E-Commerce Link : Smoothing a Bumpy Ride

To combat the triple challenge of economic uncertainty, slowing market gains and seasonal swings, e-commerce merchants must shift focus to a previously neglected stage of the sales process: customer retention. Currently, online retailers allocate 53 percent of their marketing budgets to online customer acquisition and 21 percent of marketing dollars to online customer retention, according to Shop.org's State of Online Retailing Study for 2008. By building a base of loyal customers, merchants can smooth their averages by driving repeat business over time.

Loyalty: A Precious Commodity
There's no question that repeat customers are a boon to merchants. Lower customer service costs and higher lifetime purchase totals have long been potent motivators for merchants to identify and engage with customers to encourage an ongoing relationship.

Online, the value of return customers is more clear than ever. They're more engaged, adding items to carts at double the rate of new buyers, and they place orders 200 percent more often. The average order size for loyal buyers is also higher by 10 percent than that for new customers.

With loyal customers proving such an asset to online sales, now is the time to begin tackling the barriers to offering a cohesive, relevant experience that will keep shoppers coming back. The first step: understanding your target audience and identifying the right retention goals for your business.

Segments: The Building Blocks of Loyalty
Creating marketing and site merchandising with broad appeal is fundamental to driving overall sales. But in order to retain existing customers and build loyalty, merchants must take their games to the next level and focus on crafting relevant, personalized offers.

The positive response to personalized offers is well-documented. Forrester Research found that of the 54 percent of shoppers who perceived that offers had been tailored to their personal preferences, 77 percent found the recommendations useful, and 34 percent made a purchase.

So, where to start? Sophisticated technologies now exist to track visitor behavior on e-commerce sites and deliver tailored recommendations in real time, based on click patterns, IP information and regional demographic data. But merchants can make significant gains in loyalty by focusing on a single data set and deploying one of the simplest tools in their arsenal-e-mail.

E-mail: Basic but Effective
E-mail is often overshadowed by the hype of social computing. But despite the enticements of Facebook, YouTube and more than 100 million blogs, e-mail is still consumers' most frequent online activity. Ninety-one percent of online consumers have used e-mail, according to the Pew Internet & American Life Project, whereas social computing activities rate no higher than 36 percent.