October 31, 2021
October 27, 2021
Take out all of the horrific political nonsense, demeaning of human beings from burner accounts, and screaming about individual rights vs. vaccines and you are left with the pundits demanding that you "engage" your audience, whatever that means.
Unless you can prove that engagement leads to increased profit (and you can - customers who click through 2 email campaigns or more per year are almost always more valuable from a profit standpoint), social media "strategy" is kind of whatever you want it to be.
Which brings us to Steak-Umms.
I know, I know, your company is unique and special, so you couldn't possibly interrupt "WE HAVE BLOUSES AT 50% OFF - TODAY ONLY" with any of the whimsy offered by Steak-Umm.
A CEO recently told me that his 62 year old customer isn't on Instagram so there is no reason to have a credible social media strategy. That might be true. Or, it might not be true. Imagine a future where it might not be true and then go create that future.
October 26, 2021
Many different customers rise into the top decile in our example. The customers don't all have the same attributes.
One of the customers spent just $57, but bought from a merchandise category / channel that the models see as favorable.
One customer spent $353.88 on five items, buying in May from favorable categories at a discount.
One customer spent $243.85 on seven items, buying in May from favorable categories at full price.
There are many paths to a "quality" first purchase. Look for the attributes that lead to quality newbies and then exaggerate them where possible. If one merchandise category constantly delivers high-value customers, why wouldn't you be willing to pay more for search terms that align with that category? If one marketing channel constantly delivers high-value customers, why wouldn't you be willing to pay more for customers in that channel?
Similarly, there are attributes that deliver low value customers. One customer spent $39 on Amazon, one item. That customer had virtually no future value. If you can make some profit on the $39 purchase, by all means have at it. But there is no rule that says you have to bother with that customer going forward, right? No rule. You make the rules. Be smart.
Another customer spent $179.99 on five items ... but they were from a merchandise category that doesn't lend itself to repurchase activity and came in via an affiliate. Those customers have minimal future value. Personalize the website and recognize that customer - if the customer visits again, try to cross-sell the customer into categories that lead to higher value customers. Don't use expensive marketing channels to convert the customer, it's not worth it.
You do this stuff now, don't you? Of course you do. So take it a step further. Use the attributes that matter to focus your business on higher value customers.
October 25, 2021
Over the past 2-3 weeks, we've talked about a company and the new customers the company acquires.
It turns out that the company largely determines if it will have a customer base that is loyal in the future. "How" you acquire the customer matters. "What" the customer purchases matters.
The best customers acquired by this brand have rebuy rates around 60%.
The most marginal customers acquired by this brand have rebuy rates around 30%.
Tomorrow I'll show you a few customers from Decile 1 and from Decile 10, so you can physically see what the purchase attributes look like. When you put it all together, you determine how loyal your customers will be - and you largely determine this within the parameters of the first purchase.
October 24, 2021
In this article (click here), somebody laments that they cannot get a book because it is backordered due to a paper shortage.
If only there were a digital alternative that could be easily purchased, downloaded, and read all within minutes.
Similarly ... if your paper folks won't answer your calls and your printer is readying to nuke your November 14th mailing, consider that there might be a digital marketing alternative that you've employed for decades.
In the past year-and-a-half you changed the "way" you work, likely forever. Maybe you didn't want to change how you worked, but you had to do it and you did it.
Now it time to change the "way" you perform marketing, likely forever. Maybe you don't want to do this, but you have to do it.
You can do this!
October 21, 2021
Our focus on opens/clicks (when it comes to email) is so ridiculously misguided.
Email marketing serves many different purposes.
It should be used to teach customers about new product launches.
It should be used to sell winning items at above-average rates.
It should be used to replace expensive marketing tactics, especially among infrequent shoppers.
It should be used to convey loyalty benefits to the best customers.
And it should darn well be used to build a prospect list of shoppers who eventually become customers.
In the image below, we look by decile. Best new buyers are on the left, worst new buyers are on the right. Does a first purchase via email marketing align with the best new customers, or the worst new customers?
The top three deciles had about 20% to 32% of new buyers sourced via email marketing.
The bottom three deciles had about 2% to 3% of new buyers sourced via email marketing.
So yeah, email marketing matters ... if you build a list of prospects via email marketing you generate new customers who are much more likely to repurchase in the future than customers from other sources.
This is the point in the discussion where I get an email from somebody who says to me "Sure, this sounds good, but make it ACTIONABLE."
The word "actionable", of course, means "I'm not doing anything until you give me a solution that works perfectly within my company culture and tech capabilities and I know you can't do that so that means I don't have to do anything." This happens repeatedly.
