April 02, 2008

Brand Or Merchandise Loyalty In An E-Commerce Business

You have two merchandise lines that exhibit curious behavior.

Merchandise Line #1: Traffic is driven to the online channel from paid and natural search. Customers gobble up high margin merchandise, making the merchandise line one of your best sellers. There's only one problem ... these customers don't re-order from your business, implying that these customers have poor lifetime value.

Merchandise Line #2: Traffic comes from all advertising sources. Customers like this merchandise line at an average rate, and have an above-average repurchase rate, which implies that these customers have outstanding lifetime value.

You have money to spend on online advertising today, and your business is running below last year's sales levels ... not a good sign when managing an e-commerce business. Which merchandise line do you invest in?

Maybe you are already running reports that illustrate the purchase composition of the customers who buy each item you offer. I've seen several interesting iterations of this style of reporting. It's always a good idea to know if loyal customers, infrequent customers, or newbies are buying your merchandise ... and it's always a good idea to track the lifetime value of the customers each item draws into the business.

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