Five Ways to Build Sticky Customer Relationships

People who follow the Internet economy are paying keen attention to the 'sticky factor' of Web sites — the ability to attract visitors, capture their attention and keep them coming back.

It is an important concept for advertising-oriented sites because the increase in exposure to banner ads, inline ads and keywords generates more advertising revenue. Portals such as Yahoo have spent millions to build stickiness by adding features such as communities and calendars to increase the time people spend on their sites, thereby increasing ad revenue and profitability.

For e-commerce sites, which drive revenue primarily by selling products, the approach for increasing customer stickiness must come from a different perspective. Increasing the time a visitor spends on an e-commerce site is good, but bringing customers back for repeat purchases is necessary to build a strong brand identity and franchise.

E-commerce companies have realized that unless they provide a customer experience that encourages the shopper to stick with shopping at their site, customers are only a mouse click away from venturing onto a competitor's site in search of a lower price or better shopping experience.

Building strong customer relationships leads to improved profitability since keeping existing customers is much less expensive than acquiring new ones and loyal customers tend to be less price sensitive.

Wall Street has richly rewarded e-commerce companies that have developed strong brand Web identities, but the millions of dollars that were spent to do this will be wasted if customers simply switch their attention and spending money to the next heavily marketed Web site that comes along. The ability to develop a sticky Web site that continues to bring customers back for more buying is a key requirement for building a profitable e-business.

The interactive and one-to-one nature of the Internet makes it a perfect environment to build such customer relationships. One of our customers has used several innovative e-marketing techniques over the past few weeks to generate over $750,000 of incremental e-commerce revenue. Here are 5 things that they are doing to build 'sticky' customer relationships.

Use lights-out interactive e-marketing to proactively cross-sell, upsell and re-sell products. An automated process to proactively market products to customers — referred to as lights-out marketing since it is done without manual intervention by the marketer — allows e-commerce sites to increase their stickiness by bringing more customers back to the site for repeat purchases. The interactive and automated nature of these lights-out campaigns allow them to react quickly to customer behavior while keeping costs low.

For example, when a customer buys a printer, they are asked if they would like to receive periodic e-mail promotions and reminders for consumables such as ink cartridges and paper. If the customer opts-in to these reminders, the company sends e-mail promotions at different intervals and measures the responses. The company learns from the response rates how to fine tune the frequency and type of promotions to optimize repurchasing.

Apply database marketing principles of targeting and segmentation. By leveraging the inherent one-to-one nature of the Internet and applying proven database marketing principles such as targeting and segmentation, marketers can increase the stickiness factor by interacting with customers as individuals based on their own interests and needs.

Use personalization to broaden and deepen customer relationships. Personalization can improve customer relationships and increase stickiness by allowing marketers to use past purchase behavior and demographic information to make promotional offers more relevant and improve interactions with customers on an individual level.

This is especially critical with Internet marketing because if you spam people, abuse their privacy or bombard them with offers that disinterest them, they will quickly put up blinders and ask you to stop e-mailing them, or they will ignore your communications.

By targeting people who have opted in with personalized offers that are relevant, you greatly increase the probability that people will not only respond but purchase and remain interested every time you contact them. There are also different degrees of personalization: addressing someone by name is just the tip of the iceberg.

Use continuous relationship marketing to build customer loyalty. Continuous relationship marketing improves stickiness by allowing marketers to build a relationship with customers over a long period of time. Highly targeted personalized marketing campaigns can drive repeat purchases in the short run, but building long-term relationships requires sustained interactions with customers over a longer period of time.

This requires that you continuously learn about your customers through incremental profiling techniques where you learn about their needs and interests, and then you act on their behalf by giving them information and value that they care about. Continuous relationship marketing programs are driving the next wave of e-marketing that is the key to building long term customer loyalty.

Implement closed loop measurement tools to evaluate the stickiness factor. The ability to measure customer behavior and track how well customers are responding to marketing efforts is integral to the marketing process. If marketers cannot measure the success of the marketing process and their efforts to increase their stickiness, it is very difficult to manage the process and make it more effective.

The good news about Internet marketing and e-commerce is that it is inherently a direct interaction medium, so that it's possible to measure the effectiveness of different lists, segments, offers, promotions, channels and creative approaches in real-time. New closed loop marketing systems enable marketers to analyze and understand the patterns of communications that are the most effective so as to optimize the stickiness of their customer relationships.

Anu Shukla is CEO of marketing automation software company Rubric Inc., San Mateo, CA. Her e-mail address is [email protected]

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