March 14, 2021

Seasonality, Part 2

Here's the image we ended last week with.

I asked you to study what happened 11/12 months after a first purchase. Remember, "Incremental Rebuy Rates" represent the probability of a customer purchasing "x" months after a prior purchase, given that the customer has yet to buy again.

Read down the "1x to 2x" column under "Incremental Rebuy Rates". The customer is somewhat responsive right after a first purchase. After three months, the customer quickly becomes unresponsive. Once again, we are shown the clear value of a Welcome Program.

But at month 10 something changes. The customer starts to become "more" responsive, in direct opposition to all of the rules of classic "RFM" modeling.

Why would a customer become more likely to buy approximately one year after a purchase?

It's seasonality!!

When I worked at Lands' End in the early 1990s we had a thriving swimsuit business. Every year in March/April we'd have an increase in response, driven by seasonal buying of our merchandise offering. I used to create maps for our merchants showing response rate increases for swim in Florida in January, South Carolina in February, the Upper Midwest in March (spring break), the mid-south in April, and then again in the Upper Midwest and New England in May/June.

Your Customer Development strategy needs to incorporate your merchandise offering. When you offer products that are bought at specific times of the year, you change your marketing strategy accordingly.

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