Ok, one of your digital vendors acquires a customer on your behalf. You have a new customer. Congrats!!
For so many of the businesses I analyze, half or more of annual demand comes from customer acquisition efforts. There really isn't a lot of "File Power" because the brand is simply in business to generate transactions.
Depicted here is a business that both needs new customers, and migrates customers to reasonably loyal status over time.
The table evaluates annual repurchase rates by recency / frequency combinations. This table is the foundation of any/every business. You likely created a similar table for your brand, correct?
Let's read down the "Freq = 1" column. These are the customers you recently acquired.
In the first month the customer is with the brand, the customer has 34.9% chance of buying again in the next year. Let that fact sink in for a moment. Your vendor just helped you acquire 100 customers, and in the next year 2/3rd of them will not buy again. They're just dead weight. Sure, you'll spend a ton of money marketing to these customers, begging them to buy again. All that effort, and 2/3rd of them will be inactive this year.
A smart business professional will quickly begin thinking ... thinking about whether the "right" customers are being acquired or not. This moment of self-reflection is positive in the development of a career, and is especially valuable when managing vendors.
Back to the newly acquired customer. If a month goes by and the customer does not repurchase, the probability of a purchase in the next twelve months decreases ... from 34.9% to 32.6%. Then another month goes by, and the probability of a second purchase in the next year drops to 30.0%.
In other words, File Power is in a constant state of decay. There are only two ways to solve the problem of File Power.
- Constantly replenish your customer file with new customers.
- Improve the quality of your customers.