Getting Personal
By Neil McAllister
In the past, online ventures devoted much of their marketing energy to winning customers and building market share. Yet in today's tough market, it's more important than ever that Web businesses concentrate on strengthening existing customer relationships.
Consider the numbers: According to the Harvard Business Review, it can cost six to ten times as much in marketing and advertising costs to acquire a new customer as to retain an old one. And for e-businesses, those customers don't amount to much: In March 2000, The Industry Standard reported that first quarter revenue earned by online retailers from each new customer averaged a mere $24.50.
In the following quarter, however, those same customers brought in an average of $52.50 each, and that figure remained consistent through each successive quarter. Clearly, maintaining long-term relationships with customers is the way for businesses to start seeing real returns.
Unfortunately, the same study revealed that less than 40 percent of e-commerce customers were repeat purchasers. Online businesses are now faced with what is, for many, a brand new challenge: How to better serve the needs of customers so that businesses can establish lasting relationships?
The Personal Touch
Personalization and customization software was developed with customer retention in mind, and it's a solution that increasingly more Web businesses have begun to embrace. According to research conducted by eMarketer, as of June 2001, 56 percent of U.S. e-businesses had incorporated some level of personalization.<>
