• Are You Marketing to the Right Online Customers?

    You’ve read on these pages before about the benefits of a marketing model that focuses on repeat customers to turn them into brand advocates for your ecommerce.

    Now an analysis by Adobe Digital Index confirms major, bottom-line advantages to paying more attention to your repeat customers.

    The analysis used data from 33 billion visits to 180 ecommerce sites in the U.S. and Europe. The numbers reveal a strikingly disproportionate emphasis on attracting new customers versus keeping existing customers:
    (Adobe defines returning purchasers as those who have made one previous purchase, and repeat purchasers as those who have made multiple previous purchases.)

    • 8% – percentage of visitors to US online retailers who are returning/repeat purchasers
    • 41% – percentage of sales from returning/repeat purchasers

    Let that sink in for a minute before you take a look at some of the other findings.

    • $ 2.06 – the average revenue per visit (RPV) for new customers
    • $ 5.22 – the average RPV for returning customers
    • $10.24 – the average RPV for repeat customers

    That’s five times the revenue per visit from repeat customers versus new customers.

    Keep your seatbelts fastened, this isn’t over; it hits you where it really counts too:

    RPV increase during the Christmas 2011 holiday season:

    • 17% new customers
    • 22% returning customers
    • 25% repeat customers

    Not only do they spend more, but their spend is increasing at a higher rate.

    Other data shows the overall RPV for returning and repeat customers is increasing while it flat-lines for new customers. And conversion rates are five and nine times higher respectively for return and repeat customers.

    3M Results

    So why do all these numbers mean you’re probably marketing to the wrong customers? The answer lies in the last two numbers:

    • 78% – percentage of digital marketing spend on media aimed at attracting new customers, including search and display advertising
    • 18% – percentage of digital marketing spend on media aimed at attracting returnérepeat customers, including social media and email

    Returning and repeat purchasers generate a disproportionate part of your revenue, they spend more when they visit your site and they are easier to convert.

    To whom do you market?

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    Ecommerce Marketing

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2 thoughts on “Are You Marketing to the Right Online Customers?”

  1. Ferdi says:

    Really excellent points and I support the message of this post.
    But if I segment repeat customers will they not, by definition, always have a higher RPV? Knowing they have already purchased, this segment only includes customers with revenue >0. Whereas the new customers segment includes all non-buyers such as bounces, users in research mode etc. So the higher rpv is partially made up by historic purchases, which does not make future purchases more likely to be of higher value.
    Am I getting this right?

  2. Great questions and I think you got it right. The Adobe data is based on all visits to the study sites. So yes, bounces and tire-kickers would be included in the data for the the first-time visitors.

    Based on your questions, I looked again at the Adobe report and their definition of “shopper”, or first-time purchaser, is somewhat unclear and includes the following:

    Definition in the “Introduction” of the study:
    • Shoppers: No previous purchase

    Definition in the “Definitions” section of the study:
    1. Shoppers are visitors who have (a) never purchased on any previous visit or (b) who have purchased one time
    but have not since returned to the site.
    2. Returning purchasers are visitors with one prior site purchase who then make subsequent visits in which they
    either (a) do not purchase, or (b) purchase a second time but subsequently do not return.
    3. Repeat purchasers are visitors who have made at least two purchases and who have come back to the site at
    least one time subsequent to their second purchase.

    First, I must admit that the definition of “shopper” in my blog post is unclear, indeed I never actually spell it out.

    Even so, the second Adobe definition appears to be somewhat different to the first. The second Adobe definition, which includes one-time purchasers who never returned to the site, would somewhat mitigate the “bounce” factor you mention.

    Also of note, Adobe removed the top and bottom 5% of the data for each metric.

    In any case, the overall point that ecommerce marketing is heavily weighted towards new customers, and potentially missing the higher returns that could be had from existing customers, is valid and the study’s findings support it, at least to some extent.

    Many thanks for your thought-provoking comment.

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