Think About It ... BOAR

In r-commerce (recurring commerce ... big number, small number of brands), the customer pays for Netflix and you pay your ISP or mobile provider money to have the service delivered to you. The customer pays for the merch and the customer pays for delivery. Customer pays x 2.

In o-commerce (omnichannel commerce ... probably another twenty or twenty-five percent of e-commerce controlled by 6-24 brands), the customer pays Best Buy or Dominos for merchandise and then pays Ford for use of a vehicle and pays Chevron for the gas used to get the customer to the store to pick up the merchandise. Customer pays x 2.

In a-commerce (Amazon commerce ... at least a third of e-commerce), the customer pays Amazon for merchandise and pays Amazon for Prime, at which time Amazon sends a van to your house. Customer pays x 2.

In b-commerce (e-commerce in a box ... Shopify / Big Commerce / MailChimp / Etsy / eBay / Marketplaces), the customer plays for the merch and in general the customer is being asked to not pay for shipping (read about Etsy for details) while the small seller is asked to eat the costs and then deal with UPS / FedEx surcharges and mysterious USPS delays. That makes it hard for b-commerce brands to make money.

In what is left of traditional e-commerce, the customer pays for merchandise (often discounted merchandise) and then the brand generally eats the cost of shipping. When UPS / FedEx tack on surcharges, it becomes hard for e-commerce brands to make money.

Given the forces above and the fact that a handful of brands control everything ... it becomes obvious that if you aren't part of the (b) (o) (a) (r) ecosystem you are being left behind, and that's what I'm talking about when I say e-commerce is burning down. BOAR is what e-commerce evolved into. If you are left in the (e) world, you need partners who help you, not ones who extract every last penny from you on the way out.

Getting Merchandise To You

Last week I discussed predator / prey models ... stuff like coyotes eating rabbits. The models clearly show that if all the rabbits disappear, coyotes disappear. You have to have rabbits or you don't have coyotes. The ecosystem reaches an equilibrium. It has to.

Modern e-commerce is burning down. Nobody is talking about this, of course, because it would cause everybody to have to think very carefully about the future.

Want proof that e-commerce is burning down?

In a normal year, I'd get a lot of consulting requests. This year, I get questions. Here's the primary question(s) I get now.

• "What do I do if the USPS cannot deliver packages, if the UPS charges $4 more to deliver packages, and if FedEx puts a cap on how many packages they're willing to deliver? What do I do if the USPS cannot reliably deliver catalogs because of political issues? What do I do if customers want my product in November and nobody will deliver it to the customer?"

That's what it looks like when e-commerce is burning down.

The Executive will say something like "who could have seen this coming?".

That's when I'll mention how Amazon saw this coming and did something about it years ago and now they have more than 30,000 of these vans out there delivering merchandise and if Amazon saw it coming and did something about it how did the rest of the industry miss it?

Then the Executive gets frustrated, because the Executive was looking for sympathy as opposed to pondering how a company will get merchandise to you in the future.

I'll stop there for today. More tomorrow.

P.S.:  "Commerce" is fine, by the way, if you're allowed to be open or sell stuff the customer wants during a pandemic or you sell something the customer needs and you are allowed to sell it. Or you sell something addictive, 'cause dang does that stuff work during a pandemic! 

P.P.S.:  I also get calls that start this way ... "I feel guilty to say this, but we're +27% this year." Happens all the time.

P.P.P.S.:  Your print community is telling you that the USPS is fine, and it may well be fine. Or it isn't. But tell me why you'd believe the print community when they keep telling you that print is making a resurgence (they say this over and over and over again) while the USPS sources the data for this image:

P.P.P.P.S.:  If Amazon is surging, why would e-commerce be burning down? And why would e-commerce be burning down when so many people are doing so well? That topic will be addressed tomorrow.

Another Book I Think About Almost Daily

This will probably sound odd, but I think about this book almost daily (click here):

Now, in no way should you read this book ... YOU'LL HATE IT!!! You'll hate the math.

It's the "concepts" in the book that matter.

