The Mix of New/Reactivated Customers and Annual Repurchase Rate

Their annual repurchase rate was 31%.

• "Is that good?"
• "How do we benchmark against the competition? Can you be specific?"

These are the "wrong" questions. They are mainstream questions, the questions of thought leaders.

In my system, your annual repurchase rate is a function of two issues.

• Competent Marketing.
• Your Merchandise Assortment.

For instance, if you were incompetent, you wouldn't have an email marketing program, and your annual repurchase rate would be 20% lower. But you aren't incompetent, are you?

Your Merchandise Assortment determines your annual repurchase rate.

If you sell 100 skus, your annual repurchase rate will be lower than if you sell 1,000 skus, and your annual repurchase rate will be lower if you sell 1,000 skus than if you sell 10,000 skus.

• 20% Annual Rebuy Rate with 100 skus.
• 30% Annual Rebuy Rate with 1,000 skus.
• 35% Annual Rebuy Rate with 10,000 skus.

The 20% / 30% / 35% rates are driven by your merchandise assortment, they aren't driven by marketing strategy. Marketing has no control over 20% vs. 35%, that's dictated by your merchandising team.

Marketing has much more control over new/reactivated customers.

If your merchandising team only has 100 skus, yielding a 20% annual repurchase rate, your marketing team needs to be almost entirely focused on new/reactivated customers. And it will be harder for your marketing team to find new customers because you only have 100 skus.

If your merchandising team has 10,000 skus, yielding a 35% annual repurchase rate, your marketing team can actually start to focus on loyalty efforts, because there will be more loyal buyers because there are more items that the customer can purchase, year-round. Also, it will be easier for your marketing team to find new customers because you have 10,000 skus!

In my "system", the merchant is in charge. The merchant dictates everything. The marketer "reacts" to what the merchant does.

• If you are a modern marketer, you likely fail if you don't accept that the merchant dictates everything.
• If you are operating within my system, the merchant dictates everything for you. Your strategy is a response. This is a good thing ... your job is well defined.

Is it any wonder almost all modern marketing fails? How could it possibly succeed when the marketer has no idea what constraints the merchandising team placed upon the marketer?