Let's pretend you have a magic elixir that can get any customer > 12 months of recency to purchase at a rate 10% better than what you currently experience. Ohhhhhhh Boy, one might think you've just changed the equation, right?
Let's pop that into my Lifetime Value Simulation (#LTVS) and see if it makes a difference.
In my initial run, 66,917 of 100,000 simulated customers did not repurchase after four years.
But by #targeting lapsed buyers (those with recency > 12 months), a magic 10% increase in response yields a scenario where 66,197 of 100,000 simulated customers did not repurchase after four years ... I'll spare you the details.
Let's just round the results.
- By working our tails off to #reactivate lapsed buyers we prevent a case where 67,000 of 100,000 customers do not purchase again during a four year period of time ... and instead, we face a scenario where 66,000 of 100,000 customers do not purchase again during a four year period of time.
If you want copies of the two tables, send me an email message (email@example.com) and I'll share the results with you.
The problem, my friends, is we wait until it is nearly too late to do anything. Why wait until the customer lapses before acting?
Why not act when the customer is active ... in the first three months after a purchase?
More on that tomorrow.