Return to: GROK Dot Com 5/15/2001

The Prodigal Customer

You've heard me say this a lot: keep your customers happy - downright delight them - and you’ll develop loyal customers.

There's more than just a (hopefully) smiling face on the other end of your website, there's a dollar equation taking place. You "bought" that prospect with your advertising, marketing and maintenance dollars. That's money out of your pocket. And truth is, first-time buyers almost never spend enough to offset that cost.

However, a repeat buyer gives you much more than that warm, fuzzy feeling of having made a sale and conducted a transaction well. He or she keeps increasing your revenues. Yeah, you want to get lots of the right people to your site, but you really want to work on delighting them so they come back!

Let me throw a few statistics at you.

· "Fewer than 5% of B2C website visitors make a purchase." (Nielson/NetRatings) Intermarket Group says the conversion rate is closer to 2.7%. Shop.org says it’s only 1.8%. Depends on who you read which day, but take it from me - the numbers are appallingly low.

· "Companies spend an average of $250 on marketing and advertising to acquire one single customer." (Shop.org)

· "The gross income from a typical customer is $24.50 in the first quarter and $52.50 in every quarter that he or she remains a customer." (McKinsey & Co.)

· Two-thirds of all first-time buyers do not return to purchase again.

· "A 10% increase in repeat customers would translate into a 9.5% increase in revenue." (estimate by McKinsey & Co.)

See what I mean? You spend $250 to rope them in, and they buy $24.50 worth of stuff from you. Sixty-six percent of them don't come back, so you never see that subsequent quarterly $52.50 from them. Can you say "red ink"? But look what you stand to gain if you get them coming back again and again!

We've talked about the whole "beef stew" (love the stuff!) of elements that go into satisfying your customers. Everything is important - you can't overlook the basics such as customer service, fulfillment, policies, decent design, and so on. But once you have a customer, you can set about managing a relationship with the person that might include newsletters, mailings of special offers, new product or update announcements. Don't discount the value of snail mail in these efforts! One human I know made an online purchase. Later she received a paper newsletter in the regular mail and discovered an item she wanted to buy. She'd also received several e-mails, which she had deleted unread. (Typical!)

Perhaps most effective of all is to focus your energy on helpful, personalized site options that have people longing to come back. Amazon.com does this one-to-one online salesmanship brilliantly. Look at their searchable Wish List. Their Shopping Cart has a "buy later" option. They have an incredible 1-Click feature (no wonder they want to maintain that patent!). They offer "Customers who bought this book also bought…," listings for almost every item. Notice how they can offer recommendations that improve over time, as a customer adds more information to the query database through each purchase. And get a load of the "Page You Made" based not on your purchases, but on where you've been clicking during that session! Even if you don't buy more than you originally intended to right then, you might click an item into your shopping cart and save it, or add it to your Wish List. And you'll want to come back.

Amazon expertly manages to create, in the world of e-commerce, a perception of community, something you might want to be a part of. They entice and reward their customers at the same time with features like Listmania, online reviews, Friends & Family. Best of all, this online sales pitch Amazon has created is not intrusive. For lots of folks, it helps, not hinders, the sales process - and leads to even more sales.

If you can find a way to apply variations of Amazon’s tools and incentives to your own site, all the while giving your prospects the shopping experience of a lifetime, you'll go a long way to encouraging your customers to return. And each time they do, you sell more without having to spend more to acquire them. Even on Mars, that spells p-r-o-f-i-t!

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