July 16, 2001, 12:00 AM

Online companies still don’t understand customer loyalty, says Jupiter

By looking at what drives customers to a site and what creates loyalty, e-retailers could increase average order size significantly, Jupiter says.

Despite a wealth of available tools and data to foster online customer relationship management, most online retailers still don’t fully understand customer loyalty, according to new research from Jupiter Media Metrix. “Most companies define customer loyalty too narrowly and are overlooking key measures of their customers’ behavior,” says Jupiter analyst David Daniels.

For example, 45% of online shoppers choose e-commerce sites based on word-of-mouth recommendations but only 7% of online retailers have implemented tools that allow them to capture data on “viral influencers” through studying e-mail pass-along rates. And according to Jupiter, most companies underutilize the data they’ve collected on customers to segment audiences and target marketing efforts. A full 60% of the companies surveyed purchase third-party data to analyze customers, while only 17% of online executives surveyed recognized they’ve already collected enough data about customers.

Surveys that accurately identify loyal customers and understand what drives their loyalty could reduce customer acquisition costs dramatically and increase average order size by as much as 60%, Jupiter says. With the rise of e-mail marketing, companies will be able to do a better job of tracking the pass-along rate of marketing e-mails, eventually developing loyalty and retention campaigns that target viral influencers directly, Daniels says.

 

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