If you have a quality email marketing team (one not completely outsourced to vendors demanding that you create engaging content that increases opens and clicks), you have multiple email programs, don't you?
- One for Prospects.
- One for First-Time Buyers (i.e. a Welcome Program).
- One for Emerging Customers.
- One for Loyal Buyers.
- One for Lapsed Buyers.
October 20, 2021
This is for catalog brands ... if that's not you, please read the other post I wrote today.
By now your paper rep isn't returning your calls. Your November 10 mailing is in jeopardy. The inventory you were able to get your hands on, however limited, is about to become liquidations material if you don't get catalogs out the door.
Meanwhile ... Amazon:
Yeah, that's the Amazon catalog I received today.
Amazon. I doubt their circulation was 122,000. They sent out 100 pages to millions of customers. Ready, set, play.
Ask your paper rep ... that "trusted partner" that you prioritize over your own employees (think of the $$$ your paper rep gets from your business vs. your own employees) ... ask that person why Amazon is sending out 100 pages while your Christmas season is in jeopardy because they don't have paper for you ... paper you committed to nine months ago?
You are being taken advantage of by your "trusted partners".
I'm tired of you being taken advantage of by your trusted partners. I'm exasperated. Enough is enough.
Are you tired of it?
If the answer is "yes", what are you going to do about it?
If the answer is "no", what does that say about your company?
Buying from Merchandise Category 10 was good.
Buying from Merchandise Category 03 was bad.
How about Merchandise Category 05?
October 19, 2021
Yesterday we discussed how the best new customers bought from Merchandise Category 10.
Look at what the data shows for Merchandise Category 03.
If the first-time buyer is buying from Merchandise Category 03, the first-time buyer is much less likely to purchase again in the future (remember, Decile 1 rebuy rates were 58%, Decile 10 rebuy rates were 28%).
So if you think you have a loyalty problem (and what marketer doesn't think that?), look at what you sold the customer in a first order. Maybe you caused the loyalty problem by selling stuff that causes the customer to not come back and buy again?
October 18, 2021
October 17, 2021
Last week I expressed my contempt for a customer base that wanted discounts / promotions. It's not the way I want to run a business (take a $50 item and sell it for $50 and then cheat all those that bought it for $50 and sell it for $35).
But it works, of course.
As a marketer, you want to make sure you understand the difference between customers wanting a $40 item for $25 and customers wanting $25 items. There is a difference.
For the brand I'm analyzing, the top three deciles (which represent customers who, after being acquired, have an average rebuy rate in the next year of 54%) generate 11% of their volume from items selling for between $20.00 and $29.99. Meanwhile, the bottom three deciles (which represent customers who, after being acquired, have an average rebuy rate in the next year of just 31%) generate 38% of their volume from items selling for between $20.00 and $29.99.
What does this mean?
It means the new buyers don't want cheap items. They want quality items sold at cheap prices.
It's the old JCP issue from a decade ago ... customers didn't want everyday low prices of $30 ... customers wanted 40% off of a $50 item.
This impacts "how" you sell stuff on your website, if your brand has customers with similar characteristics.
October 14, 2021
I can't believe I even have to write this given how much I dislike promotions, but here we are. I'm looking at data for the brand we've reviewed over the past two weeks. Remember ... new customers in the best decile had a 58% chance of buying again in the next year ... new customers in the worst decile had a 28% chance of buying again in the next year.
So you want to acquire customers in decile 1/2/3. You want to avoid customers in decile 8/9/10.
I looked at the percentage of merchandise in the order sold below the historical average price point for the item. In other words, if an item was $50 and then was lowered to $40 the historical average might be $48 and if it sold for $40 it sold "below" the historical average.
Top three decile results for percentage of sales sold "below" the historical average?
- 68% ... 72% ... 68%.
- 46% ... 45% ... 59%.
October 13, 2021
For the brand I'm analyzing, there are numerous marketing channels used to acquire customers.
These channels deliver above-average new buyers.
- Points Program.
- Email Marketing.
- Space Ads.
October 12, 2021
Ok, a geeky detour for today in case you want to do this work yourself.
Every first-time buyer in "Hillstrom's Newbies" purchasing for the first time between a date range is analyzed ... did the customer purchase again within twelve months?
We use a Logistic Regression framework - the methodology allows us to see the impact each variable has on subsequent purchase activity.
Now, the numbers are kinda hard to read here, so don't really focus on the numbers. Focus on the bullet points below.
- I measure the impact of each additional item purchased in a first order.
- I measure the impact of the price of each item purchased in a first order.
- I measure the impact of discounted/promoted items in a first order.