The book studies stuff like "predator / prey models". I spent nearly every free moment at work in 1998 applying predator/prey models to e-commerce/catalog sales (yes, I ordered each channel to align with predator/prey). It's how I was first able to see that e-commerce was going to destroy catalog marketing and run myriad companies into the ground. The models allowed me to forecast how it would happen, seeing "when" it was likely to happen.

EYE. OPENING!

The book got you to think about, say, coyotes and rabbits. Coyotes need to eat rabbits, so if you have an abundance of rabbits coyotes will eat the rabbits ... and then there aren't enough rabbits and coyotes starve and die and that allows rabbits to breed safely, which brings in an opportunity for coyotes to stuff themselves and the pattern repeats. Equilibrium happens ... it's almost like a sine curve.

Now we have COVID ... stores (prey) closed, while e-commerce (predator) was given an opportunity to go bezerk. And a fascinating thing happened ... e-commerce grew, but it did not save the economy. Jobs were still lost at epic rates, the economy imploded. You'll see how a company like Macy's grew e-commerce while stores were closed, but the net of the two was a catastrophe. You quickly realize that stores are rabbits, and e-commerce needs the stores to fuel customer growth that e-commerce will gobble up as a predator.

The models in this book, written in 1993 ... apply perfectly to our COVID-fueled future. Once we have a vaccine and things return to something "closer" to normal (I don't think we ever return to normal), there will be new predators ... brands unleashed on the world post-COVID ... and the giant retailers (Walmart, Target, others) will become prey. Marketplaces become a way for parasite-based relationships to exist (i.e. your brand pays a toll to have access to customers from the host ... Amazon or Etsy etc.)

Right now there are several areas of thought that are coming together for me.

• Poker / Probabilities / Betting / Bluffing.
• Use of play design in football to create "space" ... and how "space" applies perfectly to marketing/analytics/e-commerce/retail.
• Predator/Prey and Parasite/Host relationships in nature and how those relationships map to e-commerce/retail and will ultimately determine how our post-COVID world works.
• Pickleball (my fun hobby) and how the concepts above apply to Pickleball ... and consequently, how Pickleball applies to business.

All of these concepts connect me to two realities ... when I simulate the impact of all these ideas on a typical business, there are two realities.

• You constantly need new customers ... they're the "food" that various channels and product lines consume.
• You need a Welcome Program to generate enough loyal customers to satisfy the predator/prey and parasite/host issues in your business (i.e. you need new in-store customers who are quickly converted and subsequently migrate to e-commerce).

My simulations repeatedly point to these two concepts as the heartbeat of your brand ecosystem. If you want to manage a great Loyalty Program, well, somebody needs to fuel the program with a constant new supply of new customers who are welcomed and become 2x buyers and begin their journey toward loyalty. Without these programs, you're "hooped".

I wouldn't share this stuff unless I've repeatedly observed it in my work.

Current Obsession

Yup, I've read this book and listened to a dozen podcasts about this book (click here).

Why is it an obsession?

1. I love poker.
2. I love probability, which poker is all about.
3. I love how elements of poker align with business ... bluffing, betting & having a budget.
4. I really enjoy how somebody with no knowledge of the game was able to become proficient enough at it to make a living better than most of us make at something we've done for decades.
5. I enjoyed the journey ... playing crappy tables and against average competition and winning ... then sitting at better tables where the buy-ins were more expensive and the competition improved. We just don't do that in marketing/analytics.

The probability observation is probably the biggest obsession ... that you can make all the right decisions and have a bad outcome. Or, you can make all the wrong decisions and have great outcomes ... think of this as the "Macy's Fallacy" of 2014 ... going "all-in" to use a poker term on the omnichannel thesis and then having temporarily positive outcomes ... only to see their "chip count" erode down to nothing ... which is where they are today. They bet, they played terribly, they won via luck, then skill (i.e. commerce skill) won out over time and they lost horribly.

