly to the checkout. These hypothetical examples are from the Apple Wallet documentation.

A Good Fit?

A do-it-yourself approach to wallet pass marketing is entirely possible. All major mobile operating systems have well-documented software development kits (SDKs) or application programming interfaces (APIs).

Yet one hardly needs to make the effort. Prominent mobile pass providers include Vibes, PassKit, and Airship. The Shopify app store has more than 70 options for wallet passes. Some providers offer 1,000 persistent loyalty card passes for less than $100 per month.

Still, shoppers need a reason to add a pass. The motivation might be a loyalty card with its promise of points and prizes or a recurring monthly coupon. Both likely appeal to shoppers more than downloading an app.

Clearly, however, wallet passes don’t make sense for every retailer. They likely fit merchants with:

  • Physical and online stores,
  • A wide range of products,
  • An existing loyalty program,
  • Frequent sales or promotions,
  • Diminishing returns from other promotional channels.

Nonetheless, mobile wallet passes are a potential marketing channel for sellers online and off. The technology’s ability to persist on shoppers’ smartphones, provide real-time updates, and send push notifications directly to locked screens makes the passes especially valuable during high-competition periods such as the holidays.

Holiday Gift Guides Drive Long-Term Revenue

The holiday season is a prime time to acquire customers, but it can also drive them away. Impulse buying inevitably spikes during the gift-giving period. Such purchases might boost short-term revenue but often lead to higher returns and a damaged brand reputation.

Up to 60% of consumers regret impulse purchases, according to my research. Psychologists call this “post-purchase dissonance,” that sinking feeling when shoppers know they’ve made a poor decision. Others call it “buyer’s remorse.” Regardless, customers who regret first-time purchases will likely never buy again, eliminating a cornerstone of ecommerce profitability.

Landing Pages

The design of most landing and product-detail pages assumes bottom-of-funnel traffic, ready to convert. The pages are typically focused and clutter-free to entice quick purchases. Promotions such as “limited stock” and “limited time” are common for creating urgency.

While they can drive immediate sales, those tactics encourage impulse purchases, which come with higher return rates and frustrated customers.

Yet many merchants don’t realize their holiday advertising could drive both top- and bottom-of-funnel traffic. New shoppers unfamiliar with a brand may not be ready to buy and feel pressured into impulsive decisions.

The key is matching the landing experience with the ad’s context. Traffic from paid search, for example, usually requires a different experience than paid social.

Gift Guides Win

Brands sometimes direct paid social traffic to their social media profile page on, say, Facebook or Instagram. This strategy can undermine the ads’ effectiveness, as the aim of social profiles is to drive followers, not sales.

Another frequent error is sending paid traffic to the advertiser’s own home page. While it may prominently feature holiday deals, a home page is typically too broad and unfocused to drive sales.

To illustrate, consider the results of my A/B/C test for a fashion brand during last year’s Black Friday to Cyber Monday weekend. The test compared traffic from paid social to a home page, a product detail page, and a holiday gift guide microsite.

  • Traffic to the home page generated $1.52 in revenue per ad click.
  • Traffic to a product detail page generated $4.08 per click — 168% more than the home page.
  • The holiday gift guide outperformed both, generating $6.12 in sales per click — 303% higher than the home page and 50% more than the product page.

The holiday gift guide microsite is tailored to that campaign. The home page serves multiple purposes, but the gift guide is laser-focused on helping shoppers. It features curated products with holiday incentives — easy to browse across various categories.

This approach appeals to a variety of visitors, particularly those from paid social, where the intent is more diverse. The gift guide encourages considered shopping rather than impulse buying, leading to lower bounce rates, higher engagement, and longer time on-site. Hence the revenue per click is higher.

Custom Holiday Pages

To capitalize, brands can create custom holiday landing pages or gift guide microsites. Off-the-shelf landing page builders make it easy to craft individual pages tailored to specific holiday promotions. A simpler alternative is a promotional category page, although it won’t likely be as effective as one that’s purpose-built.

The goal for all is a landing experience that encourages thoughtful, non-impulsive shopping, driving immediate holiday revenue and even more in the long term.

Is Personalized Shopping Private?

Personalization at scale seems contradictory. It’s like having a party with several million friends. Yet at its best, ecommerce personalization drives conversions anonymously.

How can merchants balance customer personalization and privacy? I asked that question to payment and security pros.

Female holding a credit card in front of a laptop.

