• by Jack Loechner , Staff Writer @mp_research, July 25, 2013

With U.S. e-commerce sales now topping $200 billion annually, digital marketers are getting savvier than ever, according to a new study by Custora. The study reviews the rapidly changing landscape of customer acquisition and shed additional light on what’s shaping the future of e-commerce growth.

Customer acquisition trends reflect this evolution. Organic search still leads as the largest channel for online customer acquisition. But as more retailers move towards a “free-to-paid” subscriber model and rely on third parties to help drive visitors to their sites, email and affiliate channels have seen an explosion in growth over the past few years.

Key Findings

• Customer acquisition via email has quadrupled over the last 4 years.
• The Lifetime Value of customers acquired through Twitter is 23% lower than average.
• The most valuable online shoppers tend to come from more rural states, yet fashion brands find many of their best customers in densely-populated coastal states.

Email marketing has been a growing trend in e-commerce, with an increasing number of retailers building communities and collecting email addresses, then converting those “members” into customers. Organic search continues to grow as a reliable channel, (accounting for nearly 16% of customers acquired) reinforcing efforts to complement products with relevant and informative editorial content along with investing in search engine marketing.

Customer Acquistion
	Percentage of Customers Acquired
Channel	2009	2010	2011	2012	2013
CPC (Cost per Click)	5.39	6.71	7.89	9.71	9.82
Email	0.88	0.75	2.64	5.34	6.84
Google	0.51	1.60	1.33	0.98	1.72
Organic	10.35	13.14	15.05	16.22	15.81
Referral	3.63	6.04	7.30	7.70	6.39
Banner	0.01	0.04	0.09	0.15	0.46
Facebook	<0.01	0.16	0.22	0.05	0.17
PPC (Pay Per Click)	<0.01	<0.01	0.01	0.30	0.23
Affiliate	0.34	0.44	0.42	0.75	0.96
Twitter	<0.01	<0.01	<0.01	<0.01	<0.01
CPM(Cost Per Impression)	<0.01	0.02	0.03	<0.01	<0.01
Source: CUSTORA E-Commerce Customer Acquisition Snapshot, Q2 2013

Customer Lifetime Value (CLV) refers to the future profit a company expects to earn from a customer throughout his or her relationship with the business. Overall, the highest-value customers arrive through organic searches (54% higher than average). Surprisingly, customers acquired through Twitter tend to be worth about 23% less than average. This may be attributed to the frequency of discounts offered within tweets.

Customer Lifetime Value
Acquisition Channel	CLV (Percentage Relative to Average)
Affiliate	7.53
Banner Ads	1.34
CPC	36.90
CPM	-5.30
Email	11.81
Facebook	1.31
Google	13.35
Organic	54.25
PPC	9.60
Referral	26.10
Twitter	-23.36
Source: CUSTORA E-Commerce Customer Acquisition Snapshot | Q2 2013

The most valuable online shoppers overall tend to come from more rural states. Shoppers in rural areas tend to have fewer options for buying specialty goods locally and make more purchases online.

However, fashion brands find their best customers in densely-populated coastal states (with a few exceptions), says the report. Trendier fashion-focused brands who might appeal to younger demographics find their most valuable customers on the coasts in areas such as New York, Los Angeles, Portland and Boston. Interestingly, New Mexico and Wyoming still rank number 3 and 4 respectively in customer value.

Relative Customer Lifetime Value By State
State	All Retailers’ CLV % Relative to Average	Fashion Retailers’ CLV % Relative to Average
AK	-4.96	-23.20
AL	-8.80	-12.47
AR	-11.65	-9.04
AZ	3.16	-11.22
CA	9.21	11.04
CO	-2.72	3.85
CT	18.61	4.43
DE	-2.08	-3.95
FL	-7.06	-5.17
GA	-5.35	-4.63
HI	9.97	-9.87
IA	-14.43	-16.17
ID	-6.21	-9.31
IL	-5.43	3.44
IN	-12.03	-13.32
KS	-6.84	-16.32
KY	3.35	-18.63
LA	-10.43	-4.20
MA	-7.23	4.22
MD	1.16	-0.79
ME	-11.50	-16.01
MI	-11.84	-11.27
MN	5.58	-5.89
MO	-8.88	-11.63
MS	-8.24	-10.82
MT	2.74	-4.34
NC	-12.83	-10.45
ND	1.55	-10.65
NE	-10.05	-13.20
NH	-9.23	-20.32
NJ	-5.09	1.07
NM	3.97	5.96
NV	-1.79	1.00
NY	2.78	15.35
OH	-4.86	-10.08
OK	-6.53	-14.78
OR	-4.22	5.45
PA	-7.47	-8.08
RI	-14.55	-9.35
SC	-11.21	-10.57
SD	1.75	-13.35
TN	-8.26	-8.55
TX	-1.84	-2.09
UT	-8.56	-9.75
VA	-5.42	-2.98
VT	0.11	-8.53
WA	5.99	-2.15
WI	-9.62	-12.53
WV	-12.66	-25.84
WY	27.50	5.79
Source: CUSTORA E-Commerce Customer Acquisition Snapshot | Q2 2013

For more information from Custora, please visit here.