October 10, 2018

Would Influencing Buyers Make A Difference?

In this simulation, I look at 10,000 first-time buyers, and instead of simply following the customers on their path for twenty-four months, I instead give first-time buyers a 15% bump in response during each of the first three months on the customer file.

The results are not striking ... they are subtle.

In our "base case", the following quantities of customers migrated to 5x status (at least a 5th purchase):
  • 5x = 264.
  • 6x = 114.
  • 7x = 46.
  • 8x = 17.
  • 9x = 6.
  • 10x = 2.
  • 11x = 1.
If we bump response by 15% in months 1/2/3, migration is modestly changed.
  • 5x = 279.
  • 6x = 121.
  • 7x = 49.
  • 8x = 18.
  • 9x = 7.
  • 10x = 2.
  • 11x = 1.
That's not much of a difference, is it?

Total non-repurchasers after twenty-four months?
  • Base Case = 5,474.
  • 15% Gain (Months 1/2/3) = 5,335.
Repurchasers change from 4,526 to 4,635.

We are able to modestly re-direct customer behavior.

Now, you might not think this makes much difference, and you are largely correct.

There is an impact on demand from this cohort over twenty-four months.
  • Base Case = $437,200.
  • 15% Gain (Months 1/2/3) = $454,900.
  • Gain = +4%.
So we are able to increase demand by 4% by implementing a Welcome Program for months 1/2/3. 

Tomorrow, we'll look at a case where we don't execute a Welcome Program and instead to try reactivate lapsed buyers outside of 12 months.

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