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Ecommerce customer loyalty is rare

News, 01 June 2015

PHILADELPHIA: One-off purchases are the norm for most online retailers as research shows that few customers ever come back for more.

A study by RJMetrics, an analytics platform for ecommerce, SaaS, and mobile businesses, looked at the data of 176 ecommerce retailers and 18m customers to uncover insights on how ecommerce customers behave.

The most significant finding was that only one third (32%) of customers purchase again within a year of their first purchase.

This picture was, the report suggested, a far cry from the prevailing narrative within the industry, which tends to emphasise customer relationships and building strong brand advocates.

The real picture was one of a "cutthroat industry", with retailers constantly in the process of getting in front of new customers and then dealing with them on a very transactional basis.

But the report also found that the most successful ecommerce companies were succeeding in building longer-term customer relationships. Top quartile companies (ranked by growth rate) had customer lifetime values 79% higher than their less successful peers.

Overall, the top 1% of customers were found to be eighteen times more valuable than the average customer, so remarketing to these customers to get them back in the door has the potential to yield "phenomenal ROI", the report said.

And with top quartile customers spending nearly six times more than average customers in their first 30 days, retailers should be using data – including product categories purchased, acquisition source, days between orders – to build simple prediction models to identify who has the potential to become a loyal customer.

"While retailers love talking about building brands that customers love, there are very few companies doing that successfully," said Robert J. Moore, CEO of RJMetrics.

"If you're one of the few retailers who has figured out how to keep your customers coming back you're on the path to something very big."

Data sourced from PR Newswire; additional content by Warc staff