March 12, 2009

Mega-Metrics: Orders Per Buyer Per Year

Orders per buyer is a key metric that leading direct marketers track, on an annual basis.

Simply sum all orders in your database in a twelve month period of time, then divide that number by the total twelve month buyers in your customer file.

Iterate through this metric on a month-by-month basis, and plot your results.

This is an important metric, because we so strongly believe as marketers that our activities cause customers to become more loyal to us. Well, if that is so, you'll see it, plain as day, in this metric.

It has been my experience that getting customers to order more times per year is a very, VERY hard thing to do. You can add a veritable plethora of micro-channels, a ton of stores, you can spend a fortune on loyalty marketing, and you are not likely to move this metric much. Some folks are able to move this metric --- this will happen if you aren't already actively marketing to your existing customer base.

Pay attention to this metric, beginning in September 2008. Did your customers cut back on the number of orders, or did you simply lose customers altogether, once the Great Implosion began?

Also pay close attention to this metric by channel. You're likely to observe that your online channel has fewer orders per year than your retail channel ... your catalog advertising channel somewhere in-between.