E-commerce Customer Acquisition Funnel: 5 Questions to Give You Clarity

Samirah Tabassum

Content Manager

Ecommerce customer acquisition funnel: everything you need to know

Does acquiring new customers seem to become tougher than ever?  

That means you find yourself going down the rabbit hole to figure out where this process begins from and how not to make customer acquisition a strain on your marketing budget.

If you're looking to improve your acquisition process, learn the foundations better; we got you all covered in this article. We are going to touch upon the basics of the acquisition process. Let's dive right in.

What is e-commerce customer acquisition?  

To put in simple and more digestible words — customer acquisition in e-commerce is the process of driving new potential customers to your online store and converting them into recurring buyers.

The theory sounds pretty simple, but the actual process and the work that goes into it isn't duck soup. The e-commerce industry witnessed a major shift in 2020.

That not just brought a drastic change in customer behavior but made it extremely crucial for e-commerce business owners to understand and take a closer look at their customer's journey.

The better you understand your customer's journey, the easier it is to acquire new customers and keep them for prolonged periods.

Why customer's journey?

Because from buying a $2 Peanut butter to $2M enterprise software, every customer's journey is complex. They walk through an unpredictable path that needs your analysis.

Pelle Sundin, Content Director, and Copywriter at inLink Sweden shares his take on analyzing customer journey. He says, 'Understanding your customers and their behavior so you can target your marketing and deliver an outstanding customer experience is vital, especially in e-commerce.'

We hear you thinking...

Now, what do they mean by e-commerce customer journey?

According to Hotjar, "E-commerce customer journey is the term that describes the stages of a customer's experience with an online business, from the moment they first become aware of its products to completing a purchase."

The e-commerce journey begins when a customer discovers your brand and product and moves down to purchasing and becoming a loyal customer of your service.

A deeper understanding of how your customers are interacting at each stage can help you perfect the journey.

Depending on how well you understand their concerns and the roadblocks at each journey stage, you can make them stay or leave. So, plan the customer's journey before they plan to leave.

You have to be strategic to make it accurate. For instance, if someone's reading about 'the benefits of doing Yoga' doesn't necessarily mean they are ready to subscribe to your Yoga class or buy your guidebook.

A customer journey isn't something you assume based on your gut instinct.  With the objective to know your customers and their buying journey in mind, we recommend you start with these basic questions before exploring the journey.

➨ Who're your ideal buyers:  

Finding out your ideal buyers is the stepping stone for creating a holistic product for your customers. Even if you find this as grunt work, trust us, you'll yield some long-term benefits.

Your business is basically orbiting your customers. If you have customers, you have a business, and if there's no customer, your business will dissolve in thin air in no time.

So, having a clear picture of the group of people who are most likely to buy from you and reap benefits if you solve a particular problem can make it easier for you to win them.

"Map out the customer's journey first, who is involved in the purchasing decision and what kind of comparisons they make before choosing their provider" - Pelle Sundin.

He also added that you'll typically find the buyer personas almost create themselves when doing that research. What does that mean?

When you're doing the groundwork of knowing your customers intimately by taking a closer look into their journey, you'll get to know a lot about their buying behavior, trigger points, etc.

Caveat: by 'intimately,' we do not mean you have to — spy on them, know when they wake up when they take a shower. You can totally skip them unless you're selling shower products, alarm clocks, or finely ground coffee.

➨ What trigger your customers into buying:  

If you ask any brand to tell you what triggers your customers to buy from you? They will gear the answer towards their product or service. You see, we have this amazing feature that's easier on the user's end. We sell it at a cheaper price compared to our competitors, etc…

But does that answer the question? It speaks more about the product, not the people who buy this. They are not getting inside the customer's mind.

There's a theory called "Jobs to be Done." It's a theory to understand what intrigues and motivates people to buy.  According to this theory, people buy to get a job done.  The deeper you dig to understand a customer's job, the more effective solutions you can come up with to acquire them.

Half the job is done as soon as you find out their trigger points. And how do you do that?  That brings us to the next point, which is…

➨ To find out the pain, they want to get rid of:  

Every prospective customer you meet has different sets of trouble, experience, and viewpoint. But the only thing they have in common is — they want to get rid of pain, the constant bugging problem they want to solve. Humans are hardwired to avoid pain. Our brain always seeks pleasure over pain.

That's when your product should come in. If you don't understand your customer's pain they are still getting with other solutions, how will you cure it with your product?

Here's a catch!  Bigger problems do not always require bigger solutions.

