Jupiter: Multichannel Customers May Not Be So Valuable

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Customers who buy from the same merchant on multiple channels are not worth as much as marketers often think, according to a report issued yesterday by analyst firm Jupiter Research.

Though what Jupiter calls "active" multichannel shoppers account for a disproportionately high share of Web sales, they are more deal-driven, more aware of pricing across channels and consume more costly features, such as live help, according to the report.

"They are actually a liability," said Juliana Deeks, associate analyst, Jupiter, New York. "And one of the most important findings is that their loyalties and their spending are divided among a larger number of stores online." Active multichannel buyers are more than twice as likely to have purchased from five or more online stores than other online buyers, according to the report.

"The common assumption that customers who purchase across channels of a given retailer are more loyal to that retailer is false," Deeks said.

The report defines multichannel shoppers as those who use the Internet to buy online and research purchases transacted offline. It defines active multichannel shoppers as those who buy across channels -- including the Internet, retail store or catalog -- of the same retailer.

While 23 percent of active multichannel buyers surveyed by Jupiter said they had made more than five online purchases in the three months preceding the survey, 12 percent of multichannel shoppers indicated they had done so.

And while active multichannel buyers are 19 percent of the online-buying population, they account for 24 percent of online spending and online-influenced spending, the report said.

However, active multichannel buyers are very deal-dependent, according to Jupiter. For example, 17 percent of them said they would definitely buy from a new online store for a 10 percent discount. Also, active multichannel buyers are more likely to abandon an online purchase to avoid paying sales taxes, and are three times as likely to have downloaded or printed an Internet coupon to use in a store during the year preceding the survey, Jupiter said.

When asked why they had completed purchases in a physical store that they had researched online, 28 percent of active multichannel buyers cited lower store pricing compared with 15 percent of multichannel buyers. This suggests that not only are active multichannel buyers more aware of prices across channels, they are more motivated by those pricing differences, the report said.

"Retailers need to perform ongoing segmentation and analysis of their customer base" to see which segments warrant the most resources, Deeks said. "Rather than relying upon conventional wisdom that anyone who shops across channels is more valuable, [marketers should] test that hypothesis. It may, in fact, be true [for individual merchants]."

In other findings, more than 80 percent of online shoppers log on with specific products in mind, according to Jupiter. As a result, the most effective merchandising opportunities lie in cross- and upselling, the firm said.

Also, Jupiter predicted that so-called Web-impacted spending will reach $256 billion by the end of this year, and $582 billion by the end of 2006.

Jupiter Research, formerly a business unit of Jupiter Media Metrix, was sold this month along with Jupiter's events business to INT Media Group for $250,000. The deal is expected to close today.

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