By the way, "betting" in poker directly relates to your "marketing budget". In poker, there are situations where you have half of the chips at the table. There might be a million chips and you have 500,000. The other eight players roughly split 500,000 chips, so they might have +/- $62,500 chips. Say somebody has 100,000 chips. You might have a bad hand, but you can bet 65,000 chips (which doesn't impact you at all) but puts A TON OF PRESSURE on the other player, who now has to decide whether to call, or go all-in, or fold. You get to be a bully. This is what big brands do to most of you. They have a huge marketing budget, and they're making huge bets and you think they're smart and they may not be smart ... they just might be bullying you. Conversely, you are small and you don't have a marketing budget, so you have to "play" your marketing game very differently. Very differently.

In the five-plus months of COVID, I've witnessed my client base play better poker than they've ever played. They've had less information than ever before, and yet they're making better decisions than I've ever seen them make. Why is it that my clients made horrible or safe decisions when business was good, but now that business is unpredictable my client base is making really solid decisions? Well, the answers seem to align with playing poker, in my opinion.

Most important, the book has my mind bursting with thought. If you aren't thinking, you're not going to get much better at business.

In the past three years, this is one of two books that have influenced my work. Here's the other book (click here to buy it).

Both books, interestingly enough, are about outsiders who come into a foreign ecosystem and earn success. The former earned the author a ton of praise without changing the game whatsoever. The latter essentially caused the subject of the book a ton of grief before fundamentally changing football forever.

The applications of both books to the work we perform are self-evident.

P.S.:  In case you haven't noticed, I'm not reading business books. You are free to disagree with me on this topic and that's fine ... I recently purchased a business book about retail from a noted industry expert. The book was well-written, it connected the necessary dots, it charted a course to the future. And through no fault of the author, COVID rendered everything irrelevant. This happens every couple of years in retail / e-commerce, in spite of having a strong set of skills ... your skills become irrelevant SO DARN FAST. We need to acquire skills that come from outside of our industry and then apply the skills with what we know ... in a new way ... like we did when COVID hit.

Tilt!

Here's an image from a game of Pickleball.

The team with the peach-colored shirts is already doomed here. The woman in the white hat is, based on the angle of her paddle, going to hit the ball straight into the net or is angling toward the guy in the green shirt ... he'll just push the ball down the sideline past her and earn a point. Sometimes (often) as a consultant you can see the future before your clients see the future.

Meanwhile, it's not fun to lose points. You do everything right and you still lose points. Your opponent is also trying to do everything right, so something has to give. Eventually you get frustrated.

Here's an example. I injured my back playing pickleball. Four bulging discs between L2 and S1. Painful!! It took me eight weeks to rehab back to a point where I could go back out and play just a little bit.

My wife has a group she plays with. She invited me to play one game with them (you typically play six games in a row in our Club ... part of our COVID rules), so somebody sits out the last game so I can get one game in per my Chiropractor. We begin playing, and my body IS ... NOT ... cooperating. Worse, two things happen that get me mad.

1. The woman my wife is playing with asks me "do you want me to take it easy or to go all out?"
2. We're losing 9-2 and my wife, whom I'm playing against, says "how about we reset the score at 2-2 so you can play a bit longer?"

These are players I should be able to beat ... but on this day my body won't cooperate ... and much worse, my brain starts to not cooperate. It's the "how about we reset the score at 2-2" comment that sets my brain off.

• "I'll show them! Reset the score at 2-2. They're gonna pay."

Now I'm looking for juicy, tasty balls that I can smash back at them, as a way of showing my opponents how brilliant I am even though my brain isn't working properly anymore and my body isn't capable of working properly on this non-descript Thursday.

In poker terms, I'm about to "tilt" ... I'm about to act irrationally ... testosterone is about start flowing ... bad decisions are coming.

If you want an example of what it looks like to tilt, watch this poker video (click here).

The first example of tilt happens when a nice, juicy, tasty ball is hit right at me, shoulder height. All I have to do is hit the ball down the middle and it's an easy point. But that's not what I do. My body feels miserable. My mind feels miserable. So I make my life even more miserable by tilting ... I try to hit a cute ball down the sideline, I mis-hit the ball, and it just glides out of bounds.

