In early April 2024, an established e-commerce business specializing in commercial equipment faced a daunting challenge. Despite being a well-recognized player in its industry, the online store had begun to experience a plateau in sales growth and customer engagement. With a product range that included everything from industrial refrigerators to retail point-of-sale systems, the store had built a solid reputation for quality and service. However, by the start of Q2 2024, the company faced several critical issues that threatened to undermine its market position.
First, the cost of customer acquisition had risen sharply. CPC (Cost Per Click) on Google Ads had increased by 18% compared to the previous quarter, driving the company's customer acquisition cost (CAC) up to $98.56, a figure unsustainable given the store’s average order value (AOV) of $450. Despite ongoing advertising efforts, the return on ad spend (ROAS) had dipped to 3.2, down from a healthier 4.1 in Q4 2023. This decline was especially concerning, as the e-commerce platform relied heavily on paid search for traffic and sales.
Second, customer retention rates had slipped, with the CRM system reporting a 12% year-over-year decline in repeat purchases. The customer lifetime value (CLV) had stagnated at around $1,230, which was lower than the industry benchmark of $1,500 for similar businesses. This indicated that while the store was acquiring customers, it was failing to keep them engaged over the long term.
Third, the online store faced increased competition from both direct rivals and new market entrants, who were aggressively investing in digital marketing and offering competitive pricing. Market share erosion was a real threat, and internal analytics showed a 7% decrease in brand search queries, suggesting that customer interest was waning.
Finally, the company’s existing marketing strategy lacked integration. Google Ads campaigns operated in a silo, with little coordination with the CRM system. As a result, the store was missing out on opportunities to leverage customer data for more effective ad targeting and personalized marketing efforts. The store’s management recognized the urgent need to revamp its marketing approach to ensure continued growth and profitability.