December 26, 2012

Simulations - Frequent Buyers

Take a look a recent simulation I ran --- these customers purchased four times last year.  We can all agree that a customer who purchased four times last year is a good customer, right?
Look at what happens!  These customers perform worse over time, don't they?

Now, you can't just "make customers more loyal" by offering discounts and promotions and points and all the other games that we try to do.  No, those things only delay the inevitable.

The vast majority of customers are not part of a "life cycle".  We don't build customers up over time.  The vast majority of customers are on a downward trajectory.  You can't see this if you don't perform annual analytics, or if you don't run simulations.  All you see are conversion-based metrics.  You know the details, you don't understand the behavior!

There is nothing more important for businesses under a billion in annual sales than to acquire new customers.  And here's the good thing ... if you're under a billion in annual sales, there are an overwhelming number of prospects out there waiting to become new customers!

Run your own simulation, and find out truths like this for yourself.

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I See Dead People

From LinkedIn, where I wrote this on Sunday: