March 29, 2021

Climbing The Ladder

Take a look at customers who just purchased (read across the Recency = 1 row).

Look at how hard the marketer has to work to encourage a customer to become loyal. When the customer purchases for the first time, the customer has (in this example) a 26.8% chance of buying again in the next year. I mean, that customer is not likely to buy again.

Eventually the customer migrates across the spectrum, and at a fifth purchase the customer has a 63.3% chance of buying again. The customer is loyal.

As the customer climbs the ladder toward loyalty, annual repurchase rates increase consistently ... 26.8% after a first purchase ... 40.0% after a second purchase ... 49.3% after a third purchase ... 57.1% after a fourth purchase ... 63.3% after a fifth purchase ... 68.7% after a sixth purchase ... 73.1% after a seventh purchase.

Where is the largest "delta" after a purchase? After the first purchase ... going from 26.8% to 40.0%. With each additional purchase, the delta gets smaller. You get the most "value" moving a customer from a first purchase to a second purchase.

Run the table for your brand. Tell me what you observe (

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