Le blog de Nestore

Why are acquisition costs increasing?

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According to Prune Aubry and Florie Ducamp Albert, the two founders of We Are Jolies, their customer acquisition costs doubled between March 2021 and March 2022. And the brand is no exception. Like them, victims of the explosion of acquisition costs, many DNVBs saw their financial health in danger, to the point of forming a collective called We are fireflies to alert the government to their situation. A year after their open letter, the situation remains unchanged: no concrete action by the government and brands at the looking for new models.

How do you explain it? First of all, numerous DNVBs have been launched in recent years. There were around 350 before the Covid crisis, compared to no less than 600 in France in January 2022 according to the DNG group. One More and more competition and market saturation, which mechanically affect their customer acquisition costs.

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To this is added the rising raw material and transport costs, not to mention the evolution of the GDPR, which has only worsened the situation. In question? Customer data that is increasingly difficult to obtain, less visibility into their online behavior and blind progress for many brands. In this context, in search of a new lease of life, they are trying to diversify their acquisition channels. And for many, the pop-up store arrives a bit like Messi.

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The pop-up store as an alternative to the explosion of acquisition costs

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Usually, when we talk about acquisition costs, we refer to the cost of acquiring customers online. However, we also find sound, thus making it possible to compare the two.. (You know, at Nestore we like to compare, test & learn, and all that, It's our thing !)

The pop-up store as a customer acquisition channel

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A new way to acquire customers is therefore to go through physical retail, and in particular the pop-up store.

The point of sale acts like a media. It allows brands to meet their customers, but also and above all to tell their own story. True Brand window, the store makes it possible to transmit messages, and to reach specific targets. Provided of course that bet just on its commercial location and its value proposition in stores. But let's get back to our basic topic: The pop-up store as an acquisition channel.

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According to Rémy Bendayan, CEO of the digital marketing agency Datashake, “Some DNVBs are not doing well, they don't even pay our bills anymore. But the ones that do the best are the ones that have stores.”.

So embarking on physical retail to counter the increase in online customer acquisition costs is a good idea:

• Of minimized financial risks and better cost control;
• One optimized targeting in the field thanks to customer data collected online (demographics, etc.);
• Of “free” prints thanks to natural street traffic;
• One optimized conversion rate thanks to trained sales staff;
• More new customers qualified and committed.

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But be careful not to rush. Retail is also a real profession, and it can be learned. Once again, the pop-up is a solution!

Its ephemeral format allows you to approach retail with more agility to test a concept, location, target, or product and identify the approach that best fits your brand.

This is how we see the pop-up store as a more profitable and efficient acquisition channel for brands with better cost control and enriched customer experience, with high added value.

The pop-up store: better customer acquisition

The challenge of acquiring new customers is as much quantitative as it is qualitative. The grail? Acquire as many customers as possible with the lowest acquisition cost. And the ultimate grail? Acquire qualified customers who will be committed and loyal to the brand.

To do this, thanks to the experience offered in store, the pop-up store makes it possible to increase the life time value of its customers, and to make them real brand ambassadors.

The pop-up store as an acquisition channel for better lifetime value

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With an enriched customer experience and journey, the pop-up store allows brands to recruit a more attractive customer base than online : more qualified, more loyal and more committed, it is also a cozy nest for brands to grow. Yes! Acquiring a new customer costs between 5 to 25 times more expensive than the retention of an existing customer.

In short, your customers have value. So, even if you have to pay to win some, you might as well bet on the good ones.

To measure the value of a customer base, we are therefore interested in Loyalty Level, but also at average basket (generally superior in physics rather than online), or even to the frequency of purchase. Take these metrics, combine them intelligently, and you get lifetime customer value (LTV). In other words, LTV is equal to the product of how often customers buy, their average shopping carts, and their average lifespan within the brand (the period in which they continue to buy the brand).

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Analyzed with brands that have visited our stores, the LTV of customers recruited in pop-up stores is on average 22% higher than that of customers recruited online. So obviously, if we reduce the lifetime value of the customer recruited in this way, to what their real acquisition cost, the result is a decrease in brand acquisition costs.

The pop-up store for the acquisition of ambassador customers

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In addition to their simply monetary value, which is calculated with lifetime value, your customers can be real ambassadors that contribute to the influence of your brand. So is the pop up store a great way to make your customers standard-bearers. Indeed, there is nothing better to anchor your relationships with your customers than to meet them in person. You will thus be able to create a link with them, so that they become true ambassadors for your brand.

In addition, the pop-up has the advantage of being able to renew the customer experience regularly and easily that you suggest. Your store then becomes a meeting place between your brand and its target. Customers recruited in physical stores also become media to share and even sell the virtues of your brand.

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So we will continue to tell you, the pop-up store is a great alternative in the face of increased acquisition costs online customer since the cost of acquiring a physical customer is lower, and the customers you will gain in physical form will have greater value. There is only one left!

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