Tying its release to Cyber Monday, Coherent Path issued research showing that new online customers whose first transaction involves a discount or special offer are 50 percent less likely to return to make a second purchase.
The research also found:
- Customers who visit an e-commerce site for the first time and make a purchase at full price are more than twice as likely to make a second visit;
- Returning customers will spend 150 percent more per visit versus those who are initially motivated by a sale;
- Over the lifetime of the relationship, a customer whose first interaction with a retailer does not involve a discount is worth at least 2.5 times more than a customer who responds to a short-term discount or promotion.
Using data compiled primarily from client's e-commerce sites, Coherent Path compared consumer purchases based on various discounts over a period of time.
"Our data shows that when price plays a significant role in the first-time purchase with a retailer, even online, the chance of them becoming a long-term and loyal customer can be low," said Dr. Greg Leibon, CTO of Coherent Path and a resident scholar in mathematics at Dartmouth College.
Coherent Path said strong order fulfillment, better follow-up after the sale, and additional promotions to move excess stock are all ways to increase shopping frequency and value. The report also said personalization can be used to "guide new Cyber Monday shoppers towards the more loyal and valuable behaviors exhibited by their very best customers."