January 28, 2021

Customer Development Over Time

Alright, in this case we're evaluating customers acquired in the month of June. We're going to spend several days following these customers over the course of a year, so that you can see how customers develop and change over time.

The first image (below) shows how customers evolve and change in the very first month the customer was acquired (June).

In the acquisition month, 4.5% of the customers have already purchased for a second time! In fact, some of the customers have already purchased three times.

In the next month, customers could repurchase. If they repurchase, they move up to the Recency = 1 Month row. If they don't repurchase, the fall down to the Recency = 2 Months row.

Keep an eye on Recency = 1 Month row over time ... these customers keep buying, and as time progresses more customers move into frequency = 2/3/4 segments (called "Emerging Customers"). After the first full month on the file, 7.7% of customers have purchased for a second time.

On to August.

By the end of August, 9.7% of customers purchased for at least a second time, with the vast majority having purchased for a second time ... by this time 1.2% of customers purchased for a third time and 0.3% have purchased for a fourth time (even a tiny fraction of customers have purchased a fifth time, or a 6th-10th time).

At the end of September?

Well, the Welcome period is over, so first-time buyers are now classified as "Retiring" because their repurchase probability is progressively worse from here on out. 12.6% of customers have repurchased. Only 0.3% of customers have achieved Loyal status through three months.

Do you see how hard it is to get customers to Loyal status?

It's really, really hard.

At the end of October?

Repurchase Rate is up to 15.7%.

12.1% of the customers are 2x buyers.

2.4% of the customers are 3x buyers.

0.6% of the customers are 4x buyers.

0.2% of the customers are 5x buyers.

0.3% of the customers purchased 6+ times.

After four-and-a-half months customers are still generally in the 1x/2x stage. Few customers have moved into the high levels of Emergence, and only 0.6% of the customers are now Loyal.

This is why it is so darn critical to have a Welcome program. If the customer doesn't get out of the Welcome stage and migrate into Emergence quickly, you can't get the customer over the hurdle into Loyal status.

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