THINKing

Email Is For Retention, Paid Search Is For Acquisition

April 18, 2008 on 6:42 am | In Customer Retention, Customer Service, Email Marketing, Marketing, Online, Pay-Per-Click, Search | 5 Comments

Email – in the early days – was a great tactic for acquiring new customers. No longer. There has been too much abuse. But if you have a relationship with a customer, email is a superb tactic for customer retention.

According to a new Forrester Research report released by trade group Shop.org, paid search is the top acquisition tool, e-mail to house files is the top online marketing tactic as 92% of online retailers said they use it.

Now, some details:

- paid search accounts for 35% of new customers on average

- 53% of online retailers’ marketing budgets are spent on customer acquisition

- 21% is spent on retention.

Online retailers report popular promotional tactics in this order of preference:

- 85% say they offer free shipping (conditions apply)

- 82% use percent-off promotions

- 69% prefer dollar-off promotions

Other Posts Of Interest

http://www.justinrains.com/ Justin

I agree with the shipping however for the sites I run and my clients I recommend a flat rate shipping and maybe free after a certain amount (the conditions). Flat rate at least gives customers the notion of what the item(s) are going to cost. Nothing like paying $15.00 on a $20.00 game I have had that happen online before. Needless to say I abandoned my cart.
DaveS

Great blog Harry! I work in the tourism vertical and recently, organizations have not been as attentive to e-mail as they have been in the past due to additional effort and the buzz around search. They have missed the benefits of CRM and began focusing on more acquisition and aggressive growth. But those who have stayed the course with consistent e-mail communications are seeing returns in the form of travelers who stay longer and travel more often. The consumer feels the relationship is better and they are more informed – all resulting in a customer with greater value. Acquisition is important, but don’t forget retention.
http://www.my-creativeteam.com Harry Hoover

Right on, Justin. In too many cases shipping has become the high margin item for online retailers.

Dave, I have also worked in tourism and email is THE retention tool in that industry. Too many marketers in all industries want to bring home the new business buffalo but they forget about the hen that is already laying eggs for them in the hen house.
http://www.marketingminefield.co.uk Charles

It is amazing how many online companies neglect the use of email communications. So much effort is focused on recruiting new customers that repeat sales slip through the net simply because a consistent email communication strategy isn’t put in place with their existing database.
http://www.my-creativeteam.com Harry Hoover

UPDATE: Email Marketing Still Works, according to a Harris Interactive poll.