What wins more business New customer acquisition or Customer Retention?

Have you noticed the way most businesses reward new customers and forget their loyal, existing fans? This is no exception online, especially when it comes to e-commerce sites.

In an age when a lot hinges on the overall size of a site’s customer base, one can understand why online businesses would concentrate more heavily on new-customer acquisition. But as most marketers know, your most valuable customers are existing customers. It’s unwise to bet the farm on new-customer acquisition when retention-based advertising is relatively simple to implement.

Segmenting your ad buys

If online advertising with banners is up your alley, there are two terrific ways to segment your ad campaigns into component groups of existing customers and potential new customers.

On the publishing side, media/technology companies like Engage (ENGA, info) and DoubleClick (DCLK, info)have programs that make it easy to remarket to consumers. Engage ECHO and DoubleClick’s Boomerang work essentially in the same fashion.

Pixel tags placed on your e-commerce site allow Engage and DoubleClick to recognize existing customers in future campaigns on the Engage Media and DoubleClick networks, respectively. Utilizing their ad servers, buys can be segmented, and different messages can be served to new customers and to existing customers.

This makes it possible to address new customers with your acquisition message and existing customers with your retention offer in the same campaign. Because these types of programs are executed on the publishing side, an advertiser can choose to purchase a specific number of ad views for either the acquisition or the retention effort, provided that she has run a sizeable prior campaign with the pixel tags in place.

This concept can be ported over to an advertiser-side ad server as well. Most of the ad servers that can track back-end actions through pixel tagging can use the same method to recognize the people who have previously visited your site and serve different messages to them.

Guerrilla marketing campaign that worked

Three suspicious URLs began a viral journey across America’s computer screens last summer. Passed around in email, the links lead to what appear to be the half-baked homepages of some peculiar fellows.

At one site a long-haired race-car driver named Curry struts in red leather pants and offers seduction tips. Another site features a glimpse into the life of Super Greg, a wannabe DJ with one long eyebrow and a skintight tracksuit. Stranger still is a site featuring Roy, a deranged, beefy guy in caveman garb, waving nunchaku.

Who would have guessed these weird sites are part of a guerrilla marketing campaign for Lee Dungarees? “We thought they were real,” admits Michele Slack, a former analyst with Jupiter Research.

Lee Apparel, maker of Lee Dungarees, emailed the links – along with short video clips of the oddballs – to more than 200,000 members of an opt-in marketing list. Oddly, the sites lack even the slightest reference to Lee or its jeans. But that just makes the links more likely to be passed around, according to Linus Karlsson and Paul Malmstrom, who created the campaign for Lee’s ad agency, Fallon Minneapolis.

In time, Curry, Super Greg, and Roy were revealed as “villains” to be vanquished by Buddy Lee, a kind of kewpie doll that Lee brought back as a trademark after a nearly 40-year absence (see “Lee’s Comeback Kid,” p72).

Lee is not the first company to use guerrilla marketing to resuscitate an aging brand.

It’s a bold move at a time when old-line jeans-makers such as Lee, Levi’s, and Wrangler are under siege from newer jeans-makers such as Ralph Lauren, Guess?, Tommy Hilfiger, and Nautica while the overall market for jeans declines.

The mystery marketing campaign seems to have succeeded in raising awareness of Lee Dungarees. “There’s no doubt that it’s helping brand recognition,” says Doug Miles, former director of communications solutions for the marketing division of consulting firm ReeseMcMahon in Chicago. “But converting that to sales,” he says, “is another matter.”

‘LIKE A GAME’

Drumming up buzz was just the first step in what was later revealed to be the “Buddy Lee Challenge” – Lee’s $10 million advertising campaign that has some analysts amused and others baffled.

Besides the phony Websites, Lee’s guerrilla campaign incorporates unbranded posters, bizarre radio and television spots, and a Web-based interactive game that drives customers to offline stores and back to the Web.

Much of it, like the Websites, doesn’t seem to make much sense. But maybe the mystery itself is the point.

“Our campaign is like a game,” says Malmstrom, a Fallon art director. “Hopefully you get intrigued by finding different pieces of the puzzle and wanting to know the answer.”

It’s questionable whether puzzling customers is ultimately the best way to get them to buy more jeans. But Lee clearly succeeded in generating buzz: In the first week the freaky URLs were posted, the three sites attracted more than 100,000 unique visitors, enough to crash Lee’s servers. Two months later the tally topped a half-million.

As the campaign unfolded in other media, Lee saw sales of featured products double. A nationwide brand-tracking study commissioned by the company showed a clear change in perception among 17- to 22-year-old consumers: Roughly 64 percent more people said Lee was “cool to wear” since the campaign launched, and 81 percent more called Lee Dungarees “a brand on its way in.”