TILT!!!

Now I'm mad at my opposition, I'm mad at myself, and I'm mad at God for bending the rules of physics for just a brief moment in time.

TILT!!

When you are a consultant, you see clients tilt all the time.

Catalog clients tilt the moment you question the catalog. They suspend all logic and revert into a belief system ... in poker terms, they push their chips into the middle of the table and say ALL IN. They want to bully you into folding your hand. As a consultant, you have your data. You likely have a much better hand than your client has. And yet, you're going to fold a lot of hands and let your client "win" ... no sense pushing the client past the point where the client is comfortable, correct?

E-commerce clients tilt all the time ... "we a/b tested the lifestyle image coupled with 30% off and cart abandonment programs coupled with retargeting and an influencer program on Instagram, that works best ... who are YOU to tell me that doesn't foster customer loyalty?"

You've all seen it happen in meetings ... you challenge the feeble-minded Vice President and he immediately tilts. You tell the CEO that her strategy isn't working and she double-downs on her path. Tell any omnichannel marketing expert that they are wrong and whoooooooo-boy, look out, that individual is about to tilt.

In games, you want your opposition to tilt ... you have a tremendous advantage.

In consulting, you want to bring your clients just to the point of tilting ... once they tilt they no longer listen. But you need to push the client if you want change to happen, so you learn how to push them just up to the point where they're about to tilt ... then you bring them back from the brink.

Your career trajectory depends upon pushing people ... they're not going to change because you tell them to change. You have to nudge them ... and yet, you can't push them to the point where they tilt. This is an art, a skill well worth acquiring.

Marketing Mail Volume

Now that your political interests could be in direct conflict with the political party that supports the USPS (or you might believe something very different - and who knows what to believe), you might want to see what has happened to marketing mail volume over time.

You can clearly see the implosion that happened after The Great Recession ... time will tell what happens following COVID-19. Pundits will offer one viewpoint. But I think we know how this story evolves, don't we?

Action Table

A few days ago you saw what I called an "Action Table".

The table helps you figure out where/how you implement your Welcome Program.

First of all, you catalogers should be hearing an endless onslaught from your print vendors about Welcome Programs. Your printer should be helping you create (merchandise-centric) personalized print programs that kick-out on-demand for customers in the green cells. Why wait for the normal cadence when your printer can dynamically offer your customers just about anything??? Figure out what the customer bought, figure out what the customer is likely to buy next, and then create your own pieces on-demand. Get busy!!

Second, your email service providers should be all over you about this. They should be demanding that you implement merchandise-centric personalization, trying to get the customer to try EVERYTHING you offer quickly. If you send out five campaigns a week, the campaigns should be personalized based on what the customer purchased in a first order. You should have 2-3 campaigns per week that TEACH the customer what your big annual events are, what you are trying to accomplish, why you are better than your competition, why the customer is better than other customers (yes, tell the customer they are in the Best Segment ... thank the customer!).

If you have a Loyalty Program and the customer can be a member of the program with $400 in annual spend ... well ... TELL the customer about it. Get the customer moving toward $400 ... give the customer a push.

Put a person in charge of Welcome Programs.

• Director of Customer Acquisition.
  
• Director of Welcome Programs.
• Director of Customer Loyalty.

Put your digital campaigns (search, social) under the Customer Acquisition person.

Put the majority of your personalization efforts under the Welcome Program professional. You can make a strong argument that email should be under this individual's purview.

Put targeting, email, loyalty etc. under your Customer Loyalty professional

Get busy doing something!!!

You Quickly Observe Three Segments Of New Buyer Quality, Don't You?

Yesterday's geeky model became today's geeky table, a table that I converted to a plot. I ranked all first-time buyers into 4%-tiles, sorted from best (rank = 1) to worst (rank = 25). Then I plotted rebuy rates against the ranking.

There are first-time buyers who have a 40%+ chance of repurchasing in the next year.

There are a lot of first-time buyers who have a 30% to 40% chance of repurchasing in the next year.

There are a smaller fraction of first-time buyers who have a sub-30% chance of buying again in the next year.

