September 29, 2014

Diagnostics: How Management Responds To Changes

A good marketing/analytics system should be able to detect when the Management Team is actively trying to steer a business out of a problem.

Look at this table. Here, new buyers decrease from 55,000 in 2012 to 52,000 in 2013 to 49,000 in 2014, similar to yesterday.

And yet, sales do not decrease. Why?

Look at $ per repurchaser - among 12-month buyers.

This metric increases from $200 per customer to $220 per customer to $230 per customer, on an annual basis.

When you see declining new buyer counts and increasing spend levels among existing customers, you realize that "management figured out something is wrong". In other words, Management may not be able to fix the new customer problem (yet), but they realize that there is a problem, so they goose the top-line by getting existing customers to spend more.

Of course, this doesn't mean that Management figured out how to fix the business. Not by a long shot. It just means that Management has reporting to help them understand that something is wrong, and is trying to keep the ship afloat.

FYI - this table was very, very common in 2007, prior to The Great Recession. And it is very common in 2014 - in the in-store retail purchase channel. In retail, we're seeing new customer count issues, and in response, we see Management offering 20% off and 30% off and 60% off in an effort to get the traffic they have to buy something.

By the way, if the customer really demands omnichannel solutions, then as you install your omnichannel strategy, you should see an explosion of new customers, should you not? What is your reporting telling you about the success of your omnichannel strategies?

P.S.: If you don't have the resources to run a project of this nature and want my help, then click here data/cost details ... kevinh@minethatdata.com.