While these are important results of a Mirakl Marketplace strategy, there is a bigger, more critical, and more important business driver at play.
Earning, and retaining, the loyalty of your customers should guide every decision across your organization, especially those you make related to your Marketplace. This is one priority that should not only be at the top of your list, it should become your obsession. It is the #1 objective of building a Marketplace business in the first place.
Don't take our word for it
“There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.”
Sam Walton, Founder of Wal-Mart Stores Inc.
Several reasons justify this customer-centric obsession. A survey from Bain & Company and Mainspring on the Value of Online Customer Loyalty found:
- Loyal customers not only buy more often, they buy more variety. While one-time shoppers may not always be profitable given high customer acquisition costs, repeat buyers come back regularly, and diversify their basket. In fact, 70% of loyal Gap online shoppers would consider buying furniture from Gap.com. Yes, really.
- Long-time loyalty leads to higher spending over time. The more a customer is loyal to the website, the more they spend. According to the study, apparel customers spent 67% more 31-36 months after their first purchase than in the first 6 months. Additional research found that existing customers spend, on average, 31% more when compared to new customers.
- Loyal customers drive referrals. There is immense power in a referral from a friend or trusted peer. Among buyers of consumer electronics and major appliances, customers referred 13 people on average after ten purchases, compared to an average of four referrals after their first purchase. Even in B2B, 91% of buyers are influenced by word-of-mouth when making a buying decision.
- Loyal customers are highly profitable. Satisfying and delighting existing customers is not only an effective way to attract new customers, it’s highly economical. It costs five times as much to attract a new customer, than to keep an existing one. Another study found that the probability of selling to an existing customer is 60-70%, while the probability of selling to a new prospect is between 5 and 20%. Existing customers are also 50% more likely to try new products when compared to new products.
Show me the money
Increasing customer retention rates by 5% has been shown to increase profits by 25-95%.
Today’s customers have new and higher expectations for their e-commerce experience than ever before. When considering an online Marketplace, remember that the three keys to success are all driven by the imperative to keep customers coming back: a large product catalog, great customer experience, and a fair price. Those who can successfully rise to meet these demands will earn what is essentially the Holy Grail of business: the loyalty of customers.
Contact us if you wish to know more about how a Marketplace can help strengthen your customer loyalty.
Written by Barry Murphy
Barry Murphy is the Director of Content and Product Marketing at Mirakl. In this role, Barry leads the alignment of Mirakl's offerings to market needs for the next generation of online commerce. Barry previously ran product marketing organizations for X1 and Mimosa Systems (now part of HPE). Barry also had a highly successful stint as Principal Analyst at Forrester Research. Barry received a B.S. from the State University of New York at Binghamton and an M.B.A from the University of Notre Dame.