This leads us to what I call a "Welcome Program Action Table":

Green cells are where you take ACTION. You need to act upon the data in these months, pushing the customer toward a second purchase.

Yellow cells are questionable cells. You "could" take action, but it isn't likely to make a huge difference.

Red cells are low response cells. Here, you take minimal action, because the customer is not likely to repurchase.

The goal of a Welcome Program is to ACT upon customers differently than you normally would act. In other words, you don't hotline out some catalogs and blast some emails and call it good. Nooooooo.

How would you teach the new customer to embrace you?

A Bit Of Geeky Math

Here are the results of a Logistic Regression used to predict how likely customers are to purchase for a second time within twelve months.

Don't worry about what all the geeky numbers have to say ... I didn't even bother to give you column headings.

A few findings.

• Customers acquired in January / March / May / June / July are more valuable than customers acquired in other months.
• Customers acquired in December are about 10.4% less likely to repurchase than are customers acquired in other months. What month do you really crank up the digital advertising to generate new buyers?
• There are merchandise categories that deliver customers with better probabilities of repurchasing ... Categories 03 / 04 / 05 / 07 / 09 yield customers more likely to repurchase.
• "AD1" in this case represented new customers via print. They were 63% more likely to repurchase in the next year than those acquired via other advertising channels. Hopefully the brand didn't spend 75% more to generate an increase in repurchase rates of 63% (hint - that's what frequently happens).
• Customers who purchased because of discounts/promotions (kev_disc) were 3.4% less likely to repurchase in the future.
• Customers who bought items (ABO) that sold for above their historical average (i.e. paying $34.95 for an items that sold for a historical average of $32.95).
• Each item purchased, all things being equal, adds 5.5% to your first-year repurchase rate.

When a customer purchases for the first time, I'll bet you immediately score that customer and then calibrate your Welcome Program accordingly, right? In other words, if the customer is in the bottom 20% of all first-time buyers, you treat the first-time buyer differently than if the customer is in the top 20% of all first-time buyers. Right?

Odd Times

For those of you who are old-school marketers, you'd be reading something from Don Libey right now. He'd be yelling about two things today ... most likely about more than two things, but two things for sure.

1. He'd tell you that you can't trust China, and would be critical of twenty years of globalization that resulted in an untenable situation. Go read his old newsletters for proof.
2. He'd tell you that you can't trust anybody trying to blow up the USPS from the inside, and would have choice words for the individuals who would defend such a plan. Go read his old newsletters ... he had no patience for fools.

In other words, 90% of his readers would absolutely hate him right now based on reader political views.

But he didn't care. He wanted you to be successful, and he didn't need to be loved for you to be successful.

We do know this ... you better darn well have a plan in place for Q4 this year that is wildly flexible.

1. Push as much business out of Christmas and into September/October as is humanly possible. Get your business now. 
2. Do you think if UPS is charging you a $4/package surcharge that your customers will gladly allow you to pass along that cost to the customer? It's not the customer's fault you chose an unprepared vendor, now is it? And if you decide to eat the expense, describe how you plan on doing that?
3. You might not be able to trust the USPS for the next 4-5 years. If you rely upon them to mail catalogs, time to rethink catalogs. If you rely upon them to deliver packages, time to ... oh, wait, nevermind ...
4. You've now seen a world where Amazon pre-thought what "could" happen, was fully wrong and as a consequence was 100% right and now have their own delivery brand. That's what happens when you pre-plan. How are you going to cope with instability from the USPS, UPS, and FedEx partners who are telling many of you to cut back on marketing?
5. A good customer is a customer who is alive and healthy and safe. The fact I even have to say that is sad. A good employee is an employee who is alive and healthy and safe.
6. Your future product/merchandising plans will require a sophistication of sources. You already know this and are likely acting upon it. Act faster!

I care about your business, and because so many of you are clients I care about you. I want to see you succeed.

Have a flexible plan for Q4, ok? Nothing will be normal/predictable about what is coming over the next twenty weeks.

