Customer Retention Advertising V.S Acquisition Advertising in the Online Retail World

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The retail industry has been drastically altered with the introduction of digital advertising. Today, the retail digital advertising industry is the largest spender by far, with an estimated ad spend exceeding $15 billion in the U.S alone for 2016.

Since advertisers today compete in a much more highly saturated space, they are constantly re-imagining campaigns and coming up with creative ideas to convert customers.  The difference today is that advertisers need to think about conversion as the start of a long journey a customer takes with a brand.

Each time a consumer makes an online purchase the brand needs to care not only about the acquisition process, but how they can increase brand loyalty and awareness in order to increase the lifetime customer value.  While it is easy for advertisers to get lured in by the appeal of high conversion rates for acquisition, the true test of time for a brand is in their ability to use advertising to increase retention and overall consumer purchases in the long term.

What this means for advertisers is that they need to spend more time building a brand and educating the market of the brand value than they have in the past. Today, a single purchase on a website has less value from a brands perspective than a loyal customer who constantly comes back to their brand.  For advertisers, this directly translates into more emphasis on retention adverting rather than first time acquisition, and an increased reliance on customer loyalty programs.

What can be done to increase lifetime customer loyalty? For starters, focus your marketing strategy on long term advertising that is brand focused and not product centric. It is important to ensure that all long term advertising campaigns are monitored and tracked. In doing so, it will be possible to integrate customer loyalty programs that reward repeat consumers and upsell products.  Companies that want to take things further, should also consider integrating a native application in order to increase purchases.

Ultimately, the sky is the limit – the important thing to remember is that acquisition is no longer the king – set your sights on retention for long-term success as an advertiser and as a company.

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