‘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:

  1. Purchase/ Manufacturing cost of the product.
  2. Gross Profit on Sale.
  3. Average and Median orders ( no. of times/ year).
  4. Average and Median order value.
  5. Demand Elasticity
  6. 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

Bhaskar Thakur

Digital Transformation & Marketing Leader , Growth Enabler, Recreational Runner, Learner & Seeker. On this blog I share my perspective on Technology, Entrepreneurship, Startups, Growth, Health, Running and Biking.