Analysis: Merchants ineffectively tracking shoppers' habits

By Paul Krill, Network World Fusion |  Software

Internet merchants are not tracking customer behavior well enough to understand customer loyalty, according to a report detailed Monday by Jupiter Media Metrix Inc.

According to the New York-based company's survey, 45 percent of online shoppers choose e-commerce sites based on word-of-mouth recommendations, yet only 7 percent of companies implement tools to identify "viral influencers" via e-mail pass-along rates.

Merchants could reduce customer acquisition costs by 27 percent and increase order sizes by as much as 60 percent by considering viral marketing and customer satisfaction, according to Jupiter.

Key metrics of the Jupiter study include the following:

Jupiter analysts believe e-mail will dramatically enhance the ability of merchants to measure viral behavior. HTML-based e-mail messages can link to files remotely from a user's desktop, enabling companies to track and measure pass-along rates of these messages. Companies will soon be able to develop loyalty and retention campaigns that target viral influencers directly.

Most companies do not look beyond monetary metrics when identifying loyal customers. This incomplete approach can alienate valuable, lower-spending customers who may recommend the site to others.

Companies are not using customer data effectively and allocate customer and marketing analysis dollars incorrectly. Most companies under-utilize data they have collected and instead rely on data purchased from third parties, according to Jupiter.

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