Retention-Based Advertising

Have you noticed the way most businesses reward new customers and forget their loyal, existing fans? This is no exception online, especially when it comes to e-commerce sites.

In an age when a lot hinges on the overall size of a site’s customer base, one can understand why online businesses would concentrate more heavily on new-customer acquisition. But as most marketers know, your most valuable customers are existing customers. It’s unwise to bet the farm on new-customer acquisition when retention-based advertising is relatively simple to implement.

Segmenting Your Ad Buys

If online advertising with banners is up your alley, there are two terrific ways to segment your ad campaigns into component groups of existing customers and potential new customers.

On the publishing side, media/technology companies like Engage and DoubleClick have programs that make it easy to remarket to consumers. Engage ECHO and DoubleClick’s Boomerang work essentially in the same fashion.

Pixel tags placed on your e-commerce site allow Engage and DoubleClick to recognize existing customers in future campaigns on the Engage Media and DoubleClick networks, respectively. Utilizing their ad servers, buys can be segmented, and different messages can be served to new customers and to existing customers.

This makes it possible to address new customers with your acquisition message and existing customers with your retention offer in the same campaign. Because these types of programs are executed on the publishing side, an advertiser can choose to purchase a specific number of ad views for either the acquisition or the retention effort, provided that she has run a sizeable prior campaign with the pixel tags in place.

This concept can be ported over to an advertiser-side ad server as well. Most of the ad servers that can track back-end actions through pixel tagging can use the same method to recognize the people who have previously visited your site and serve different messages to them.

The important difference between this method and the publishing-side method is that you won’t be able to purchase specific levels of media weight against existing customers. Once an advertising-side server is called, it has to serve an ad, regardless of whether the browser calling the ad belongs to someone you’ve formulated a relationship with or not.

Still, segmenting your buys in this fashion only makes sense — a seasoned customer is not going to respond to your offer of $10 off a first purchase if he made that first purchase two years ago. However, he might respond to an ad that thanks him for being a loyal customer and offers him free shipping on his next order.

Utilizing Email Offers

Another approach, which is often more cost-effective if implemented properly, is utilizing email offers. Almost every e-commerce site worth its salt collects an email address upon a customer’s registration. Smart e-commerce sites will place that email address into a database profile containing, among other things, purchase history. Segmentation by purchase history can be as simple as a database query and can allow your site to do things like:

• Thank your regular customers. “Hey, Mr. X., thanks for ordering a box of Krispy Kreme donuts from us every week. Since you’ve been such a great customer, we’re going to throw in a free six-pack of Loco soda with your next purchase.”
• Snare those customers who have dropped off the face of the planet. “Hey, Ms. Y., we noticed that you haven’t ordered anything from us in the past nine months. We’ll be happy to offer you $10 off your next purchase if you fill out our customer feedback form and tell us why.”
• Cross-sell and upsell. “Dear Mr. Z., thanks for purchasing a copy of Barry Manilow’s ‘Greatest Hits, Volume 1.’ Did you know that we’ve recently opened a new bookstore on the site? We’ll give you a free copy of Mr. Manilow’s autobiography with the next CD purchase you make.”

The e-commerce sites putting emphasis on retention are the smart ones. When you think of how tough it is to target users online who are both interested in your products and comfortable purchasing online, it only makes sense to mine your existing customer base and offer them incentives to do more business with you. These people represent low-hanging fruit for most e-commerce sites.