In the movie “50 First Dates,” Adam Sandler’s character falls for a girl who lost her short-term memory, and he must woo her and re-win her heart every day as if they had just met -- because, for her, they had. Perceptive online retailers and marketers notice the movie’s parallels to their own predicament: With more shopping choices than ever, brand loyalty isn’t what it used to be, so marketers must woo their customers daily to re-win their trust and loyalty continually.
In fact, in a study conducted by the Millard Group in 2004, just two percent of respondents indicated that brand was the crucial factor in their purchasing decision, far below price (26 percent). It’s harder than ever to turn customers into returning customers -- most consumers are out to find a deal, period. But it’s worth the effort: According to a June 2004 report from DoubleClick, although returning customers are just one percent of all website visitors, they spend the most time on a site -- 7.69 minutes on average -- and the most money, about $180 every session.
The internet provides the advantage and the challenge. Its geographical neutrality means marketers can find customers anywhere in the world, depending on the nature of their businesses. But consumers have the same endless possibilities. There’s a clear imperative for online retailers and marketers: Work hard to reacquire customers and re-win their loyalty every day.
But how? Should you offer free shipping? Sales? Coupons?
Insights from the front lines
Ebates works with more than 800 trusted retail sites, and with more than seven million registered members and roughly one million active shoppers -- giving us a unique vantage point on the industry, and on what strategies actually help online retailers and marketers build customer loyalty.
Aside from “out-offering” all of your competitors, here are a few things we’ve learned based on our own data, along with anecdotal feedback we’ve received from our merchant partners:
Choose revenue-sharing over PPC: The term “pay-per-click” advertising is often used interchangeably with “pay-for-performance,” but that’s a misnomer. The performance you want is not the click, it’s the buy. Revenue-sharing partners offer true performance-based advertising -- you pay them only when a customer pays you.
Some companies are hesitant to create too much loyalty through a third-party partner -- which, online, is often a shopping portal -- fearing what they see as a never-ending commission cycle. But, quite frankly, that’s a short-sighted approach. Revenue-sharing partners drive traffic to your site that you otherwise might not get. Those same shoppers will visit those portals anyway -- and if you’re not there, they’ll just spend their money at a competitor’s site.
Merchants have left the Ebates fold for that very reason, only to return soon after because traffic dropped precipitously without us. As long as a particular portal or other revenue-sharing partner is adding value and sending you traffic, realize that money spent on commissions is still a better investment than money spent on risky PPC advertising that may or may not lead to sales.
Find a portal partner that will help you be strategic about your incentives: It’s important to know your own customers and how they like to save, because it does vary by category, gender and other factors. At Ebates we recently found that 90 percent of our own members shopping in the “Home & Garden” category cite “Free Shipping” among their favorite ways to save money when shopping, higher than in any other category. Those buying in the “Business & Office” and “Computer” categories look for mail-in rebates, while those shopping for apparel and jewelry are eager to find items on sale.
Find partners that are in touch with their users and can share with you hard data about which promotional tactics are most effective in your category -- and then can help you implement those strategies to increase sales.
For example: One of the leading brands in a top-three vertical wanted to increase its share of the Ebates market. We increased the company’s overall cash-back percentage, coupled that with periodic promotional rebate increases to drive traffic at key intervals, incorporated media buys for strategic ad placement on our website -- all combining to help that company become our premier merchant partner in its category. The merchant saw substantial growth in its volume and gained a higher share of the Ebates marketplace against its number one competitor. Not surprisingly, both companies are in active discussions with us now to create their strategies for 2006.
Work with a cash-back portal: This one is a no-brainer. At Ebates, we give our users a healthy cut of the revenue paid to us by our merchant partners. Offering cash back builds unprecedented loyalty among consumers who know they can buy the same products they would buy anyway -- at the same stores -- and get cash back. Our close rate for October -- the rate at which our users started at our site, went to a merchant site and actually bought something -- was more than 10 percent. Compared with the industry average of four percent, cash-back shoppers are two-and-one-half times more likely to make a purchase on your site.
Cash-back portal members quickly become hard-core shoppers with extremely high repeat buying patterns: More than 90 percent of shoppers who have made five purchases at Ebates will make a sixth. Plus, our merchant partners tell us that compared to their “normal” users, cash-back customers abandon fewer shopping carts and make more purchases, in higher amounts, more often.
There are so many shopping and saving options online, it can seem like a free-for-all -- for marketers and for consumers. But if you keep shoppers engaged by making it easy for them to get the best deals, you will successfully re-win their loyalty -- and their dollars -- every day.
Alessandro Isolani is co-founder and CEO of Ebates, the largest cash-back shopping portal. A former deputy district attorney, Isolani prosecuted credit card fraud and identity theft cases before launching Ebates, the first cash-back shopping portal, in 1999. Ebates continues to lead the industry with more members, more retail partners and more cash for its users than any other savings site.