Personalizing ecommerce shopping drives sales. Maintaining privacy is the challenge.

Balancing Act

Robin Anderson, vice president of acquiring products at Tribe Payments, an open banking facilitator, has seen ecommerce personalization evolve from simple tracking and recommendation systems to sophisticated, artificial-intelligence-driven experiences. He believes all commerce channels, from online to in-person, will become more personalized.

“Hyper-personalization is on trend in payments and the flipside, which is privacy,” he said. “It’s not only about the data you capture and leverage to drive engagement; it’s also about the mechanisms to allow consumers to call back that data later. It’s a real balancing act, and I don’t think anyone has quite cracked it yet, but certainly there has been a lot of rapid innovation.”

Compliance

Keeping up with privacy regulations, which vary by region, is critical for ecommerce merchants, stated Sandra Tobler, co-founder and chief customer officer of Futurae, an authentication platform.

“Privacy guidelines such as Europe’s GDPR and PSD2 have a profound impact on ecommerce merchants, requiring them to handle customer data with greater care and transparency,” she said. “Compliance with these regulations is crucial to avoid hefty fines and to build customer trust.”

Tobler recommended using advanced authentication to verify legitimate customers. Multifactor authentication, biometrics, and behavioral analytics can help protect customers’ accounts, build trust, and decrease churn rates. Advanced solutions use data collected during authentication to tailor security measures for each user. A key aspect of this approach, continuous authentication, assesses a user’s behavior and context throughout the shopping journey.

“If users are shopping from a familiar location and device, the system can allow them to proceed with minimal friction. However, if the system detects an unusual location or device, it might prompt for an additional authentication step to ensure security. Recognizing returning customers and allowing them to move through the shopping journey without repeated prompts contributes to a smoother experience, increasing customer satisfaction and loyalty.”

It is also important to separate nonsensitive data, such as behavior patterns, geolocation, and devices, from sensitive, such as credit card numbers and other personally identifiable information.

“Decoupling sensitive data aligns with privacy regulations by minimizing the amount of personal information processed during authentication,” she said. “The end-to-end encryption of sensitive data, such as credit card numbers and personal identification information, protects the original, even if intercepted.”

Sensitive Data

Jason Howard, CEO at Caf, an identity authentication provider, agreed that collecting only required information for specific transactions is foundational to regulatory compliance.

“Many jurisdictions around the globe have created consumer data privacy laws, and running afoul of these regulatory statutes can be costly. That’s why we recommend incrementally collecting information from users only as needed. Such an approach creates a better customer experience, thus leading to less abandonment and quicker time to revenue.”

Howard additionally noted that decentralized identity solutions enable secure and transparent transactions without relying on intermediaries or data storage. These solutions also simplify the authentication process and eliminate the need for repeated verifications when customers access different platforms.

“With robust biometrics, merchants can be assured that users are who they claim. Biometrics help protect against stolen identities, impersonation, and account takeover attacks.”

Embedded commerce — selling products on external channels — has created new revenue channels and opportunities for attackers, Howard added. Fraudsters exploit the refund process within embedded payment systems in various ways, such as requesting refunds for products or services they never purchased or falsely claiming that the goods they received were defective.

Ecommerce companies need technology to detect that behavior. Behavioral analytics can identify suspicious patterns and fraud. AI models can uncover patterns in large datasets that may previously have gone undetected. AI can also detect manipulated images or documents.

Checkouts

Peter Karpas, CEO of Bold Commerce, a customized checkout provider, observed that personalization has thus far stopped short of the checkout experience.

“Personalization in ecommerce is less about who one specific customer is and more about the experience,” he said. “For example, a shopper that lives 20 miles from a store should be offered a checkout with options for pickup and delivery, whereas a shopper farther away should just see shipping.”

Rather than creating millions of unique customer experiences, Karpas suggested that brands tailor shopper journeys and segments. Checkout, for example, could be two or three versions, depending on the segment.

“Retailers realize personalizing checkout isn’t the same as everything else,” he said. “They’re finding it disproportionately impacts conversions, average order value, and customer lifetime value.”

Turn Shoppers into Brand Advocates

Turning shoppers into brand advocates transforms the customer lifecycle into a profit-generating flywheel.

An ecommerce customer lifecycle is a process with steps. It’s different from a flywheel, a model of continuous improvement. Combined, they create a reinforcing loop that produces customers and revenue.