Acting Sooner vs. Later

Let's look at what happens if we boost response in Month = 01, Month = 02, Month = 03 ... by 10% ... via a Welcome Program that goes after brand new customers right after they were acquired.

You boost response, and over time you have a better cumulative repurchase rate.

Now, let's bump response by 10% at Month = 15, Month = 16, and Month = 17.

Here, you multiply 10% gains against response figures that are close to zero ... giving you close to zero benefit.

We work so darn hard to "reactivate lapsed buyers". A lot of hard work. But the hard work doesn't translate into a meaningful difference ... because the customer simply isn't responsive anymore.

We need to act sooner ... sooner instead of later. When the customer is acquired, we need to act immediately ... just like we do when a loyal customer buys from the 7th time ... we jump all over that opportunity.

Focus on a customer who bought for the first time, and get that customer to buy for a second time quickly while the customer is still responsive.

Customer Journey Builder

Number One complaint from those of you in the reading audience, when I harp incessantly on the need for a Welcome Program:

• "That's going to require too much customized work, and frankly, we don't have the resources to do that, sorry."

Bleck.

This Email Service Provider (click here) allows you to Create Customer Journeys. They show you how to do it in the article ... just go read it (click right here folks).

When you respond with "well, they cater to small businesses and as you know we're a unique $40,000,000 omnichannel print-centric brand", then I'd counter with the concept of getting your existing ESP to replicate what is shown there. And if they can't replicate the software and functionality for you, it's time to change your ESP, don't you think?

I watch what my online clients do with email, and I watch what established companies with print/retail history do with email, and my goodness, there's a pretty big gulf between the two. A Welcome Program requires you to do some work. Go do the work.

P.S.:  I had a client ask me the following question ... "why can't you just come in here and do the work for us so we don't have to even think about it?" Ponder the essence of the question ... the client was saying that a Welcome Program was important, but wasn't something the client wanted to think about. Just let that thought sink in for a moment. 

You are an important person. You matter. You WANT to have to think about things, because that means you understand your business better than anybody else, and that allows your career to progress at a faster pace. Your company will make more profit. Your salary & responsibilities will increase faster. Please, you want to have to think about things! Thinking is good.

P.P.S.:  A marketer recently wasted a month of my time with proposals and counter-proposals, before choosing a competitor over me. And while that happens in this business, he said something to me that made the time spent worthwhile. Here's what he said:

• "If possible, we want to outsource everything we do. We'll pick the product, sure, but we just don't care about marketing because it's pointless. Marketing can be outsourced to the cheapest provider, and that's how we thrive."

Why share that? Because a Customer Journey Builder means that you have to do some work, but the trade-off is that you aren't the person who wants to outsource everything. Again, you want knowledge ... not of a process but you want knowledge of a customer. And you can't have knowledge of a customer if you outsource the knowledge of the customer to somebody else.

Gone

Recall our Life Table for first-time buyers (click here).

What happens to the Monthly Rate after Month = 12?

It's pretty much over, isn't it?

One month after the customer was acquired, 8.12% of first-time buyers who haven't repurchased yet buy in Month = 01.

Fifteen months after the customer was acquired, 0.86% of first-time buyers who haven't repurchased yet buy in Month = 15.

This is why a Welcome Program is so darn important. If you don't capture the customer when the customer is INTERESTED in what you have to say, you don't get other opportunities.

Ultimately, marketing is divided into three core functions.

1. Awareness / Customer Acquisition.
2. Welcome Program.
3. Customer Loyalty.

We constantly read about (1) and (3), don't we??

We almost never think about (2), do we??

And yet, (2) is critically important.

12 Months After a First Purchase

Recall our Life Table for first-time buyers (click here).

Read down the MONTHLY RATE column. You see the high level of response in the first few months after a customer becomes a buyer. Then response quickly sinks. Now look at what happens at Month = 12.

Tell me what you think is happening there?

This outcome is common in my project work ... customers "reawaken" briefly at Month = 12. 

Say a customer purchased for the first time on Cyber Monday. That customer will "reawaken" twelve months later ... which ironically enough would be next year's Cyber Monday.

