May 04, 2021

Why Are You Featuring Certain Items To First-Time Buyers?

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.





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