December 02, 2020

First-Time Buyers

Show of hands ... how many of you measure how likely a first-time buyer is to purchase for a second time, by month? How many of you produce a graph that looks like this?

You take all first time buyers. If the buyer purchases for a second time in the month the customer was acquired, you tabulate the response rate for that month (month = 0). Then take all customers who have yet to repurchase, and measure the response rate for that month (month = 1). Pull out all purchasers, repeat for month = 2. And so forth.

This is the most important analysis you can do. You learn how first-time buyer behave. You're not going to like what you learn. Tomorrow, I'll discuss how one Chief Marketing Officer interpreted this information.

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