mCommerce Insights

Why the Most Successful Retailers Spend Their Marketing Dollars On Retention

MarketingGap_Blog.jpg

For every 100 visitors to an online store, just two actually make a purchase on average.

Let that sink in. Now consider: how much of your marketing budget is allocated to bringing in these visitors?  About 78% of the retail industry’s digital marketing budget is spent on acquiring exactly this kind of traffic. Merchants often tend to favor quantity over quality in this regard, and it costs them dearly. As digital marketing platforms like Google and Facebook become more successful and more popular, the costs per click are becoming increasingly expensive, meaning acquiring customers using them is less and less sustainable. 

As this competition continues, retailers tend to spend more on them, but don't consider the alternative of re-allocating a portion of their budgets to retaining the customers they've already won. 

While repeat customers make up just 8% of site traffic, on average, 40% of sales can be attributed to them.

Budgets are typically allocated according to the number of visitors attained with each dollar, but this method does not properly correspond to the division of actual sales being completed. On the contrary, actually, the high discounts and low-margin offers provided to first-time buyers can actually hurt the relationships you have with existing customers, while capturing one-time visitors for only a moment, leaving loyal users in the lurch. From a business perspective, this is simply an unsustainable practice. The real winners in the eCommerce game emerge as those who have invested in their existing customers, cultivating meaningful relationships and expanding their base share. Amazon is an outstanding example of this practice – since its inception, the company has focused heavily on customer satisfaction, yielding excellent customer loyalty and ensuring sustainable growth from the start. 20 years later, it’s clear this method has paid off.

If existing customers are so much more valuable – and cheaper – why don’t marketers allocate their budgets accordingly? There are 3 main reasons for this.

  • New Shops Have to Focus on Acquisition
  • Newly Acquired Customers Are More Visible
  • Retailers Don’t Know The Best Way to Build a Retention Strategy

To see more in-depth insights about the 3 reasons for these budget discrepancies, download our latest whitepaper, The Loyalty Factor: How to turn one-time visitors into loyal lifetime customers. You'll learn about the reasons, and find action steps for how to build a strategy that rewards and retains your most loyal customers

Download My Copy

Amanda Laviana

Written by Amanda Laviana

Marketing Communications Manager | Amanda is an experienced content marketer, with a background in advertising copywriting. She manages content across an array of platforms for Shopgate, including blogs, whitepapers, webinars, social media and video.