E031 eCommerce Matters - UNLOCK: Improve CPA with Pricing

Posted by Philip Huthwaite on February 10, 2022
Philip Huthwaite
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We’re back! Much like the band One Direction, we went on a little hiatus! Although rather than releasing solo albums and sunning ourselves, we have been working at making our technology effortless to adopt.

The first eCommerce Matters episode of Season Two is entitled ‘UNLOCK: Improve CPA with Pricing’. We teased you towards the end of Season One, offering bits and pieces about the kind of impact pricing can have on your marketing spend, but now we focus a whole episode on the topic.

 

What is CPA?

According to our friends over at BIGCOMMERCE, “Cost Per Acquisition, or "CPA," is an eCommerce marketing metric that measures the aggregate cost to acquire one paying customer on a campaign or channel level. CPA is a vital measurement of eCommerce marketing success, generally distinguished from Cost of Acquiring Customer (CAC) by its granular application.” Whereas indicators of success may include metrics such as page visits, CPA allows you to directly measure the financial impact of marketing campaigns. Whether you’re a retailer or a marketing agency managing the digital spend, it is, therefore, a very important metric to live or die by. If you can reduce the CPA, you’re onto a winner.

 

How does your competitor price position influence CPA?

We have spoken at length on competitor pricing theory, and the need to be price competitive if you’re selling branded goods that are readily accessible from multiple retailers. Price is the leading discriminating factor in this instance for consumers choosing vendor A over vendor B. More often than not, the consumer is just going to buy the cheaper one if they’re buying a product made by an established brand. The retailer it is acquired from is less relevant if the consumer can get the quality assurance from the brand of the good being purchased. If all the prices are consistent, then the second layer of decision-making kicks in, such as delivery speed and the returns policy.

A lot of retailers and digital marketers spend countless hours, days, weeks obsessing about the cost per acquisition, but this fundamental principle of competitor pricing is often missed, or more than not, not even known about and considered. Price plays a part, because at some point the consumer is going to make a buying decision and price will be a deciding factor, and if you do not price competitively, this will impact your CPA, as they will not convert.  

This post will not go into all the things that impact CPA, but normally top of the list is good website copy. You invest in good website copy to improve SEO. If you have good SEO, you don’t need to spend as much money on Google Ads, because Google thinks that you're a better search result to return to the user. Therefore, you don't need to spend as much money on getting the user to that particular page. The same is true for Price. If you’re market relevant in your pricing, i.e. you’re priced competitively (this does not always mean being the cheapest, but more in the ball-park of the market price corridor), the Google Algorithm just like considering your website copy, considers price, and you do not need to spend as much on Google Ads, because you’re relevant.

You then get the snowball effect in the pricing world where you’re priced competitively based on the market theory, this then gives you better relevancy in the eyes of the Google algorithm, with Google saying, oh, you are priced competitively, we think you're more relevant and will put you in front of more people at a lower price, you then get more eyeballs to the product page, and then because you're priced competitively in the first place, you're more likely to convert. That's the virtuous circle and why the price is so important.

It's classic optimization. I'm trying to roll my boulder up to the top of the hill and I need to balance my boulder on the top of the hill. I need to do that for every single product. What we're basically saying is that price moves every product in your inventory further up to the top of that hill. The Google algorithm is not necessarily just looking at that particular product and where it is priced, but rather where you’re also priced across the board on other products. So, actually, by making you more efficient at the top end and the bottom end (where your price is way off the market price), it benefits everything, and it becomes that snowball. It's about bringing together pricing and making you aware of that dataset and almost putting it on top of impressions, click-through rates, cost per acquisition, and marrying the two and seeing where you've got opportunities to tweak and optimise.

When you're thinking about digital spending decisions, are you asking where is this product priced in the market? If you're not, you're really missing out because you've probably got a playbook as long as your arm of things to optimise, and price should be on it, as one of the biggest levers for digital marketing performance improvements.

We joke in the office about the separation of church and state, but it's usually that people obsess about things they can control, and it’s often difficult for advertising agencies, who are managing the digital spend of a lot of our clients, to get visibility on pricing information.

And likewise, for the eCommerce pricing professional, getting timely access to marketing insights is equally difficult. There is therefore this gap in the middle that we are breaching. It's about bringing your prices, your price against your competitors, and finding the true market price that is required in order to get the conversion (the CPA) at a better rate.

 

Where does BlackCurve come in?

If you’re reading this, and wish to explore the opportunities for real, it is very straightforward. You access the trial link from our website, set up your site by providing your product feed (either by .csv, Google Sheets, or use the Google Content API to pull in your Google Shopping Feed), you then connect your Google Ads account.

BlackCurve Free Trial

BlackCurve is collecting millions of competitor prices on a daily basis. If we have your product in our database, you will be given access to the market information almost instantly. For products that we do not have when you sign up, they will be available to you within 24 hours, and then daily pricing information will be provided from there on out.

Once the competitor data is available, you will have access to an online dashboard. Here you can get access to competitor information at a market (aggregate level), by competitor view, as well as by product view, and line up this information against your key digital marketing metrics. For those users who prefer to view data inside a spreadsheet tool, you can download reports, which gives you actionable insights, flagging opportunities to optimise.

 

Conclusion

If you're a digital marketer, whether or not you're in-house or you're working for a marketing agency, if you're not looking at price, why not? It’s a huge lever in order to improve whether you're driven by CPA or whether you're looking at ROAS or whether you're looking at improving your Impression Share, whatever the metric that you're looking to optimise, price is a huge contributor. BlackCurve can support you in that journey, adding it to your optimisation checklist. We can provide you with access to that pricing information and you don't even need to be logged into core business systems. BlackCurve operates outside of that, that's the beauty.

 

Podcast

If you would like to listen to the full podcast it is available here: 

🎧 Apple - https://apple.co/3GHvq6u

🎧 Anchor - https://bit.ly/3HNPCFu

🎧 Spotify - https://spoti.fi/3gDxT7r

 

It can also be watched in full here:

🎧 YouTube - https://bit.ly/3rEQfvl

 

About BlackCurve

BlackCurve helps eCommerce businesses understand their competitors and use pricing to improve their digital marketing performance.

Topics: UK Retailers, Ecommerce Company, competitor-led retail pricing strategies, Marketing Strategy

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