This timeframe (Month = 12) is the final timeframe where you (the marketer or analyst or Executive) make an effort with your Welcome Program. It's your last hurrah!

A Compressed Timeframe

There are two columns in our Life Table (click here to see the table - the table isn't emulating properly via email). 

The "Monthly Rate" is the probability of a customer who has yet to repurchase through "x" months repurchasing that month. Tell me what you observe as you look down that column?

The "Cumm Rebuy" column represents the cumulative probability of a cohort of new customers repurchasing over time. After twenty-four months, 39.1% of first-time buyers (in our example ... actual data) have purchased for a second time.

Read down that column (Cumm Rebuy). How many months does it take for half of the audience to repurchase?

• About two (2) months.

In other words, if you don't convert the customer (quickly), it quickly becomes unlikely that the customer will repurchase.

Look down the "Monthly Rate" column ... go to month = 17. If the customer has not purchased for a second time after sixteen (16) months, the customer has a 0.75% chance of buying again in month = 17. Yeah, in other words, the customer has close to no chance of repurchasing that month.

The customer is highly responsive in months 0/1/2/3, is somewhat responsive in months 4/5/6, then begins to lapse, and by month = 14 the customer is dormant.

As marketers, we think we can get the customer at month = 14 to "reactivate". Let's say we increased repurchase rates that month by a whopping 30% (which won't happen). The incremental repurchase rate changes ... from 0.97% to 0.97*1.3 = 1.26% ... still close to zero.

Meanwhile, imagine increase rebuy rates by just 10% for customers at month = 2 ... the rate that month goes from 4.6% to 5.1%.

Go after your new customers during the compressed timeframe when they are most likely to respond. Don't let your opportunity slip away, ok?

Why Does A Welcome Program Matter? Look At Months 1-2

Let's look at life table results from a recent project.

This table is for customers who just purchased for the first time. Each row represents months since first purchase. In the month of a first purchase (month = 0), 7.63% of customers buy for a second time ... that's a big number. A BIG number.

If the customer does not purchase for a second time in the remainder of the acquisition month, we move down one row. In the first full month on the file, the 1x buyer repurchases at a rate of 8.12%. That's also a BIG number! After a month-and-a-half, 15.1% of first-time buyers have already repurchased for a second time.

In the next post, we'll move down the table. Your homework assignment? Preview the rest of the table and be ready to construct a story.

Welcome Program

I always face a challenge from marketers when I talk about implementing a Welcome Program. When I tell marketers that a Welcome Program generates a ton of profit, I get the kind of blank stares that scientists get on their face when somebody tells them they won't be wearing a mask to fight a virus.

The reality is that marketers don't want to implement a Welcome Program ... because the program doesn't fit into a campaign-centric style of marketing.

The reality is that when I've observed Welcome Programs, they work.

At the very end of my tenure at Nordstrom, we experimented with a Welcome Program. If a customer bought for the first time, bought online, and lived within 10 miles of a store, my team sent the nearest store manager the phone number and/or email of the customer who just purchased. The store manager then reached out to contact the customer within 7 days of the first purchase, welcoming the customer into the brand, offering to help the customer in any way possible.

An online newbie had a 30% chance of buying again in the next year. 

An online newbie contacted by the store manager had a 50% chance of buying again next year, with an approximate 30% chance of buying again in the next month (based on what I remember and the relationship we fit to the data).

It's not everyday that you increase annual rebuy rates from 30% to 50% for a segment of customers, now is it?

Shortly after I began my consulting career I worked with a B2B brand that executed a Welcome Program ... a different email cadence, a different print cadence, and outbound calls / emails to first-time buyers. The results were staggeringly positive.

In B2B marketing, it is common for somebody to reach out to the customer, and it is not unusual to see different print/email campaigns for first-time buyers ... in B2C? It is rare to observe a credible Welcome Program.

So we're going to spend some time talking about "why" you should have a Welcome Program ... we'll analyze data that supports the case for having a credible program. More on the topic tomorrow, ok?