Katelyn Bourgoin, the CEO & Lead Trainer of Customer Camp, emphasizes having 1:1 custom interviews. She says this will give you rich, detailed insights into the customer's journey and help you identify their target moment and trigger points.

Researching customers through forums, social channels, or other media gets your hand on surface-level insights sometimes. But, a direct conversation with customers can get you more refined details that can turn out to be gold for your business.

And the final question is - how do you eliminate this pain and give them the pleasure they need? This is the most important one.  

This question lets you develop a solution to position your product as the optimal solution for your customers. After giving yourself answers for clarity, you need to know the customer journey stages.

What does an e-commerce customer journey look like?

People use the term e-commerce customer journey for different meanings. But, we define and split this concept into 5 stages.  This way, you will have no hard time mapping out the customer journey.

Some stages are moved in a fleeting moment, and others take weeks or even months to get past the next.  When you understand each stage well enough, it becomes much easier to guide the customer throughout the purchase. The 5 stages of an e-commerce customer journey look something like this.

→ Awareness

→ Consideration

→ Acquisition

→ Retention

→ Advocacy

Awareness Stage:  

This stage is also known as the DISCOVERY stage. Because your potential customers recognize the burning problem and trouble, they have. They will actively search for companies that bring the best solution to this. And this is your chance to get in front of them to show how you help them.

In today's world, social media plays a big part in getting in front of your ideal buyers. In other possible cases, your ideal customer might not have any idea of what they want or need. Upon seeing something on social channels, they feel the need to buy it.

Take Aaron, for example. Aaron wants to have a heavy stubble beard. But he has been finding it hard to deal with acne, itchiness, and smelly beard.

So he heads over to Google to find a solution to it.  Aaron is now in the Awareness stage as he is aware of his biggest problem about growing beard. He is scouring for recommendations for the best product to deal with it, which can also help him groom his beard.

Consideration Stage:

Continuing the story, now Aaron stumbles upon the XYZ brand that sells beard grooming products. Apparently, they are best known for solving his problems. Let's assume XYZ is your company.

Many customers have shared their good experiences using that product. The beard grooming kit of XYZ brand piqued his desire to get his hands on it. Aaron has moved past the next stage that's known as the CONSIDERATION stage.

In this stage, the customer sees something they like and begins browsing through your website/page. You have the customer's attention, and they're considering buying your product or service. The customer might also be reading reviews, comparing prices to choose the best one.

Brand familiarity plays a big part here. Establishing a strong brand identity is the key.

Acquisition Stage:  

Aaron takes the plunge and adds the product to his cart. This is the most important part of the overall journey as he is about to press the BUY button.

In this stage, the customer makes the decision, and they're proceeding to be your paying customer.

It also depicts the PURCHASING stage. This is the moment when the customer is ready to pull out their wallet. So, you need to assure the customers that they are making the right choice so that they don't change their minds.

It would help if you initiated to welcome your customers and ensure they progress with a  smooth buying experience. If you handle them with caution, it becomes effortless to move them down the next two and most decisive stages for your business.

Retention Stage:

This is when your customers are more likely to fall off if they don't receive a satisfying service and product. And retaining a customer has become more difficult than ever.

Every business is fighting to keep its customers for a lifetime period. Analyzing customer journeys and talking after converting them into paying customers brings out all the nitty-gritty details of the overall customer experience.

Your customers won't lie if you ask them — how did they find the product, did they face any trouble during the purchase process or not.  Their feedback can help you fix the hole and eliminate what causes trouble to them.

In this stage, you need to develop a strong relationship with the customers. That way, you can create opportunities to provide them in the future better. This way, your customers will keep coming back over and over again.

Last but not least.

Advocacy Stage:

Brands that have a higher chance to become successful are laser-focused on their customers.

The easy recipe to turn your customers into brand advocates is to treat them like their stars. Assist them throughout their journey, know what they need, when they want it, and get them exactly that.

Remember: A happy, repeat customer is a brand's biggest asset because, in the future, they are primed for becoming raving fans of your company who will recommend and promote your brand through 'Word of Mouth Marketing.'

Jay Desai, the founder of Swpely and Growthkit, puts it into words really well. He says, "Word of mouth marketing is 10X better than any marketing team out there". Your customers are way better at selling than you, adds Jay.  

Let's think about this being consumers ourselves. Whenever a product or service turns out to be a great fix to our relatable problems, we don't think twice about taking it to social media and sharing our experience with people on our network.

That way, we unknowingly promote the brand by sharing how they made us feel or how big of a problem they helped us solve.

For customers to become your brand's Advocate, you need to win their trust, be at their service, fix their deepest concern; the biggest worry you need to put customers at the forefront of your service.