- I measure the impact of new/existing items in a first order.
- I measure the impact of canceled items in a first order.
- I measure the impact of returned items in a first order.
- I measure the impact of the month of acquisition.
- I measure the impact of the share of a first order in each merchandise category.
- I measure the impact of marketing channels in a first order.
October 11, 2021
- Canceled Items caused new buyers to be MORE likely to purchase in the future.
- Returned Items caused new buyers to be MORE likely to purchase in the future.
- Discounts/Promotions caused new buyers to be MORE likely to purchase in the future.
October 10, 2021
Many of you are dealing with this very issue. You planned to sell Blue Widgets for nine months, you have them on your website, but most of the sizes are sold out and replacements are sitting on a ship outside of Long Beach.
Do those canceled orders or canceled items hurt future customer behavior?
The company I'm currently analyzing (and this was pre-COVID, so I get it, we live in a different world now)?
In fact, canceled items helped ... helped A LOT!
Customers were 2.36 times more likely to repurchase if they had an item canceled than if the order was properly fulfilled for the company I analyzed for this series.
2.36 times more likely to repurchase!
In other words, when a customer was disappointed the customer became persistent. The customer looked for something else to buy, causing the brand to get two orders in a short period of time.
What am I asking you to do with this information?
Don't give up. Give the customer alternatives. Give the customer choices. Especially first-time buyers. Work hard to aid their persistent behavior.
October 07, 2021
October 06, 2021
October 05, 2021
Modern marketers love December. It's so "easy" to acquire customers. I worked with a "normal" brand who acquired 40% of their new buyers every December.
They didn't, however, elect to measure if this was a good decision.
Remember our data from yesterday? The best newbies had a 58% chance of buying again (decile one) and the worst newbies had a 28% chance of buying again (decile ten).
This graph shows, by decile, the fraction of new buyers acquired in December. Tell me what you observe:
Look at deciles nine and ten. These are the worst deciles ... and anywhere between a third and half of the first-time buyers in these deciles are acquired in December.
In other words, if you acquire a customer in December, the customer (for this brand) is generally a low value customer, one unlikely to buy again in the future. You better collect all of your profit upfront with this customer.
In the Logistic Regression analysis performed for this brand, I learned the following:
- January / February / March / April / May / September new buyers perform at or slightly above average.
- July / August newbies perform above average.
- October newbies perform below average.
- November / December newbies perform well below average in the future.
October 04, 2021
October 03, 2021
Between now and the Supply Chain Apocalypse of 2022 (read this tread on Twitter), studying new customers and studying the impact of first purchase attributes on future spending activity will be important. Some of your customers will tolerate the issues. Some of your customers will not be customers as a consequence. Building an entire business based on what happens in China could become a dicey proposition ... a fatal proposition for some.
But that's a problem for 2022. Until then cross your fingers and hope that toilet paper is available.
As you already know, most e-commerce brands thrived during the COVID-bump of 2020. Because annual repurchase rates are generally low for e-commerce brands, sales growth is highly dependent upon new+reactivated buyers. With a veritable plethora of new+reactivated buyers in 2020, life was comparatively good (commerce life, that is).
Those days are gone now.
Trends in customer acquisition are trending back toward 2019 levels for so many of you. This means that customer acquisition is no longer easy, it's hard, and you (that's you ... the reader) play a disproportionate role in how loyal your customers will be in the future based on the criteria customers possess during a first order.
Over the course of the next few weeks, we're going to talk about how much influence you have on future sales/profit based on the "type" of customer you acquire. This work was inspired by a random user on Twitter who was furious that a fusion of Apple/Facebook were "killing businesses". Wrong. The owners of the businesses made the mistake of trusting Apple/Facebook, and are now getting what they deserve.
What a first-time buyer purchases dictates future loyalty.
When a first-time buyer purchases dictates future loyalty.
Quantity of items purchased by a first-time buyer dictates loyalty.
Price points purchased from dictate loyalty.
Marketing channel purchased from dictates future loyalty.
New vs. Existing items dictate future loyalty.
Items selling above/below their historical average dictate future loyalty.
Cancelled items in a first order dictate future loyalty.
Returned items in a first order dictate future loyalty.
Winning items in a first order dictate future loyalty.
We'll talk about all of that and more, starting tomorrow.
P.S.: Lots of unsubs in the past few days, and they're coming from old-school companies, old-school vendors, and old-school conference organizers. This means we are on to something. Same thing happened in 2013-2014 when we started talking about the importance of merchandise ... it chased away the establishment. You are the anti-establishment. Thanks for coming along on this journey!!
October 01, 2021
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