Why Won't You Come Back? Going once. Going twice. But not necessarily sold.
Thanks to consumers' growing trust in the Internet bidding process and to their growing comfort with e-commerce in general, Web users are flocking to auction sites to see what's on offer, and maybe even get a good deal. As a result, almost all auction sites have reported a rise in traffic this year, as cyber flea markets have gone mainstream. In fact, the number of visitors to these sites increased 5 percent in the first three months of 2000 alone, according to Media Metrix.
At the same time, an increasing percentage of auction site surfers are consumers who are visiting for the first time. And these newbies have a lot to teach marketers about the art of customer retention in the digital age. New users accounted for 8 percent of total auction site visitors at the start of the first quarter of 2000, and by the end of the second quarter accounted for more than 26 percent of all visitors to these sites, according to "Customer Satisfaction Snapshot: Online Auction Industry," a new study from cPulse, a Manhattan-based Internet market research firm. As the number of new visitors increase, dissatisfaction with the auction experience is on the decline. While a whopping 70 percent of consumers who don't plan to return to the auction site were dissatisfied with their experience in the first quarter of 2000, just 49 percent said the same in the second quarter.
That's the good news. The bad news is that most of those new customers are proving to be window-shoppers who are unlikely to ever come back. In fact, first-time auction site users are 66 percent less likely to return than typical users.
"People are coming to auction sites just to check out the scene. But since they weren't serious in the first place, they're not likely to stick around over the long run," says Michael Hochster, an analyst at cPulse. "The correlation between customer satisfaction and return use isn't as strong anymore." In other words, many new auction visitors don't come back, no matter how good they say their experience was. For cyber marketers, it's the start of a new day. Instead of a single-minded focus on attracting clicks, e-marketing strategists will now have to tackle the retention challenge in earnest.
At least in the case of online auctions, cPulse believes that there are simple steps sites can take to turn "tire kickers" into repeat customers. First, Hochster says auction sites must put function ahead of design. cPulse found that words are as valuable - if not more valuable - than pictures when describing a product that's up for auction. Unlike catalog shoppers who tend to browse for products, auction users usually know what they're looking for and have some idea of its value. As a result, descriptors that speak to age and condition say a lot more than thumbnail photos of the product. In fact over-designed sites could actually hurt retention by slowing page downloads and making the bidding process laborious.
Second, and most important, says Hochster, is to put greater emphasis on value. The most common complaint from auction "defectors" was that minimum bids were too high. It's so important an issue, in fact, that complaints about minimum bids were the most frequent response to cPulse's open-ended question. As one respondent noted, "why are your minimum bids so high? In fact, higher than some retail elsewhere. I have been buying from your competition more and more. You started off great, but the prices are no longer feasible."
All of this just goes to show that growth in the number of hits doesn't necessarily add up to big sales, much less profits. For marketers in the New Economy, attracting repeat customers is still what will add to the bottom line.