The feedback of a customer holds the power to make or break a brand. So, you should never waste the chance to provide delightful service.

Because people are more likely to find the words coming straight out of your customer's mouth more genuine than any marketing tagline.

Now comes the most important part.

Mapping out eCommerce customer's journey

A customer journey map is a depiction of the multiple touchpoints on your customer's buying journey. The main purpose of creating this is to ensure a seamless buying experience.

The journey map consists of the 5 customer stages we mentioned before. Your customers buy from you to get some job done and make their lives easier.

The main benefits behind creating this map are to add more value to your customers and find if they are achieving their goals at each stage or not.

That means you can optimize the customer onboarding experience, benchmark the customer experience desired by your customers against what they actually receive, understand the differences in buyer personas as they move from prospect to customer through the end-to-end funnel, and create a logical order for your customer journey.

Let's admit this. While creating a robust customer experience throughout the entire lifecycle is the top priority of every business, but it's far-fetched to analyze each touchpoint virtually.

Because having multiple touchpoints makes the process complicated hence customer journey mapping becomes a necessity at this stage.

But taking a closer look at your customer journey helps you understand how they navigate, make it frictionless, ensure their convenience, identify and pinpoint what they find frustrating and why they are dropping off.

“ The closer you are to the customer journey, the better you can make suggestions and innovations.”                  - Kat Warboys HubSpot Marketing Director for APAC, in Bandt.

What is E-commerce Customer Acquisition Funnel

The e-commerce customer acquisition funnel is visualized as molding the customer journey into a funnel.

That illustrates each stage of your customer's buying process, from gaining awareness of the brand to becoming a paying customer.

However, the funnel isn't universally the same for every type of e-commerce business. Some businesses sell low-ticket products, which indicates they have a short sales cycle because price doesn't become a barrier for the customer.

And some focus on high-ticket products, which usually take a longer period to convert a customer due to taking more time to convince the customer.  Hence a long sales cycle.

Knowing how the funnel looks can be helpful to optimize each stage of the funnel to maximize conversion. So, if you don't have clarity of each stage of the funnel, it becomes difficult to optimize for more sales.

We found that asking these five simple questions clarifies how to encourage customers to proceed through each stage of the funnel.

  1. How would your ideal customers discover you in the awareness stage?
  2. What do they do when they want to know more about your product to move to the consideration stage?
  3. How is the buying process for your customers when they reach the purchase stage?
  4. How do you follow up in the post order process if you're serious about retaining them?
  5. How do you convert first-time buyers to repeat users and advocates?

Interview customers to get answers to these fundamental questions and understand their buying behavior. It's best to take baby steps in the beginning and categorize the most critical customer profile.

Understanding customers' buying behavior isn't an easy job to do. But it's not difficult either if you harness customer interviews that give you granular details straight out of their mouth.

From checking out your website to completing their buying journey, they can give you all the details of their experience and where they want to see more improvement. Using those data to map the customer journey based on their behavioral pattern and incorporating psychological triggers can drive more revenue in the long run.

Do you find yourself chasing down new customers because current customers aren't sticking around, and you need to keep your eCommerce business afloat? Is it a sustainable strategy to run your eCommerce business?

We hear you saying no because it actually isn't. It's time you need to focus on Customer Lifetime Value (CLV).

In this competitive narrative, you can't really go far by keeping on investing in getting NEW customers rather than keeping your OLD customers. What you really need to concentrate on is maximizing your revenue from your present customers. And this is where customer lifetime value comes into play.

According to Tim Cameron Kitchen - CEO of Exposure Ninja, "In order to increase your customer lifetime value, you need to pull two levers. One, increase the number of purchases. And two, increase the purchase value of each customer. And of course, a good business will have a combination of both of these levers."

We want your business to have high customer LTV. So we noted down a series of pointers that you could follow to increase your customer lifetime value and higher profits. Before we dive into the strategies, let's start with the basics.

What is Customer Lifetime Value (CLV)?

According to Omniconvert, "customer lifetime value (CLV) shows how much revenue a business can expect from one customer compared to how long the company predicts that customer will stay."

Customer lifetime value is an important metric for eCommerce brands to measure the average accumulating total of their purchase for some time.

Lifetime value helps you determine if your business will scale the ROI from marketing. It also helps you evaluate the retention strategy depending on how low or high your LTV is.

How To Increase Customer Lifetime Value

You can increase your customer lifetime value by either increasing your Average Order Value or Average Purchase Frequency. An increase in either of these metrics will rise Customer Lifetime Value. Apart from that, let's take a look at the other ways to increase CLV.

