Companies who get serious about data-driven retention efforts have a significant competitive advantage over those who don’t. A new study by RJ Metrics, a site analytics software vendor, underscores the value of tracking customer metrics to determine which customers are most likely to become big spenders– but that value only materializes when e-commerce retailers make the effort to market to these customers at the right time, using the right methods.
The average customer lifetime value over the first year as a customer with an e-retailer is $154, according to the E-commerce Buyer Behavior report by RJ Metrics. However, a whopping $106 of that amount will be spent in the first 30 days of that relationship. While only 30 percent of new customers make a second purchase during that first year, they typically will make that second purchase within the first 30 days after purchase number one.
This seems to produce a sort of spending snowball effect, because once a customer has made their second purchase, there is then a 50 percent chance of their making a third purchase, and with each purchase thereafter, the likelihood of an additional purchase goes up. Consequently, from the first 30 days of customer engagement, you can wind up with a small group of customers who are worth significantly more than the average customer. RJ Metrics found that the top 1 percent of customers is worth nearly 20 times more than the average customer.
So how can your company best take advantage of this golden 30-day window? You can improve your results by marketing strategically to new customers in a different way than you market to existing customers. Knowing how and when to reach these customers can yield dramatic results.
One way is to buy digital advertising that the new customer would see online so that your company stays at the top of their mind. Strategic email marketing can also be very effective. First-time purchaser campaigns are campaigns specifically designed to go out when customers purchase from your e-commerce site for the first time. These campaigns can be some of the highest revenue-driving emails you can send. You want to get as many buyers past the second-purchase hurdle as you can, and as quickly as possible.
One of the best methods is to run your first-purchaser campaign through your order receipts and order shipped notifications. These types of emails are the most opened and read emails by customers. You can begin with very basic messaging that will give customers a reason to go back to your site and buy a few more items, for example, “buy three and save.” Alternatively, you can include a coupon discount with a 30-day-or-less expiration date. You could also include cross sell or upsell items in your email, along the lines of, “customers who bought this also bought this.”
Some other ideas for email campaigns include a relational email sent out a day or two after the first purchase, to remind the customer why they bought from you and to reduce the chance of any buyer’s remorse. After about five days, you can send an email to get the customer engaged with the brand, such as inviting the customer to connect with you on social media. Seven days later, you can send out a related product email, which will ask the customer for a review of the product they have purchased, and to make suggestions for follow-up purchases.
It makes sense to target not only first-purchase customers, but also those customers who have already made their second purchase within 30 days, since the odds of their making another purchase is significantly higher than those who have gone a longer time without making that second purchase. A customer who bought last week is more valuable than a customer who bought two years ago. Similarly, a customer who has bought five times is more valuable than a customer who has bought only once. By targeting your marketing to clients who meet frequency and recency guidelines, you can set your company up to take advantage of a huge opportunity.