Among the myriad marketing programs available to dealers is the concept of customer remarketing, or typically called, retargeting. Customer retargeting is the simple concept of a customer visiting your store or ecommerce site, they leave without buying anything, they are tracked down and pushed some type of marketing later relevant to their store visit. Back in the very old days of marketing, a lot of this retargeting started when a customer walked into a store “just browsing” and later ended up with a sales follow-up phone call or catalog in the mail. In the digital world, the concept started with a “Did you forget something?” browse/bounce or abandoned cart emails and later advanced to pushing your ad while known and unknown previous non-purchasing shoppers are on other sites such as news and entertainment websites.

Today, that “just browsing” thing is mostly thought of when an online customer exits your site without purchasing and are digitally tracked through cookies, tags or pixels and later presented with an ad for your company while they are surfing a different site on the great worldwide interweb. In any channel, retargeting is just a situation where a customer interacts and does not buy and you figure out some way to market to them later in a way that hopefully relates relevantly to what they were shopping for.

In any of the above digital examples there is some marketing tracking technology trickery typically powered by Google Analytics or Google Ads tags on your site to make all this happen, however direct mail and phone call retargeting is far from dead and there are some significant considerations when jumping into the budget commitment of digital customer retargeting.

 

Why Retargeting?

There is an old sales and marketing saying that it is far cheaper to retain and market to an existing customer than a new one — this is the case with both direct mail and digital retargeting. Retargeting is regarded as one of the most effective digital marketing options available. About 25 percent of customers note they enjoy seeing a familiar company ad, 98 percent of customers now enjoy seeing direct mail related to a business they shop with, they are about 43 percent more likely to convert to a sale and the CTR (Click Through Rate) is about 10 times higher than a non-retargeted ad.

The cost of direct mail is constantly decreasing and for most businesses idle sales team time can be used for follow up last visit customer retargeting calls. In the digital domain, display ads are still generally less expensive than retargeting ads, however retargeting is still regarded as having a significantly higher return. Retargeting also delivers more than 1,000 percent lift in brand name search over other search strategies, so for companies wanting to strengthen their brand strategy, retargeting is a very strong option.

Another great advantage to digital retargeting is that retargeted browsing shoppers could be an anonymous user potentially — either a previous customer or non-customer. With direct mail and email retargeting, in most typical cases you need to know who you are retargeting with either a mailing or email address. But with digital, customers are getting tracked in a variety of ways and can still be retargeted even if you have no idea who they are or where they live. Digital retargeting supports both a very strong new customer acquisition strategy and existing customer retention.

Cost & Budgeting

The first and biggest consideration is understanding the cost of customer retargeting. If a retargeting program is set up well it can be highly profitable, however if the return is not closely managed the programs can be a big money pit. The average cost of retargeting to a digital customer is about 25 to 60 cents per click, which can add up very quickly when you consider that even small retailers have a few thousand customers a day who would qualify for your retargeting campaign. In the world of digital marketing, a $100,000 yearly budget is tiny, only representing a small retailer with 2,000 customers retargeted a day with just two retargeting programs running.

Direct mail is a physical media and has a huge visual impact and conversion lift over digital ads and retargeting, so keep in mind that only the stellar direct mail campaigns should be tested as digital offers. Direct mail retargeting is usually a postcard and is based on the cost of postage (35 cents) plus postcard costs which are now typically under 5 cents each on quantities more than 1,000. For its cost and impact, direct mail is a big winning option to retarget customers for any sized dealer.

When considering a program such as this, retargeting should be part of a larger overall marketing program for a company and not viewed as savior sales. Having the budget to be able to commit a consistent investment into retargeting is critical to its success as on and off intermittent strategies do not tend to work well.

 

Advantages & Strategy

One of the notable advantages of digital retargeting programs is that they are generally far less expensive than Pay Per Click search campaigns where you are just bidding on keywords or word groups when anyone searches on Google, for example. Digital retargeting is not targeting any customers as a search result such as with PPC, just those non-purchasing website shoppers with a later ad on some other website.

For those companies that want to jump into digital marketing, retargeting is a great option for less money than many other digital marketing strategies. Starting with retargeting also allows companies an opportunity to tune their physical and digital offers with a lot less investment than jumping into very expensive PPC search bidding. Does the “$10 off $100” or “Buy 4 Get 1 Free” offer work better is a question answered at a retargeted 27 cents a click verses a $2 PPC search.