Improve Your Customer Support

Treating your customer right is the core to increasing customer lifetime value. According to Tim Han, an international speaker and author from success insider - "treating your customers like family is the key to recurring customers."

Now we're not telling you to turn a blind eye to their red flags and keep on supporting them. But we definitely recommend you to go a bit above to give them special treatments. In fact, according to research from PWC,  86% of buyers are willing to pay more for a great customer experience. So enhancing your customer support is an absolute must.

A solid customer support strategy includes attention to the customer pre, mid and post-sale. Your customer support should cater to your customer at every stage of their buying journey. A great way to make sure your customer's queries are always answered in no time is by using an AI-powered chatbot. Having a live chat available can turn a customer question into a sale or complaint into a resolution. We recommend you check out MyAlice as their chatbot can actually automate your entire selling process from start to finish. And the best part is, MyAlice is completely free to sign up!

You need to make sure your customers are returning again and again for the delightful experience you provide.

Send out occasional gifts

Who doesn't like free stuff? Especially when it comes as a surprise from a place you shopped from. We find ourselves leaning towards shops that offer great discounts or free goodies in most cases. And that's because this is a psychological trick that all of us fall for.

Lippincott's creative consultancy provided a scientific and psychological-based study called the "Happiness Halo" - proving exactly that. In the "Happiness Halo," the author stresses, "Appeal to customers' reason and they're yours for a day. Appeal to customer's emotions, and they're yours for a lifetime."

And nothing is more solid than sending gifts to appeal to your customer's emotions. It shows them that you care about them more than just a means of getting some sales.

We're not telling you to send out gifts 365 days a year to every customer for every purchase. But rather, identify your loyal set of customers and potentially loyal customers, and then send out occasional gifts to show them you care.

Nudge Your Customers into Subscriptions

One of the most popular ways (that works) of increasing the number of purchases of your customers is by bumping them into subscriptions. They're one of the new trends of e-commerce. And they can be lucrative enough that we even see big names like GoPro getting into the subscription realm they previously didn't opt for.

You can nudge them into a subscription by displaying a subscription-biased pricing option of your product.

This basically means you will show the pricing option of a one-time purchase on one side. And on another, the pricing option is based on subscription. However, you need to show your customers how the subscription pricing will be more effective and profitable.

This will incentivize them to opt for the subscription rather than going for a one-time purchase.

Another way of getting your customers into subscriptions is by showing the subscription as the default purchase method. And if customers want to go for a one-time purchase, they need to click on that purchase method.

You can do to level up the subscription game by giving them an option to allow your customers to customize the time frame and the amount of product for the subscription. This way, they will not have too much stock of the product based on their lifestyle. And they are less likely to cancel the subscription altogether.

Integrate Add-ons and Upsells

Another great way to increase the average order value of your customers is by adding add-ons and upsells. Big names like GoDaddy GoPro have been using this pricing strategy for years now, which has helped them generate more sales.

Everything that you throw at your customers before and after purchasing the products is for one thing - increasing the order value.

And therefore, there's an increase in customer LTV. Some of your add-ons and upsells features may seem annoying to your customers. But it's a genius idea for your business.

Since you are competing in a very competitive and price-sensitive space, If you want to maximize your customer acquisition, you need to maximize the value of every customer you get through the door.

By doing so, you can save the money that you would have otherwise spent on getting new customers. So you can now invest it in other business activities. Like - marketing. Which will help you build market share without increasing the price of their core product.

— Introduce Premium Versions

Introducing a line of premium versions of the same product can incentivize your customers to opt for better options. But, you need to make sure you can present it in a manner that demonstrates why the premium versions are better than the regular ones.

That way, customers who always want the best of everything are more likely to opt for the premium purchase. The pricing of the premium product will also be higher than the regular, which may be a problem for some of your customers. In such a case, you can introduce split pay for that.

Now split pay is absolutely everywhere and another massive trend of e-commerce over the last few years. One of the biggest players in the split pay market -Klarna, claims to increase the average order value by up to 58%.

Split pay will help you get more sales for your premium products and end up increasing the average order value for your customers.

Drawing Conclusion: Loyalty Brings Revenue

The right customer lifetime value model can boost your company's growth and progress in many ways. It puts more money in your business's wallet by lowering customer acquisition costs and saving money on marketing and sales activities.

Delivering a great deal of value, understanding the customers being in their shoes, prioritizing customer service are what they need to come back to you again and again.

Learn More:

  1. How Customer Service Can Help Sustain Your E-Commerce Business
  2. How To Get Repeat E-commerce Customers: Encourage Them To Return For More

More from the Merchant's Guide