August 02, 2021

What Does The Forecast Look Like?

Recall our comp segment and comp new/reactivated buyer metrics:

  • Comp Segment Performance July 2021 = $10.15.
  • Comp Segment Performance July 2020 = $11.88.
  • Comp Segment Performance July 2019 = $10.06.
And here is the view for new + reactivated buyers:

  • Comp New/Reactivated July 2021 = 15,500.
  • Comp New/Reactivated July 2020 = 28,300.
  • Comp New/Reactivated July 2019 = 17,200.
Using this information, I produced a forecast for the rest of 2021 and for 2022. We can compare to the COVID year of 2020 and the last "normal" year, 2019:


The secret here is to forecast rebuy rates and spend/rebuyer metrics, and then to forecast new/reactivated buyers to the best of our knowledge.

Given what we're seeing with our comp segment and comp new/reactivated buyer counts, I forecasted the rest of 2021 and all of 2022.

Tell me what you observe?

You see a business that loses the COVID-bump ... settles back toward "normal", and is entirely normal by 2022 with a $2.1 million bump in sales caused by having decent file power improvements caused by COVID.

In the next post I'll show you a range of "alternatives".

Email me (kevinh@minethatdata.com) if you'd like me to forecast where your business is headed in 2022 ... $4,900 per run.










August 01, 2021

Forecasting Calendar 2022

Undoubtedly you are struggling with forecasting what your top-line looks like in 2022. Did the COVID-bump end? Will performance slump back to 2019 levels, or will there be some gain that can be leveraged in 2022?

You likely already know the answer. You've looked at your comp segment performance, comparing it to 2020 and to 2019. You know what happened to new + reactivated buyer counts vs. 2020 and vs. 2019. This tells you what is coming.

Let's look at a very simple example, based on what happened in July.

  • Comp Segment Performance July 2021 = $10.15.
  • Comp Segment Performance July 2020 = $11.88.
  • Comp Segment Performance July 2019 = $10.06.
And here is the view for new + reactivated buyers:
  • Comp New/Reactivated July 2021 = 15,500.
  • Comp New/Reactivated July 2020 = 28,300.
  • Comp New/Reactivated July 2019 = 17,200.
We already know the story for 2022 "if" things continue as they have in July 2021.
  • Existing buyer performance is about the same as two years ago (pre-COVID).
  • New/Reactivated buyer performance is about -10% to two years ago (pre-COVID).
The business would contract compared to 2019 without file growth, given these figures. COVID file growth will likely carry the business into next year, helping the business squeak out small growth levels.

We'll talk more about this over the next several days.

But between comp segment numbers and comp new/reactivated figures, you likely already know what 2022 looks like.

July 28, 2021

Email Subscribers And Reactivation

Your best tactic regarding reactivation efforts is email marketing. It's virtually free and you control everything.

If you are simply executing your typical email blasts (same email to every customer five times per week), you are undoubtedly getting benefit, as shown below.


Yeah, look at those email subscribers! Especially look at those with 1 click-through in the past year or 2+ click-throughs in the past year. That's where you get a big bump in reactivation, and a huge increase in profitability.

The best reactivation marketers have programs tailored to the audience they hope to reactivate. This is a place where "engagement" actually means something. Take advantage of this opportunity!!




July 26, 2021

A Nice Reactivation Bump in CLV / LTV

Here's a common situation that supports reactivation efforts.

When you acquire a new customer, you might have the following metrics over three years.

  • Future Demand/Sales = $200.
  • Future Gross Margin Dollars = $120.
  • Future Pick/Pack/Ship Expense = $30.
  • Future Marketing Expense = $40.
  • Future Variable Profit (Long-Term Value) = $120 - $30 - $40 = $50.
Overall, you'd be pretty happy with that outcome.

When you reactivate a customer, you have a customer with multiple prior purchases, meaning that the customer is more valuable going forward. Your data looks like this:

  • Future Demand/Sales = $230.
  • Future Gross Margin Dollars = $138.
  • Future Pick/Pack/Ship Expense = $34.50.
  • Future Marketing Expense = $42.
  • Future Variable Profit (Long-Term Value) = $138 - $34.50 - $42 = $61.50.
Would you rather have a customer worth $50.00 in the future, or a customer worth $61.50 in the future?

This is why you work hard to reactivate customers with recency > 12 months.

July 25, 2021

It Can Be Hard To Move The Needle

Here's why you have to have some semblance of precision in your reactivation efforts.

This is what a normal year might look like for 13-48 month buyers:


It's not easy to reactivate customers ... they've lapsed for a reason, right?

Now, let's say you improve reactivation response by 15% annually. Here's what the story looks like.

You did a great job, and in this case you get 9,500 more customers as a consequence.

In this business, you go from the following scenario ...

  • 170,759 new buyers.
  • 63,404 reactivated buyers.
  • 234,163 new + reactivated buyers.
... to this scenario ...
  • 170,759 new buyers.
  • 72,915 reactivated buyers.
  • 243,674 new + reactivated buyers.
  • Total Increase = 4%.
A typical "direct marketer" looks at that story and says "no bueno" ... too much work for too little return.

Fortunately, many of you are going to have 50% or more 13-24 month buyers this fall because of the COVID-bump that you didn't capitalize on via a credible Welcome Program.

Which means you will have an opportunity to do something this October/November/December.

Time to do something!


July 21, 2021

10% to 20%

Why do you care about reactivating lapsed buyers?

Because they are worth more than new buyers.


In this example the new buyer spends $111 in the year acquired.

The reactivated buyer spends anywhere between $123 and $132 in the year reactivated. In other words, the reactivated buyer is likely to be worth 10% to 20% more.

This also means you can spend more to reactivate a customer than you can spend to acquire a new customers (because the customer will pay you back faster) ... and marketers love that kind of stuff.

Your cheapest, most direct, and most effective tool to reactivate a customer is email marketing.

Your best indicator of a lapsed buyer ready to reactivate is a website visit in the past 1-4 weeks.

Go get those lapsed buyers ... convert them ... at least get them to your website, ok?



July 19, 2021

Dealing With Tiny Percentages

The first thing you notice when you try to reactivate customers is that they (the lapsed buyer) have very little chance of buying again in the next month.

We've talked about the importance of the Welcome Program.

All of you know about the importance of Reactivating Customers.

When you try to Reactivate a Customer, you invariably face a big problem ... you're dealing with Tiny Percentages.

Here's a typical story regarding Reactivation. I calculated the average monthly response rate for buyers across a bunch of businesses.

Let's say you are trying to reactivate a 25-36 month buyer, who only purchased one time. Every month you have a 0.7% chance of getting the job done.

0.7%.

As a marketer you become Shania Twain ... "that don't impress me much". You could increase the rate by 50% and it would seem like nobody would notice and you wouldn't get credit and in a year you'd be fired.

You'd be wrong.

I'll explain why in my next post.




What Does The Forecast Look Like?

Recall our comp segment and comp new/reactivated buyer metrics: Comp Segment Performance July 2021 = $10.15. Comp Segment Performance July 2...