Retargeting is not always the answer. If customers have not visited your store yet or you need to draw in a lot of net new customers, then PPC search or bulk direct mail campaigns are good options to get net new customers. PPC search can easily start around eight times the price of retargeting with PPC average click cost of $2 to $3 with more than $15 per click being common. Changes are high that bidding on “AR15” for example is not going to be a cheap term, but new customer acquisition and protecting your brand name from poaching competitors may be worth the cost.

The main reason for this lower cost is the customer’s Average Time to Purchase (abbreviated to AT2P). AT2P is the time it takes to move through a purchase funnel of Awareness, Interest, Consideration, Intent, Comparison and finally Purchase. In the marketing world, we call this the Marketing/Sales Funnel. The longer a customer does not convert/buy from you, the longer AT2P and larger number of ads you will be retargeting to that customer.

In an ideal retargeting state, a customer would bounce from your site without purchasing, and during a later visit to another site that day, they would see your first digital ad, click and buy immediately. But the retail industry AT2P is about twenty days, so accept that the true cost of a retargeted customer is not 27 cents, but likely a multiple of that. The lower the cost of the item in retail the lower the AT2P. A cool billet magazine release for $5 probably has a sub-30 second AT2P where that $3,000 custom precision competition rifle may have a 90-day AT2P. Notably large ticket items such as homes, cars and home furnishing have a 6 to 12 month AT2P.

 

Retargeting Options

Email - Constant Contact, SendInBlue, GetResponse and MailChimp are the usual options for email retargeting programs and all have some type of retargeting email program available once you have tagged your site with their code. If you are going to select an email vendor, the value of these programs is integrating their code on your site to get the benefits of seeing customer campaign conversion, reporting, return on campaigns and the ability to retarget non-purchasing customers.

Once this initial integration is set up, it is usually fairly straight forward of setting up triggered retargeting emails based on a visit, keywords, pages and products. Regardless of email, direct mail or digital, the more you tune your messages and offers, the higher the response, conversion and return will be on these programs. If they visit a 9mm ammo page, a 9mm ammo discount offer will likely convert higher than a general broad offer, however nearly everyone in the firearms industry only uses broad offer retargeting campaigns such as “$15 coupon code on $150.”

Direct Mail - Most marketers extract a known visited customer report from their website analytics — those customers who are logged-in and visit without buying. This file is sent to a mail house for fulfillment, or an intern/part-time employee gets the opportunity to hand sticker address labels on pre-printed postcards. I have done this both ways and they both work equally well, however there is a volume where the intern cannot keep up. Generally, you will want to have a special discount code printed and assigned exclusively to each direct mail campaign to track the return in your analytics systems.

Digital - There are a lot of options on the market for digital advertising, however, if you are a dealer starting out I would just stick with Google Analytics, Google Ads and potentially your YouTube channel. There are literally 1,000s of agencies that can also assist, however if you have the aptitude and patience to set this up with Google’s rather friendly interface, you will save a bundle doing this yourself vs the typical 15 to 50 percent of total spend agency fees.

 

Measuring Return

Measuring your return with a properly set up digital Google Ads/Analytics or an email program should be easily visible in your online Google Analytics reports. This should tell you the exact revenue of each campaign (by campaign code), however it likely will not show your return. ROAS or Return On Ad Spend is the most common measurement for modern marketers.

ROAS is gross sales Campaign Revenue divided by Advertising Cost of the Campaign which delivers “Return” hopefully in the form of a positive number. ROAS indicates the expected return on a marketing investment. Typically, ROAS is expressed as a multiplier or as a percentage but should always be a number greater than the amount of margin made on a sale. Example - A specific $100K retargeting campaign generates $1M sales — $1M/$100K = 10x, spend $1 get $10, or 1,000 percent ROAS. Sounds great but what if your margin is low, how will you know if your campaigns are actually making money.

Another spin off metric is MOAS (Gross Margin on Ad Spend) which is more meaningful in retail with lower margin products to assure you are covering the cost of marketing. Example - A $100K campaign generates $200K margin (on that same $1M) — $200K/$100K = 2x, spend $1 get $2 in margin, or 200 percent MOAS. Sure this example program is profitable, but not by much. Keep a close eye on these ratios weekly to assure you do not need to tune an underperforming campaign or invest more heavily in a successfully one.