Retailers are investing in a mix of marketing methods across channels to boost customer engagement and ensure long-term loyalty. A key metric used to determine the success of cross-channel initiatives is customer lifetime value (CLV), defined as the future profit a company expects to earn from customers throughout an extended period of time.
To determine how specific communication channels impact customer acquisition and overall lifetime value, Custora, a customer acquisition and retention company, mined data from 72 million customers at 86 U.S. retailers across 14 industries.
The Q2 2013 report, titled: E-Commerce Customer Acquisition Snapshot, indicated that organic search has the most impact of all marketing channels, accounting for 16% of all customer acquisition. Additionally, the CLV of customers arriving to retailers’ sites via organic search was 54% higher than the average of other marketing initiatives.
However, email marketing is on the rise: Custora research confirmed that customer acquisition via email has quadrupled over the last four years. The positive growth may be due to the variety of opportunities retailers have to create more personalized interactions, according to Aaron Goodman, Lead Data Scientist for Custora.
“More online retailers are using email marketing to win customers,” Goodman said in an interview with Retail TouchPoints. “Instead of using their sites to get customers to make purchases, we’re seeing retailers are using tools and techniques to capture customer emails. Then, retailers are adding them to distribution lists for branded newsletters, and are providing personalized messages to win conversions.”
While social media presents an opportunity for retailers to connect with consumers in real time, Facebook and Twitter are not as effective in driving acquisition and increasing CLV, according to Custora research. In fact, only 0.17% of all customer acquisitions come from Facebook, and less than .01% derive from Twitter.
Regarding Twitter, Goodman noted that although many retailers are using the site to connect with customers, “we’ve found the social network is not very valuable in grabbing high-value customers.”
In fact, the overall CLV of shoppers who visit retailer web sites via Twitter is 23% below the average. This poor performance can be attributed to the fact that most retailers rely on the social network to distribute discounts, according to Goodman.
“Tactics we see on Twitter most frequently focus on deals, such as ‘get $5 off if you re-tweet this message,’” Goodman explained. “But those customers who come in for a promotion tend to only be discount seekers and are not willing to be loyal to a retailer.”
The disparity between Facebook and Twitter acquisition rates can be attributed to a variety of factors, according to Goodman. For example, Facebook relies less on discount-focused posts, and suggests retailers use paid advertising opportunities instead.
“Based on our analysis, it seems like Twitter ads disappear more quickly and don’t leave a lasting impression due to the feed format,” Goodman said. “Additionally, Facebook is a more mature advertising platform, and has more information about its users, which allows brands to create better and more targeted campaigns and interactions.”