Zulily Customer Acquisition

A trip to the Zulily home page tells you a lot about how the company works to acquire customers, The company, a Seattle based online retailer of products “designed for moms” offers different deals at discount prices to their online users.  Want to find out what the current deal is?  You will have to sign up.  The home page cannot be navigated until the customer offers an email address.  The user experience is captured below.Image

As the user quickly finds out, any exploration of the site requires the user to sign up.  While this may deter some customers from signing up it enables real customers to self select.  If a person is interested in the service they have to sign up and Zulily has their email address.  The user immediately is rewarded with seeing a deal and Zulily now has another email address to target market to.  The more information about purchase habits Zulily gathers, the better they can target deals to consumers who want them.

The second part of Zulily’s acquisition process is via customer referrals   Customers are encouraged to invite their friends to join the deal hunting process.  The reward for a successful conversion of a friend is $20.  Image

This process informs us that the expected life time value of qualifying Zulily referral prospects is over $20.  The company must have calculated that referred customers are more likely to use the service and purchase.  How many customers can Zulily afford to get this way?  Well as the benefactor of an $85 million raise by Seattle’s Mavron Venture Group, that’s over 4 million Andrew Jackson’s.  

Zulily’s future looks bright.  Ifl their customer lifetime value calculations are right they can afford to spend a lot of money of customer acquisition   With powerful Ally’s in Seattle, the company is bound to go far.

Charlie Northrop

Charlie Northrop is a second year MBA student at the Foster School of Business at the University of Washington.  He is a regular contributor to the Marketing 555 Blog.

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