Customer retention is vital to e-retail survival

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By: Wise Marketer Staff |

Posted on May 30, 2008

Repeat business is an increasingly important opportunity for e-retail marketers to increase their revenues and bottom line profits, and e-mail techniques for boosting loyalty are now critical, according to the quarterly MarketLive Performance Index which examined the performance of almost 100 online retailers.

The report argues that, to achieve consistent performance in any market, merchants must shift their focus from acquiring new customers to a previously-neglected stage of the sales process: customer retention.

Retention overlooked online
According to MarketLive's founder and chairman, Ken Burke, "Analysts report that 53% of online marketing budgets are spent on customer acquisition and only 21% on retention. A solid retention strategy can result in a base of loyal, repeat customers and help retailers accurately predict sales performance and drive repeat business over time."

According to the latest Performance Index (Volume 4), the value of return customers is critical to an online merchant's bottom line. Data from a sub-set of long-time MarketLive Index merchants over a 15 month period showed that loyal customers contribute more than new buyers across a variety of metrics.

Repeat business is worth more
These customers tend to be more engaged, adding items to shopping carts at double the rate of new buyers, and they usually go on to place orders twice as often. The average order size for loyal buyers is also 10% higher than that of new customers.

MarketLive suggests that online retailers can build a solid customer loyalty programme using one of the simplest and cheapest online tools: e-mail. The strategic use of e-mail marketing has become a worthwhile customer retention strategy that MarketLive clients have tried and tested. The index report describes the six main elements to consider when building an e-mail based customer retention strategy, and also outlines promotional tactics during each stage.

The MarketLive Performance Index is available free of charge, and can be downloaded directly from MarketLive's web site - click here (free registration required).

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