E-businesses overlooking loyal customers

A new study reveals that companies are focusing on the wrong measurements when examining who are loyal customers.

2 min read
Companies are focusing on the wrong data when it comes to identifying their most loyal customers, according to a new report released Monday by Jupiter Media Metrix.

The New York-based research firm said nearly half of online shoppers, or 45 percent, choose e-commerce Web sites based on word-of-mouth recommendations, otherwise known as viral marketing. But only 7 percent of companies, according to Jupiter, can accurately identify "viral influencers."

According to Jupiter analyst David Daniels, companies can improve their consumer intelligence by using tools that track HTML-based e-mail messages. Because about 60 percent of consumers online have the ability to read HTML-based e-mail, he said, companies should be adding code to those e-mails that allows them to determine viral behavior.

Daniels added that businesses should take advantage of analysis tools that provide companies with the opportunity to better learn their customers' behavior.

The report comes as Web companies are trying new gimmicks and more invasive advertising to attract new customers. Major companies, such as Nike, Burger King, General Motors, ESPN, Pepsi, Nickelodeon and Paramount, are lining up to create online games featuring their wares. Meanwhile, others are experimenting with "pop-ups" that automatically launch Web pages or short online films to hawk products.

While companies attempt to lure new customers with such ads, Daniels said, businesses need to focus more on identifying their loyal customers, especially the ones who are "acting as an advocate for their brand" via viral marketing.

"Those are the customers that are truly loyal, not necessarily the customers that transact a lot," Daniels said. "Businesses need to invest in measures to identify their viral customers."

Jupiter said companies that accurately identify loyal customers could reduce customer acquisition costs by 27 percent and could increase average order sizes by up to 60 percent.