Athleta Pushes for Product Swaps to Increase Customer Acquisition
The cost of customer acquisition is persistently increasing, driven not just by competition, but also by the rise of ad-blocking technology. It is estimated by the end of Q2-2023 there were more than 912 million users who employed ad-blockers, mostly on their phones, which has inevitably led to higher customer acquisition costs. In fact, ad-blocking technology is forecasted to cost business over USD 54 billion in advertising revenue. Consequently, businesses are either rethinking their marketing strategies and focusing on customer retention or coming up with new ways to bring in new customers.
Athleta, for instance, recently held a product swap event where customers could get a free pair of their “Salutation Stash’ leggins in exchange for another pair of leggings from any other brand. The event was held in partnership with second-hand e-tailer ThredUp. Lululemon has also partnered with Jolie and held “dupe swaps” where customers could try out their products and see how they compare to their competitor’s.
Athleta’s product swap is a risky move considering net sales for Q3 were down by 18% YoY. To offset declining sales, Athleta has refined their product offering and marketing strategy, having more drops and brand activations. The product swap costed Athleta over USD 300,000, but the company’s chief commercial officer stands by the strategy, emphasizing their goal to convert non-buyers into lifelong customers of the brand.
Melissa Minkow, director of retail strategy for at CI&T, notes that product swaps encourage customers are curious about the brand but have yet to act upon their curiosity and try out their product. However, this strategy is a bit of double-edged sword, especially when customers exchange lower-priced goods for premium product.
According to McKinsey & Co., as of October 2023, 79% of shoppers had traded down in their everyday shopping in an effort to sav money. Unless consumers perceive higher priced items worth the investment, these product swaps might be seen as a “one-off” and not yield the desired customer acquisition numbers driving the events.
Consequently, brands are limiting the size of these events, and monitoring carefully its impact on sales numbers.
