The Pain of Losing a Customer Cuts Deeper Than You May Think
November 15, 2017
by Adam Segal
When analyzing online retail success, we tend to focus on metrics like average order value (AOV) and revenue per visitor (RPV) to indicate success. These metrics focus on the transactional nature of visitors engaging your site.
However, there is an additional hidden cost in losing visitors to unauthorized, injected content appearing on your website — you don’t just lose the customer that day, you potentially lose them forever, at a much higher cost than you may have anticipated.
According to the White House Office of Consumer Affairs, loyal customers are, on average, worth up to 10 times as much as their first purchase. Studies have shown that increasing customer retention rates by 5% increases profits by 25% to 95%. These two points are critical in understanding the true cost of losing a potential customer to a competitor.
When visitors to your site are infected with malware-driven injected ads, unauthorized display advertising and affiliate hijacking will drive a significant percentage of visitors to convert elsewhere. Infecting between 15-25% of all website visitors, this growing problem is known as Online Journey Hijacking.
Jim wants to buy the latest gaming console for his children. He reads some reviews and decides on the Playstation 4 Pro. Jim is a price-sensitive buyer and decides he’ll take a look at well known retailer Bullseye. Jim heads over to bullseye.com, searches for the Playstation 4 Pro and adds it to his shopping cart. Jim clicks through the checkout process and when it comes time to enter his credit card details, a piece of content catches his attention: “Buy the Playstation 4 Pro for $299”. Jim was about to pay $399 but would much rather save $100, and so he clicks through to GreatPrice and purchases the gaming console there.
An actual screenshot taken from an infected device
In this scenario Jim, GreatPrice and the affiliate network all win. Bullseye loses. But they don’t just lose the $375 that Jim was going to spend that day. Jim has now entered into a transactional relationship with GreatPrice. Jim may register as a user before he checks out, he may subscribe to their newsletter to get updates on promotions. GreatPrice now have the opportunity to build a more meaningful relationship with Jim.
This relationship will grow as Jim buys games and accessories over the next few years. Jim may also be inclined to head to GreatPrice first when he needs a new TV, or when his bluetooth headset breaks. Every cent that Jim directly, or indirectly brings to GreatPrice will be revenue lost for BullsEye.
Jim is just one example of millions of consumers who will be hijacked by unauthorized display advertising. According to Namogoo’s latest report, retailers stand to lose $2.1 Billion in revenue this holiday season alone.
It’s natural for us to look at that $2.1 Billion as a small piece of the very lucrative $100 Billion pie, but when we consider the long-term ramifications for individual businesses pouring millions of dollars into customer acquisition, coupled with the fact that loyal customers are worth up to 10 times more, we reach a very different conclusion:
Driving visitors to your website dramatically increases your chances of turning them into loyal customers, but all it takes is one compelling, albeit unauthorized creative to catch their eye, and you may have lost a loyal customer for life.