Diagram of a customer lifecycle flywheel with five stages: Engage, Acquire, Nurture, Retain, Encourage Advocacy.

A customer lifecycle flywheel drives sales in a loop that improves with every rotation.

Ecommerce Customer Lifecycle

A customer lifecycle generally has five broad steps — from discovering a brand or product to becoming an advocate for the business.

Ecommerce marketers often focus on one or two of these steps. For example, some marketers spend most of their time engaging and acquiring shoppers. This is essential work but unending.

Marketers relying on advertising to engage customers will never eliminate paid acquisition or reduce its cost. Growth will be proportional to investment.

In contrast, the same marketers could develop brand advocates and soon find steps one (Engage) and two (Acquire) filled with referred shoppers.

By no means should ecommerce stores stop advertising. But they should think of customer lifecycles as flywheels.

Connecting Stages

Business flywheels have rules. First, the virtuous cycle means each flywheel step moves smoothly to the next. For example, many marketing teams are good at moving shoppers from engagement (Engage) to purchase (Acquire).

Portion of the flywheel showing the Engage and Acquire steps.

Each step in a business flywheel should flow smoothly into the next.

A prospect moves from the Engage step to Acquire when she has enough context to make a purchase. Ecommerce marketing teams are usually very good at this part of the wheel. They run ads, monitor clicks and visitors, and measure conversions.

Moving a shopper from Acquire to Nurture should be just as smooth. Perhaps this requires a post-purchase email sequence encouraging the shopper to join a newsletter. Or it may be a thank-you note from the store.

Each step should lead to the next. Encourage Advocacy becomes the final step, leading back to Engage. The store’s advocates have become marketers, exposing potential customers to the business. Thus Engage now includes both referred and purchased shoppers.

Portion of the flywheel showing the Encourage Advocacy and Acquire steps.

Encourage Advocacy, the last step in a business flywheel, restarts the cycle.

Ease

The second rule of a business flywheel is each rotation is easier. This becomes true when marketers focus on the entire cycle and encourage advocacy.

Here is a hypothetical example. What if every brand advocate produced one prospect for each rotation of the flywheel? Assuming the company ordinarily obtains 100 engaged shoppers each cycle, advocacy could lead to 47 more engaged shoppers by the fifth rotation.

With brand advocates, the top of the cycle (Engage) is growing because customers beget customers.

Effectiveness

The third rule for a business flywheel is each rotation is more effective.

This, too, is true when marketers consider the entire lifecycle.

In the example above, more prospects are entering the Engage step, and thus more into Acquire, Nurture, Retain, and Encourage Advocacy.

Flywheel

A linear conversion process implies an ending. Marketers often focus on the steps that conclude with immediate sales. But transform that process into a flywheel, and suddenly advocacy is not the end but the beginning of greater opportunity.

Develop promotional tactics for each step in the cycle. The increased flow boosts revenue and profit without more investment.

Abandoned Carts Are an Opportunity

Abandoned cart recovery can be a goldmine for ecommerce marketers, but not how one might think.

In 2024, ecommerce shopping cart abandonment rates among U.S. adults hover around 70%, according to the Baymard Institute. It’s a big opportunity.

Baymard suggests focusing on design, noting that “if we focus only on checkout usability issues which we…have documented to be solvable, the average large-sized ecommerce site can gain a 35% increase in conversion rate though better checkout design.”

For the overall U.S. and E.U. ecommerce industry, that 35% increase is about $260 billion in additional revenue.

Beyond Design

The problem is that usability and design haven’t solved abandonment thus far. Ecommerce cart abandonment rates have been essentially flat since 2018 and have risen since 2006.

Ecommerce managers have been unable to solve the shopping cart abandonment problem, or the rate does not have the impact on sales we think it might.

What if shopping cart abandonment is normal for ecommerce, and the real opportunity rests in treating folks who abandon carts like warm leads instead of lost opportunities?

That does not mean that online merchants should ignore design or conversion optimization; rather, it implies an opportunity to market to shoppers who didn’t complete the checkout process.

Cart Recovery Email

A cart abandonment email sequence is perhaps the most popular and effective way to recover the sale. Ecommerce platforms such as Shopify and BigCommerce include those emails as default features.

Familiarity, however, may be a problem. It may be too easy to turn on the feature without optimizing it. A better practice could be identifying the shopper as early as possible and creating an automated behavior-based email to convert.

