Why creating customer relationships is more important than conversions.

For e-commerce marketers, the cost to acquire a new customer can be daunting. For many years, the e-marketing priority has been on conversions. There has been a belief that new customers and “growing your list” is the holy grail of e-commerce.

Unfortunately, the demographics are working against you. Think about it. Baby boomers are aging and retiring. Millennials, of whom there are significantly less of, are more interested in the newest gadget or the latest/greatest trend than they care for brand loyalty. They have the world at their finger tips, only a mere click or tap away.

The endless fountain myth

It is no longer true that a customer, once obtained, is an endless fountain of sales. Competitors can set up quickly online, and it’s quite likely that somebody else sells your product, or a version of it, somewhere else on the planet. You don’t have the same local market insulation that your predecessors enjoyed. Thanks to the internet, you are competing with the world.

Only 32% of customers place a second order

According to recent research by RJMetrics, “only 32% of customers place a second order in their first year as a customer.” That pretty much shatters the endless fountain theory. But while this statistic seems deflating, it is actually an opportunity to significantly increase your competitiveness against the average, merely by making quality touches.

When you couple this effect with the further finding that “69% of a customer’s first year spend comes within their first 30 days as a customer,” it becomes glaringly apparent that how and when you re-engage with a new or existing customer will become more critical to your business’ success.

If you do the job well, there is more good news for you! Once you engage with a customer following their second purchase, “the likelihood of a third purchase jumps past 50%,” according to RJMetrics. For those obsessed with conversions, 50% is a fantastic rate.

Consider a customer’s worth

Thus it becomes important to understand and appreciate the customer lifetime value (CLV). Traditional retailers have understood this concept for decades. On the other hand, many e-commerce marketers focus too closely on their click-through-rates (CTR) and conversions, almost forgetting about ongoing engagement with people who have already purchased from them. Given the acquisition cost, this is an obvious mistake.

Some e-marketers pay lip service to the notion of engagement, thinking that merely having a social media presence or a periodical email blast will keep them top-of-mind with their customers. Maybe that will work, but not necessarily. True engagement, and the desirable results that follow, requires a little more effort than that.

Save the lip service, give ‘em real content

Social media posts must be targeted, but should not be always pushing for a sale. These posts should seek to raise awareness of product-related issues, even when not selling. You could mention little-used features, answer technical questions, or tell a customer story – whatever fits with the customer you are trying to engage. Your social media posts need to offer real value to your customers to encourage them to read what you post. Then when you do make an offer, the customer is at least reading it.

The same is true for periodicals, whether it’s a newsletter, auto-responder, or scheduled contact. If you are always selling, the customer becomes aware of this, and ignores or deletes.

If flagged, you could lose millions!

Of course, the worst possible reaction of an annoyed customer is for them to mark you as spam. This doesn’t just take that one customer out of play, if it happens enough times, all your broadcasts could be flagged as spam on a domain server level, potentially closing the email boxes of millions of customers. These are customers you’ve already spent money to get, and customers you’ve also spent time and effort to keep.

When you do ask for a repeat sale, the timing needs to be right for that customer. If you’ve done your homework and use the right tools, figuring out that “right time” is easier. A good rule of thumb is that one out of five or six customer touches can ask for a sale. Any more than that, and you risk turning off the customer.

A customer is more than a wallet

You don’t want a customer to think that you value them only as a wallet to tap. Remember that customers are people with needs and interests beyond your product offers. This holds true in the business-to-business (B2B) world as well. You may be marketing to businesses, but people in those companies make the buying decisions. Address the needs, participate in the interests, and you will be appreciated.

By providing genuinely useful content to your customers without any immediate ask, you gain the trust of your customer, who comes to like you. Each time you refrain from simply pushing for a sale, the customer is relieved, and feels that you’re being helpful.

You want them to want you

Your perceived value to them increases with each helpful touch. On some unconscious level, the customer expects you to make an offer, and is even willing to entertain it, if you otherwise provide them with relevant and useful information. In the back of their mind, the customer is waiting for a pitch, and by holding off, he is more accepting when it finally comes.

Does quality engagement increase customer lifetime value?

RJMetrics also found that the fastest growing companies have a CLV that is 79% higher than slower-growing peers. This is no accident. The increased CLV is likely the driver of that growth. What drives the CLV higher is the priority the marketer puts on its existing customers at every touch. Good engagement = higher customer lifetime value.

Give, to get

Networking guru, Dr. Ivan Misner, coined the term “giver’s gain.” That philosophy certainly applies to ongoing customer engagement. So if you want higher lifetime value customers, make sure to engage meaningfully with them.

All it really takes to foster higher CLV is a little bit of patience, some humanity, and an understanding of your customers. What we are really talking about is investing some time in an existing customer. That’s far easier and less expensive than constantly trying to convert new customers. It’s also less stressful for you, and less annoying to the consumer at large.

Focus on relationships, and don’t worry so much about conversions. Success will follow, and you’ll be happier, too.

Hopefully you found this article useful and will share it with your business contacts. If you have questions or comments about this blog or about copywriting, feel free to contact the writer directly.