A Direct Marketing Agency - Helping Brands Acquire and Retain Customers

A 15-month study by MarketLive Performance clearly points to the high value of loyal customers (those defined as having made three purchases or more).

Loyal customers:

• Convert at three times the rate of first time customers
• They possess an average order of 10% more than first time customers

However, according to Shop.org's State of Online Retailing Report for 2008, marketers are allocating 53% of their marketing budgets to customer acquisition and only 21% to customer retention.

While customer acquisition is critically important, we also know from the Pew Internet Study in 2007 that marketers ranked e-mail to their house lists as tops in performance when compared to all other tactics. Therefore, there appears to be an overall under-investment in marketing to the most loyal customers.

This is due to the low number of companies segmenting their house lists and then sending targeted e-mails to those customer groups (based on past behavior and/or purchasing). We've seen estimates that only about 25% of marketers have a targeted e-mail program in place. We know from our own work that a significant lift in ROI is the result of a targeted e-mail program.

Finally, another important conclusion is that marketers should be implementing programs designed to engage their customers with the purpose of turning one-time customers into two-time customers and subsequently, two-time customers into three-time customers (and more).