May 06, 2021
May 05, 2021
Think about it this way. A football team drafts players, and those players are not great players, so the football team goes 5-11 for a few years. What happens? The coach is fired. The General Manager responsible for the awful outcome is fired. The new coach and GM have to live with these players for a few years until they can turn over the roster.
Like the NY Jets, right?
The same thing happens in e-commerce. We acquire customers, and then we're stuck with those customers for a few years. If those customers don't perform, if they cannot be Developed, then the marketer or analytics expert or e-commerce executive is fired.
So why would you knowingly acquire customers who you know won't repurchase again? To generate short-term profit? Sure, go ahead. But that doesn't allow your company to achieve lofty goals, does it?
This is actual data from a brand. Here are annual rebuy rates for customers acquired via various channels.
- Website Unsourced = 25%.
- Paid Search = 27%.
- Catalog = 27%.
- Email = 27%.
- Retail Store = 34%.
- Online Events = 23%.
- Customer Service Associate = 12%.
- Social Media = 19%.
May 04, 2021
Here's actual data from a brand. I took all first-time buyers, I looked at the products those customers purchased, and then I measured whether the customer who bought the item repurchased within a year. With this data, I aggregated it to one row per item, measuring the repurchase rate of the items sold. Look at the histogram of annual rebuy rates.
The average item generates a new customer who has a (in this case) 26% chance of buying again in the next year.
Some of the items purchased by first-time buyers lead to outstanding levels of Customer Development, generating customers who have a 40% or better chance of buying again in the next year.
Some of the items purchased by first-time buyers lead to awful levels of Customer Development, generating customers who have a 15% or less chance of buying again in the next year.
Why would you feature items that lead to new customers who have a 12% chance of buying again? Yeah, I can hear you all the way from New England as I type this, yelling at me that those items are profitable. That's a merchandise-first view of the world. That's not how you Develop Customers, however.
Why would you feature a middling item (in terms of the rebuy rates generated by the item) in an email campaign at 30% off if the item yields Customers unwilling to be Developed? Think about it ... maybe the reason you are forced to give customers 30% off is because you loaded your customer files with Customers who are unwilling to be Developed ... because of some of the products you offer.
Or because of the channels where you market to customers. More on that topic tomorrow.
May 03, 2021
Yesterday I showed you a situation where a brand had no Customer Development Plan to speak of. When that happens, the same items sell at the same rate across all customer segments.
When every item sells at the same rate across all customer audiences, your failed to find ways to customize your assortment and thereby facilitate the development of customers.
The table above represents actual data for the top 25 items selling at a specific brand.
The table below represents actual data for the top 25 items selling at a brand that knows how to Develop Customers.
The 10th best selling item (overall) is the 6,957th best selling item to the Acquisition Audience, and is the 1,713th best selling item to the Welcome Audience. Among Loyal buyers? It's the 3rd best selling item.
This is what it looks like when you are fusing your Merchandising and Customer Development strategies. You pick and choose the products that appeal to customers based on different life cycle situations.
Does that make sense?
May 02, 2021
It's pretty easy to tell when a company doesn't have a Customer Development Plan.
How can I tell?
You take a look at the merchandise sold by a brand, and you rank-order the items from best to worst for the following:
- Overall Performance.
- Performance Among the Acquisition Audience.
- Performance Among the Welcome Audience.
- Performance Among the Emergence Audience.
- Performance Among the Loyal Audience.
There is almost no difference whatsoever between audiences. None. The same items sell well across all audiences.
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