Online retailers tend to earmark a significant portion of their marketing budgets for media technologies aimed at luring new customers, but it turns out that existing clients are those who bring the real income, according to a report I saw this morning.
Adobe’s most recent digital index report shows that one repeat buyer generates the same revenue per visit as up to seven first-time online purchasers in Europe. For the UK, the ratio is one repeat buyer to six new purchasers. This can be explained by the fact that the average order value of repeat buyers is higher as they tend to spend more.
Estimates by the Internet Advertising Bureau (IAB) show that UK online retailers allocate nearly 80% of their digital budgets for search and display advertising, which are both intended to bring in new customers. The proportion spent on search and display advertising in the US is similar.
The report further revealed that returning and repeat buyers provide for even higher revenues during holidays. With Christmas now approaching, e-commerce businesses are beginning to draft their marketing strategies. One of the things they need to consider in order to ensure a greater number of returning and repeat purchases is personalisation, tailoring the web experience to stimulate customers to visit the website again. Sales could also be boosted by rewards, loyalty incentives for customers and use of e-mail and display advert retargeting methods. Taking into account conversion rates is also essential, since they need to be optimised to generate higher returns per visit.