January 17, 2021

Customer Development: First Order Attributes

The customer tells us an awful lot while placing a first order. The customer is giving us all sorts of subtle hints about whether the customer wants to have a long-term relationship. Most first-time buyers don't want a long-term relationship. The customer had a want/need at a point-in-time, the need was fulfilled, and the customer leaves (theoretically) happy.

But some customers give away information, useful information!

You are like a Quarterback approaching the line of scrimmage. You are pointing out the middle linebacker. You might have two plays called, a run/pass option, and you have to decide which option you want to select. You might not want your run/pass option, you might audible out of your play into something else that suits the personnel you have on the field.

All of that is you. You are the Marketer, and based on what customers present to you following a first order, you decide to take advantage of the situation. You decide to develop customers.

Here's an example. We have first-time buyers, and we have annual repurchase rates illustrated in the table below.

In this example, the customer might order just one item ... the customer might order six or more items. The customer might buy inexpensive items, or the customer might buy expensive items.

Which customer has the best chance of being developed, based on annual repurchase rates following a first purchase?

A customer buying one item from a low price point has a 17% chance of buying again within a year.

A customer buying six or more items from high price points has a 44% chance of buying again within a year.

Yeah, you want to develop the customer with a 44% chance of buying again. Take some time and be planful here.

The customer with a 17% chance of buying again? That's a customer requiring a very different development strategy. That's a customer that is only responsive in the first three months following a first order, so you invest all of your energy within that window, then you let the customer go.

Know "who" needs to be developed.

Know "when" a potentially unresponsive first time customer needs to be developed.

Know "channels" (strong hint - personalized email) to use to develop customers.

Welcome the customer.

This is what Customer Development is all about.

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