‘Re’- Maximizing Life Time Value of Website Visitor by BhaskarT


									               ‘Re’- Maximizing Life Time Value of Website Visitor

For most online retail models ‘Re-’ is the key to profitability: Re-Visits, Re-Orders and minimal
Rejections and Returns. If your customers consume the product you sell daily or regularly ,‘Re-’ is
the key.

Food, Pharmaceuticals, Nutraceuticals, Subscriptions are some businesses that depend on Revisits
and Reorders for profitability. More often than not the Cost to Acquire a new customer is more
than the profit from first sale/ subscription in such businesses.

In this post I have discussed strategies to Maximize the Life Time Value of a customer. The
strategy would work across industries however, would need customization and tuning.

Plan and Budget the campaign:

It all starts with the Plan and Budget. If you are targeting repeat orders from your customers plan
a year round campaign and not a one time offer. For example, if you are selling Health
Supplements you have to acquire new customers and get repeat orders from the existing
everyday; unlike Television Retailers who run promotions and clearances around the shopping and
the holiday seasons.

Welcome New Visitors and Reward Returning Visitors:

This a critical and tricky element of the campaign and has long term impact. Typically, marketers
want to ‘deep discount’ first orders to ‘kill competition’ and hope to make profits on repeat orders.
However, this strategy may irritate you existing customers brand loyalists. Design a promotion
plan that entices new visitors and makes your existing customers feel special.

Having separate landing page for new and returning visitors works. You may also want separate
toll free numbers. If you are running a PPC campaign you should run separate campaigns for new
visitors and existing customers. Add negative keywords to segregate visitors.

On the website it helps to have separate entry and exit points designed for New visitors and
existing customers. Clever navigation and content architecture helps achieve the objective.

Benchmark the Cost of Acquiring New Customers:

The key to success is acquiring new customers at cost that justifies the revenue you expect from
the customer. If your cost to acquire a new customer is high you will get revenue but profit will
elude your business. If you target conservative cost of acquisition you will be profitable per sale
but would find difficult to scale up. Here are the factors that helps decide the benchmark Cost of
Customer Acquisition:

Purchase/ Manufacturing cost of the product.
Gross Profit on Sale.
Average and Median orders ( no. of times/ year).
Average and Median order value.
Demand Elasticity
Competitor’s Pricing Strategy
Design Promotions to Acquire New Customers:

The promotion strategy you use to acquire new customer is critical to retaining loyalty and
building brand. The expectations of the customer that responds to “Free First Month Trial” is
different from the expectation of a customer that responds to “Free 12th month when you pay for
Test various promotion offers. Poll audience about promotion’s appeal. Create a tracking
mechanism to map customer to the promotion they responded to.

If your strategy to attract customers is ‘Gifts’; design Gifts that resonate your Brand and Product.
Test response to various Gifts and poll audience about gift’s appeal.

Design the Outbound Marketing campaigns around the Product/ Service and not around
the promotion:

If your success depends on repeat orders your email campaign and display ads on third party
website should talk about the product and not about the free gift or free first month offer. The
objective of the outbound campaign is to get relevant traffic to your website. When Promotion is
the theme of your outbound campaign visitors come to your website for the offer and not for the
product attributes/ brand value. Promotions should be used on the website to entice interested
visitors to convert.

Also, your existing customers may feel cheated if they see offers that are better than the plan
they are on.

Experiment with the Promotion placement

At what stage of the shopping funnel should you expose your customers to the Promotion? If you
place the offer on the home page or the campaign landing page you will have more visitors adding
the product to the shopping cart or registering for subscription. If you put the promotion in the
shopping cart you will reduce Shopping Cart abandonment.

Experiment with the promotion placement in the shopping cycle, find out what works best for your
business. You may also want to use promotion placement as a tactic to counter seasonality in
business. Put the promotion on home page/ landing page during lean months and in the shopping
cycle during peak season.

Review the campaign, Fine tune as needed.

Review the campaign performance every quarter. Look at the data from Analytics and try to find
patterns and define your success mantra. Evaluate campaign performance. Analyze performance
of various Promotions and record for future reference. Remember the key to Maximizing Lifetime
Value of a Website Visitor is ‘Re-’

About the Author

Bhaskar Thakur is Entrepreneur, Digital Business and Social Media Evangelist. A seasoned
marketer and entrepreneur with over 13 years experience, he is founder of
www.worldwithoutme.com, www.initiative31.com. Bhaskar is among the first wave of Internet
Marketers in India and specializes in creating Strategies, solutions and slatforms for Social Web.
He enjoys mentoring businesses and coaching the young.

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