November 17, 2009

This Week In Business: The Most Important Time In A Customer Relationship

If you are like me, you've read a lot of content about customer loyalty.

If you are able to analyze actual customer transactions, you quickly learn that the most important time in a customer relationship is the three months following a first purchase. When I run a life table analysis, I'll frequently observe that something like 40% of customers will ever purchase again --- and within the first three months, half of the 40% place their subsequent order.

My simulations strongly suggest that the two levers that really propel a business into the future are customer acquisition and first-time to second-time buyer conversion.

So focus on this important time in a customer relationship --- manage the tactics you love to employ (free shipping, discounts, promotions, all of that stuff), and add a customer service strategy (i.e. actually ask the customer if everything went well during the first order, ask the customer if she needs anything else). Treat this early timeframe with urgency!

Speaking of Omnichannel Theory

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