The steps could be:

  • Capture the shopper’s email address as soon as possible,
  • Understand when to send the first cart recovery email message,
  • Know how many messages the series should include,
  • Optimize and personalize the message content.

Merchants should test and optimize each step for their audience and setup. For example, some marketers send the first recovery email 90 minutes after the abandonment, but others prefer 30 minutes or less.

Retargeting Ads

Another recovery tactic is to retarget cart abandoners with advertising. Retargeting ads should complement the abandonment email series. When the series begins, it should add the shopper to a retargeting campaign. This requires automation to launch a retargeting campaign and then turn it off.

The campaign should run on Google and Meta and in programmatic email via services such as LiveIntent. The goal is to remind shoppers of the abandoned items.

As always, testing and iterating is the key to remarketing success.

Text Messages

After email, the most powerful ecommerce communication tool is text messaging. Text messages are now the preferred transactional communication channel for many shoppers.

A typical online buyer prefers text-based order and shipping notifications. Marketers can use that affinity to remind shoppers via text about abandoned items. Make the message as transactional as possible and avoid repeated messages.

Better Recovery

Since 2006, ecommerce cart abandonment rates have risen from about 59% to 70%, peaking at almost 72% in 2012 with the rise of smartphones before leveling off.

Yet cart abandonment is an opportunity. Without neglecting design, merchants can improve their recovery efforts with coordinated email, retargeting ads, and text messages.

AI Tools for Ideal Customer Profiles

An “ideal customer profile” describes a company’s most valuable prospects, those who find a product or service seemingly perfect for their needs.

Ideal customer profiles help merchants:

  • Select marketing channels,
  • Create ad copy and design,
  • Narrow outreach,
  • Build email sequences,
  • Produce how-to, problem-solving videos.

AI platforms have vast databases of businesses and their audiences, helpful for defining an ideal customer. I tested three platforms for this article.

Custom GPT: ICP Generator

ICP – Ideal Customer Profile Generator,” a custom GPT (available for ChatGPT Plus subscribers), creates profiles based on a URL. I tested it on Smarty Marketing, the site I launched last year. The results were useful, although lacking specifics. My company’s ideal customers per the custom GPT are:

  • In the growth phase: Companies aiming to expand their online presence, increase website traffic, and enhance brand visibility.
  • Digital forward: Businesses that understand and value digital marketing’s impact on growth and are ready to invest in innovative SEO strategies.
  • In competitive markets: Enterprises in industries where online competition is fierce, making them more likely to benefit from unique and effective SEO and link-building strategies.
  • Content creators: Organizations that produce valuable content and can leverage infographic marketing and social media to engage and expand their audience.
  • Seeking long-term results: Businesses focused on building lasting brand awareness and not just short-term gains, aligning with Smarty Marketing’s emphasis on long-term outcomes.

I could continue prompting the custom GPT for the best keywords in organic and paid search campaigns, the best social media platforms, helpful Facebook audience targeting, and so on.

Lemlist

Lemlist builds free ideal customer profiles based on a URL. The profiles are personas with names, demographic details, goals and objectives, and their potential outreach strategies. The reports are useful for ideas and brainstorming. The most helpful sections are:

  • An ideal customer’s responsibilities and pain points,
  • The ideal customer’s most effective marketing channels (“touchpoints”),
  • Risks to ideal customers of not achieving goals.

Lemlist builds free ideal customer profiles based on a URL — with names, demographic details, goals and objectives, and potential outreach strategies. Click image to enlarge.

For example, Lemlist identified my company’s ideal customer as a marketing director (spot-on) with these pain points:

Struggling with understanding organic search strategies, underperforming marketing campaigns, and lack of unique digital content.

And the risks to my ideal customers of not solving problems are:

Continued decrease in online visibility, inability to compete with competitors’ online presence, loss of potential leads and sales.

M1-Project

M1 Project offers various AI-powered marketing tools, including generators for an ideal customer profile and a marketing strategy. Input your URL and M1 Project will:

  • Create a product description,
  • List the problems your products solve,
  • Segment your target audience.

Edit the descriptions, problems, and segments to your business. Then choose your preferred segment, and the tool will create an ideal customer profile. The downloadable document costs $99 and includes the ideal customer’s:

  • Position, income, and pain points,
  • Tools or platforms (potential partners for your business),
  • Publications,
  • Channels frequented,
  • Followed social media accounts.