breakeven on 'one-time' shoppers. For grocery e-tailers, customers have to be retained for 18 months for breakeven. The study also shows that repeat purchasers tend to spend more in a given time period and generate larger transactions. For example, online grocery shoppers spend 23% more in months 31-36 than in the first 6 months; this includes products in other categories (cross- and up-selling). A final effect is that repeat customers tend to refer more people, to bring in greater business. The impact of these referrals can be signfi-cant - over a 3-year period, in each product category, more than 50% additional revenue of the referrer was generated. Each referrer also has a lower acquisition cost.

Table 6.1 summarises the differences between the two paradigms discussed in this section. Figure 6.16 shows that to build relationships and loyalty online, the quality of the online experience is significant. The topic of loyalty drivers is discussed further in Chapter 7.

Was this article helpful?

0 0
Borrowing Basics

Borrowing Basics

Some small business persons cannot understand why a lending institution refused to lend them money. Others have no trouble getting funds, but they are surprised to find strings attached to their loans.

Get My Free Ebook

Post a comment