Good Incentive

Customers need a reason to return to your Web site. Are you giving them one?
Magazine Contributor
3 min read

This story appears in the August 2001 issue of Entrepreneur. Subscribe »

It's a scary reality: e-commerce sites turn over as much as 60 percent of their customers every six weeks. Given such a discouraging statistic, how is your site supposed to grow when finding new customers may consume all your time because first-timers rarely make return trips?

The answer is, it can't. You'll have to find a way to get customers to come back for more. The secret, say experts, lies in building loyalty. Achieve that, and you most likely have a customer for life.

Online incentive marketing (setting up loyalty programs on your site, for example) works wonders when it comes to building relationships with customers. In a recent study from market research firm NFO Interactive, about 53 percent of online consumers surveyed said they'd go back to shop at a specific Web site if it offered incentives.

"Customer retention is [incredibly] important; one way to make someone a lifetime customer is through incentive programs," confirms Leland Harden, co-author of NetResults.2: Best Practices for Web Marketing (New Riders Publishing). "Incentive programs allow merchants to show customers that they appreciate them."

There are numerous such programs out there. You could do something as simple as offering customers the ability to earn gifts-like T-shirts emblazoned with your logo. Or you could go with the most popular option, known as a frequent-buyer or points program. This choice gives customers the opportunity to receive frequent-flier miles, discounts or points toward the purchase of merchandise by buying products on your site. The more your customers spend, the bigger the discounts or the more points they receive.

One company reaping the benefits of the strategy is, an Arlington Heights, Illinois-based community and portal Web site for collectors. The site rewards customers by giving them the opportunity to amass loyalty points they can trade for savings on future purchases.

It works like this: When customers sign up for's program, they receive five points. They also get points every time they purchase products, visit the site, get a friend to register, or participate in a poll or survey. When customers hit 500 points, they receive $10 off their purchase at checkout.

"We set up the program to show our customers that we really appreciate their business," says CEO Shonnie Bilin. "And the program has been a great success because it helped us develop customer loyalty. We reward customers for coming back to the site. Then they reward us by [returning] and purchasing more products."

Although Bilin, 47, set up her program in-house, you can also outsource your program to an incentive company such as Inc., Netcentives and WebMiles Corp.. When your company joins the company's merchant or partner network, members who purchase products from your site receive points that can be redeemed for merchandise or airline miles.

Before deciding which program to try, however, make sure you know your customers-and the kind of loyalty program they'd be interested in. Do they prefer frequent-flier miles, points or discounts? Would they come back time and time again if the right incentive was offered? If you're not sure, simply ask them-it's really the best way to find out.

Keep in mind that incentive programs aren't for everyone. If you sell niche or expensive products, for example, shoppers may buy something once but then have no reason to visit your site again. So, before you spend time and money launching an incentive program, consider whether your effort will be worthwhile.

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