January 14, 2020

The Biggest File Power Story of 2020

One of the most popular questions I'm getting is this one ... "What Is Happening To File Power Across Your Client Base?"

This graph represents one of the three biggest File Power stories I'm seeing. For now, don't worry about the numbers on the x-axis, they will be explained in due time. Instead, think about the concept illustrated in the graph.

For this brand, the twelve-month customer file is contracting ... contracting at an alarming rate. This is a common trend these days.

Also common is the "File Power" of those who are buying ... File Power is increasing. Think of File Power as a parallel to "Lifetime Value" ... it is a metric that tells us how strong a customer is likely to be, moving forward.

In the example above, the file gets smaller every single day ... but as it gets smaller, the customers who are still buying have increased File Power. In other words, the infrequent and low-quality customers are disappearing.

This is soooooooooooo common in my project work in the past year. One might theorize that Amazon is scooping up the infrequent buyers. One might theorize that increased prices result in fewer customers. In retail, one might theorize that reduced mall traffic among infrequent buyers yields this outcome. Others might guess that Google/Facebook are redirecting traffic to the parties they prefer.

The reason doesn't matter.

This relationship is frequently a "late stage indicator" of an unhealthy brand.

And if you don't measure File Power, you don't know if this is happening or not.

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