What’s the only thing better than customers? Repeat Customers. According to the book Flip the Funnel the conventional wisdom is that it is far more expensive to acquire new customers than it is to retain existing ones. Many companies now base their strategy on increasing purchases from repeat customers, which in the case of Zappos is 75% of their business (again from the book Flip the Funnel).
You should be able to get repeat customer metrics directly in your e-commerce order system. If you have a Yahoo! Store, you can get a baseline metric by pulling up the Repeats report. This will show you the number of customers who have placed multiple orders. You can then divide this number by the number of total orders to get the percentage of repeat orders.
In this example, 159⁄3511 = 5% of orders came from repeat customers. This metric will probably not change that much over short time periods, but I would check it from time to time – perhaps on a monthly or quarterly basis. Are you able to do a better job of retaining your existing customers?
From a web analytics perspective, what I would like to examine is the behavior of repeat customers vs one-time customers vs non-customers. Are repeat customer behaving differently than other segments? Is there anything I can do to target one-time customers to get them to become loyal customers?
To address some of those questions in your web analytics you’ll have to be able to query your e-commerce order system and tag your visitors appropriately, eg as “new customer” or “repeat customer”, at the time of ordering. Implementation approaches will vary depending on your e-commerce platform, but web analytics tools such as Yahoo! Web Analytics or Google Analytics allow you to set custom variables so that you can track these customer segments.
Once you have set up your tracking, what does the data tell you? One of the first questions I would ask is how repeat customers come back to your site. Are they coming back because they know your brand and therefore type in your brand name in a search engine or visit your site directly?
My take so far is that unless you proactively target and try to get more repeat customers, don’t expect repeat customers to behave differently than one-time customers. You will have to work just as hard as getting new customers to get repeat customers in your search marketing campaigns. You will have to earn their business again every time by competing for non-branded terms:
In this example, the new and repeat customer segments show virtually no difference.
Could you be doing a better job of targeting your one-time customers either directly on your site or via email campaigns so that they become loyal repeat customers? Do you have a great process in place once customers place an order or when they call your customer support number?
Hopefully over time you will find that loyal customers will come back directly to your site thereby lowering your direct SEM costs. And finally I should mention that I have not even taken into account other advantages such as word of mouth and referrals from your loyal customers that should help to lower your overall marketing costs.