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Online retailers put existing customers first: survey

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Keeping hold of existing customers and improving the effectiveness of online marketing are the two top priorities of internet retailers, according to new research.

eCommera, ecommerce trading solution provider, commissioned independent research to quiz ecommerce directors about their priorities. Joint first place in the list went to customer retention and to improving online marketing effectiveness.

In second place was attracting new customers and in join third place were ecommerce analytics and understanding of how to optimise and manage ecommerce technology and innovation.

Perhaps surprisingly, engaging customers through social media channels came in at last on the list of ecommerce directors’ priorities.

“We were actually encouraged by the lack of concern over social media, recognising that this is currently a distraction,” said Andrew McGregor, chief executive of eCommera. “It is easy to get excited about 'the next new thing' but no retailer is going to get rich anytime soon from their social media strategies.

But while the eCommera research puts customer retention as a top priority, at the same time a new study from customer insight agency Service Management Group (SMG) suggests that 42% of retailers are finding it more challenging to keep current customers loyal.

It found that 64% of the retailers it quizzed will spend more of their marketing budgets on gaining new customers – even though 63% admit that existing customers are more profitable.

Jeremy Michael, managing director of SMG UK, said: “With Christmas around the corner, it is now even more important to turn each new customer into a loyal one and ensuring that their first visit encourages them to return and, more importantly, recommend.”

This looks set to be important since, figures from consumer research

specialist Intersperience says many customers will be looking to reduce the amount they spend this Christmas. In all, consumers are looking to reduce their Christmas bills by 6%. That would amount to a total fall in spending of £500m, compared to last year, if all 35m people of working age population went ahead with such a cut.

Paul Hudson, chief executive of Intersperience, said: “The spending predictions are the lowest we have ever recorded so it is clear that retailers are going to have to offer deep discounts in the next few weeks to generate an acceptable level of sales.”

However, he said, there was some potential consolation in the finding that last year one in three shoppers spent more than they had originally planned.

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