Cyber Dialogue Uncovers the 90/20 Rule

Nearly 90 percent of all online dollars are spent by 20 percent of the top tier of shoppers on the Internet, according to the InterActive Consumers study released by Cyber Dialogue today.

What's more, top-tier buyers in most categories account for the majority of a site's online sales volume, Internet-influenced offline shopping and ad clicks, the study found.

Top-tier shoppers account for 87 percent of all dollars spent online as they make purchases of at least $1,000 per year, according to the study.

“The real finding is it’s always some very small percentage of customers that are the most valuable ones,” said Qaalfa Dibeehi, director of Internet consumer practice at Cyber Dialogue, New York, an analytical electronic customer relationship management company. These shoppers are predominantly male, college graduates and with annual incomes of at least $75,000.

Defined by transaction frequency, top-tier online shoppers place 12 or more orders a year, accounting for 71 percent of all online sales transactions. The top products purchased online by this group are holiday gifts (61 percent), travel (55 percent), books (53 percent) and software (45 percent).

Companies need to identify these top customers and target them before their competitors do, Dibeehi said. “What's the point of going after a broad range of customers that aren't so valuable?” he said. “This is a separate group that needs to be identified. If you have to wait to find out who is the most valuable, you're opening the door for everyone else to take your customers.”

This desirable audience is not just spending cash online. Top-tier shoppers account for 94 percent of Internet-influenced offline spending. They spend an average of $700 offline after gathering information on the Web.

Reaching this audience is essential for traditional companies looking to drive sales online and offline, Dibeehi said.

“Think about the number of businesses whose strategy is not necessarily to sell all of this stuff online,” he said. “For traditional retail outlets, this sort of strategy is super-important for them. If you had it in your mind to do a mass marketing campaign, you're missing the point. The whole point is to target these valuable customers.”

The top tier of online adults who click on six or more ads a month accounts for 81 percent of all ad clicks. Sixty-nine percent of these ad clickers are male, and 49 percent are employed by small businesses. Thirty-seven percent of this group report making purchases after clicking on an ad.

Other findings about the 90/20 group include that 78 percent find shopping online easier; 63 percent have had their impression of a brand changed online; and 32 percent participate in award programs.

These findings were derived from in-depth interviews with more than 1,600 online adults and 1,100 offline adults conducted in April by Cyber Dialogue.

Cyber Dialogue clients include AOL/Netscape, Avis, Levi Strauss & Co., Procter & Gamble, Tommy Hilfiger, Sony and Yahoo.

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