June 11, 2017

Is Customer Productivity Acceptable?

I use the comp segment framework to identify if customer productivity is acceptable or not. As you know from reading this blog over the past four years, I measure 2x buyers in the past year, quantifying what they spend in the next month - and compare the metric to a comparable group of customers from the prior year.

For our business, here's what the comp segment table looks like:

Well look at that!

It turns out that customers are 3% more productive than the prior year, and are 7% more productive than the year before that ... for a total of 10.7% more productive over the past two years.

This tells us that Marketing is not doing their job. If customer productivity is improving and the business is shrinking, then new + reactivated customer counts are likely in decline?

Wanna take a look at new + reactivated customer counts?

There you go!

In the past two years, Marketing is throttling new + reactivated buyers down by 10% - while Merchandising is improving productivity by 11%. Now, it is possible that new + reactivated customers are impacted by more expensive new items, sure. But Marketing is responsible for new + reactivated buyers, it is their job to figure out how to get new + reactivated buyers interested in buying merchandise - especially if existing customers are showing increased productivity.

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