November 09, 2014

Why Is It So Hard To Find New Customers And Reactivate Lapsed Customers? Some Numbers, Please!

Here's something I ran across in a recent analysis. The metric is a simple one ... percentage of demand at full price (click here to pick up your copy of Hillstrom's Diagnostics).
  • New Buyers = 46% Full Price.
  • Lapsed Buyers = 41% Full Price.
  • 1x Buyers Last Year = 37% Full Price.
  • 2x Buyers Last Year = 33% Full Price.
  • 3x Buyers Last Year = 28% Full Price.
  • 4x Buyers Last Year = 21% Full Price.
  • 5x+ Buyers Last Year = 18% Full Price.
Not surprisingly, on a comp basis, there's a problem with this business:
  • New Buyers = -15% vs. Last Year.
  • Lapsed Buyers = -8% vs. Last Year.
  • 1x Buyers Last Year = -2% vs. Last Year.
  • 2x Buyers Last Year = +1% vs. Last Year.
  • 3x Buyers Last Year = +3% vs. Last Year.
  • 4x Buyers Last Year = +4% vs. Last Year.
  • 5x+ Buyers Last Year = +5% vs. Last Year.
I keep seeing stuff like this ... companies give the "best" customers all the promotions and sale purchase opportunities and liquidation opportunities. Not surprisingly, folks hang on to better customers.

The CRM folks demand that only best customers are rewarded, and we listen. Either don't discount, or discount to everybody equally, if you want uniform outcomes. We're causing our own problems, folks!!

Go run this query on your own business. Right now! Go do it. What did you learn?

And if the numbers look like these numbers, well, maybe you just learned why you cannot acquire new customers anymore.