How to increase your Customer Spending and reduce Customer Acquisition Cost though Performance Engineering
In the dynamic e-commerce landscape, businesses are constantly striving to optimise their operations, enhance the customer experience, and increase spending to achieve sustainable growth. While marketing strategies are crucial in acquiring new customers, website and web application performance remains an important and often overlooked factor impacting revenue. Understanding the delicate dance between attracting customers and optimising website functionality should be a high priority. A slow-loading or unresponsive website can lead to frustrated customers who abandon their purchases, decreasing your customer’s average spending, and ultimately increasing Customer Acquisition Cost (CAC).
The Impact of Website Performance on Customer Acquisition Cost
Website performance is directly linked to conversion rates. Studies consistently show that even a slight delay in page load times can result in a significant drop in conversions. For instance, a study by Akamai found that a 100-millisecond delay in website load time can lead to a 7% decrease in conversion rates. Additionally, years ago Amazon found that a delay of 100 milliseconds resulted in a 1% loss in sales.
Streamlining the path from product discovery to checkout is not just about convenience; it’s a conversion strategy. Moreover, search engines prioritise websites that offer a superior user experience. A well-performing website is more likely to rank higher in search engine results, increasing visibility and attracting organic traffic. This, in turn, complements paid marketing efforts and contributes to a holistic customer acquisition strategy. Thus, even a small improvement in website performance can significantly impact the number of sales generated and reduce CAC.
Challenges in Website Performance Faced by eCommerce Directors
E-commerce Directors often lack control over their website’s development, impacting critical KPIs like basket size and conversion rates.
Unlike marketing investments that focus on acquiring new customers, allocating funds to enhance website speed yields a broader, lasting impact on all customers. While the spend to acquire a new customer has limited reach, the investment in a faster website positively influences the spending behaviour of every visitor.
Recognizing the disparity between ownership and accountability in website development, E-commerce Directors can strategically improve long-term ROI by prioritizing a faster, more responsive website over transient marketing efforts. In doing so, you unlock the potential for sustained growth across all key performance indicators, fostering a more resilient and profitable e-commerce ecosystem.
Performance Engineering for Increasing Your Customer’s Spending
E-commerce businesses can adopt performance engineering as a strategic approach to increase customer spending and reduce CAC. By investing in improving website performance, businesses can achieve the following benefits:
- Increased conversion rates: A faster and more responsive website can lead to higher conversion rates, as customers are more likely to complete their purchases when the experience is seamless and enjoyable.
- Reduced bounce rates: Slow loading times can cause users to abandon their shopping carts and leave the website. By improving performance, businesses can lower bounce rates and retain more potential customers.
- Improved brand reputation: A website that performs well reflects positively on the brand’s overall reputation. This can lead to increased customer loyalty and word-of-mouth marketing.
- Longer customer lifetime value: By providing a positive customer experience, businesses can encourage repeat purchases and increase customer lifetime value.
Performance engineering, in the context of e-commerce, ensures that the digital infrastructure, website, applications, and other related components operate efficiently and effectively. It involves a systematic approach to identifying and addressing performance bottlenecks throughout the entire e-commerce ecosystem. For instance, this includes setting up alerts for potential issues to proactively address performance problems before they impact users. Another important aspect for business is the scalability of the e-commerce platform. This is where Performance Engineering plays a pivotal role, making sure your platform seamlessly accommodates increased traffic, transactions, and data without compromising performance. Your e-commerce platform is not a set-it-and-forget-it entity; it requires regular updates, security patches, and maintenance to ensure optimal performance.
What To Do
Leverage the synergy between your marketing strategies, attracting new customers, and performance engineering efforts, ensuring a seamless and enjoyable customer experience. The optimal balance will inevitably contribute to overall business growth and gaining a competitive edge in the dynamic digital marketplace.
Perfana is ready to assist your e-commerce business in adopting the best practices of Performance Engineering.