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Dec 6, 2005 6:01 AM

Small Number of Online Buyers Drive Almost Half of the Business

Only 18% of online buyers drive almost half (46%) of the spending, according to a report by Nielsen//NetRatings.

These buyers have been dubbed "most valuable purchasers" (MVP) by the research group, which suggests that marketers focus their attention on these buyers.

"Each retailer needs to analyze its own customer base to identify its respective MVPs and develop targeted marketing programs that will maximize revenue from these shoppers," said Heather Dougherty, senior retail analyst, Nielsen//NetRatings. "Not only are the MVPs valuable based upon sales and number of purchases, they are also inordinately loyal to the retailers that they purchase from."

Compared to these big spenders, the majority of online buyers, or 55%, spend the fewest dollars online and make fewer purchases. This group accounted for 21% of online purchases.

The MVPs (18%) spend more than $185 while buying something online four or more times. Eleven percent spend more than $185 dollars in three or less times while shopping online; 55% spend under $185 in three or less times and 16% spend under $185 in four or more times.

The study also found that MVPs are heavy users of comparison-shopping tools as compared to the other segments. They have higher household incomes, are more likely to have broadband access and are heavier Internet users in both time spent online and time spent on retail Web sites.

"Customer acquisition strategies need to include a combination of broad reach marketing tactics, including search and comparison shopping tools, as well as targeted Web sites that are frequented by the MVPs," Dougherty said. "Online retailers also need to tailor loyalty programs that reward the MVPs for purchasing at their sties to drive repeat sales and maintain a strong relationship with these valuable customers throughout the year."

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