February 01, 2021

As The Year Progresses, The Customer SLOWLY Emerges

We continue our study from yesterday. Look at the series of tables below, which show how our cohort of new buyers evolves and changes over time - through the end of the first year the customer was on the file.

Follow the customers through the year, what do you see?

Look at rebuy rates as they accumulate through the year.

  • 18.8% through November.
  • 20.0% through December.
  • 21.3% through January.
  • 22.1% through February.
  • 22.6% through March.
  • 23.2% through April.
  • 24.3% through May.
  • 25.1% through June.
As discussed yesterday, much of the "action" in getting customers to a second purchase happens in the first three months after a first purchase (10% converted after three months in our example).

How many customers migrated to "Loyal" status (5 purchases)?

  • 0.9% through November.
  • 1.1% through December.
  • 1.4% through January.
  • 1.6% through February.
  • 1.7% through March.
  • 1.8% through April.
  • 1.9% through May.
  • 2.0% through June.

So here's the thing. You are constantly told to focus on your Loyal buyers, and who can blame you, that's where all of the fun is in your marketing efforts? But look at this example. Just look at it. After a year, only two (2) percent of the customers acquired become loyal (in my example, "Loyal" = five purchases).

And only 2.3% of the customers acquired last June had a recency of one month as of the following June. Heck, only 5.2% of those customers purchased in the past three months. That's a really, really tiny fraction of "active" customers.

Virtually nobody is loyal.

Virtually nobody is active.

THIS is why Customer Development is so important. The company I am citing here does a modest job of developing customers ... not great, but certainly not awful like we see across the board these days.

Focus on those first three months after a first purchase, and accelerate the customer as s/he migrates from a 2nd to 3rd to 4th to 5th purchase, where Loyal status is frequently achieved.

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