February 08, 2021

The Customer Resume

Part of the Customer Development process is "understanding" how customers behave.

Think about it this way. When you want to hire somebody, you have limited data about the candidate. You scour social media for clues, and the candidate prepares a resume for you. Based on the resume, you make a decision whether to invest in the candidate or not.

Customer Development is no different. Cohorts of customers prepare their own resume. When you acquire a cohort of customers, the customers evolve and change over time. This evolution/change is described via the Customer Resume.

Let's look at customers who bought for the first time in December 2019. We follow the customers for a full year. First, we review how the customers evolved from a Recency/Frequency standpoint.

I like to first look at the bottom row of the table. Notice that 80.3% of these customers didn't buy again in the next year. Oh oh. That's a problem. It's easy to acquire a customer in December, it's hard to Develop customers acquired in December.

How many customers achieve Loyal status (5+ life-to-date purchases)? A whopping 0.9%. Heck, only 18.8% of the customers achieve Emerging status.

How many of the customers were active in the past three months? Just 9.6% (sum the totals for recency = 1/2/3).

These customers likely DON'T WANT TO BE DEVELOPED. They had a Christmas need last year and the brand met that need, now the customer is gone. Well, that's where you have to fight against that trend. That's where the Welcome Program comes into play. You have to convert that customer in Jan/Feb/Mar before you end up with this outcome. I mean, virtually nobody acquired in this cohort is buying anything. And you aren't going to convince a customer who hasn't purchased in thirteen months to buy now. Be honest - name the third party you bought from on Amazon thirteen months ago?

Tomorrow we'll dig into this table ... the actual Customer Resume.

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