September 28, 2023

Inflection Points and Seasonality

There's a place along the California coast where Elephant Sea Lions gather to breed, raise children, bark at each other, establish dominance, and generally lay around.



They follow the same pattern, every year.

Many of your customers follow the same pattern, every year. I analyze the patterns all the time. So many of you have customers marooned on Christmas purchases ... they buy every year between November 20 and December 20. That's it. This means there are two key inflection points worth thinking about ... marketing to this specific customer beginning October 1 each year, and then having your Analytics team identify customers in this segment who purchase in Jan / Feb / Mar / Apr / May / Jun / Jul / Aug / Sep / Oct  because those customers experience a true inflection point (new seasonal purchase), and will behave differently as a consequence.


September 27, 2023

Something Different - Inflection Points

There are many ways to be different, ways that lead to Inflection Points.



Yeah, an office building.

Years ago, I had a client that printed a message on a card in outgoing packages, telling the customer that the brand put a "ghost" in the package. Fun, who wouldn't want a whimsical ghost in their home? But you can test it, and you can see if customer loyalty increases when a whimsical ghost message is placed in an outgoing package. If it does, you've just found a creative inflection point.

Customers generate their own inflection points (a 2nd purchase, becoming a loyalty member, buying from a key category).

Marketers influence inflection points by doing something different.


September 26, 2023

Impossible Inflection Points

Last week I ate at multiple one-star MICHELIN restaurants. That's what makes vacations fun!

Now, a one-star MICHELIN restaurant can offer an impeccable dining experience at $270 per person, or, the restaurant can offer an impeccable dining experience for just $32.


Either way, the restaurant did a bunch of things right in the past, earned a MICHELIN star, and has now created a situation nearly impossible to manage. Customer expectations are sky high. It will be easy to disappoint the customer, it will be hard to delight the customer. You just do your best to maintain a very high standard.

This is where I start receiving emails from intrepid readers, with quotes like this:

  • "Kevin, you don't understand. We are unique and special, but we sell widgets. Widgets are commodity items sold at the lowest possible cost. What inflection point matters for us? We aren't a MICHELIN star restaurant, we're a purveyor of widgets?"

Of course, there are inflection points for the purveyor of widgets.

But there is nothing special about your business. You've designed a boring business. As a result, your struggle is different.
  • The one-star MICHELIN business deals with nearly impossible inflection points.
  • Your business deals with very boring inflection points.

The one-star MICHELIN business must be creative, must change, must be excellent.

The purveyor of widgets? The rules are very different. Make sure the customer needs widgets a few times per year, make sure your prices are fair, make sure you get the customer a widget immediately. Maybe you hire a "Widget Influencer" to create programming on your YouTube channel, and you link her fabulous shows to increased sales as an inflection point. But make no mistake - you are in a different business.

September 25, 2023

Negative Inflection Points

You need to get gas ... tank is low and time is short. So you pull up to the pump, and are greeted with this little gem.


In your customer data, you'll notice that one customer out of a thousand process the QR code and sign up for either Silver, Gold, or Platinum level rewards. That's an inflection point.

Your analytics team measures the positive side of the inflection point.

Your analytics team cannot measure the negative side of the inflection point.

  • I get $0.75 off each gallon of gas at my QT store by pairing my grocery id to my gas purchase.
  • I get $0.10 off each gallon of gas at Shell by accepting PLATINUM STATUS.


Where do you think I'm going to get gas next time?

Each of us manage a business loaded with negative inflection points. I once had a Marketing Executive tell her CEO not to trust me because my website looked like it was created during the Bush Administration. That's a negative inflection point. It's our job to minimize negative inflection points.


September 24, 2023

Inflection Point: The Camp Fire

Inflection points happen in different ways at different times.

For instance, if you own an RV, you visit a lot of campgrounds. There are two first-impressions you get at a campground. At check-in, you'd probably prefer to walk into a modern office than a double-wide trailer from 1994.

The second first-impression happens when you arrive at your campsite.


Almost every campsite offers a picnic table. That goes with the territory. Some campsites are paved (this one isn't).

But look at the little campfire opportunity.

If you run a 300 site RV campground, it will cost you $79 * 300 = $23,700 to furnish all sites with a campfire pit.

And yes, most of your customers are passing through, they aren't returning.

They are talking, however. Going the extra mile means that an RV customer will recommend this place ... your future new customers come because you offered this little nicety to a current customer. You spend $23,700 in 2021 to obtain new customers in 2024 ... and you cannot connect the 2024 customer to the 2021 purchase of camp fire pits.

So yes, this is an inflection point. Not one you see in your data, but an important one nonetheless. The best performing clients I work with cannot track 20% to 50% (often more) of their new customers. They have word of mouth. Word of mouth is often generated via product/creative inflection points.




September 20, 2023

New Pilot Project

When I have a new product offering, I share it with you, the loyal reader, at a significant discount. You help me test out a pilot product, you save money.

In recent months, my Marketing Budget Experiments projects lead clients to a common question ... "how do I increase customer loyalty?" With new customers becoming harder to acquire and more expensive to generate, some are electing to swing back towards loyalty/retention. In my project work, there are key Inflection Points where your brand can facilitate increased loyalty. There are obvious ones like Christmas, or Spring if you are the gardening world. There are profitable ones, like opening a proprietary credit account.

Your brand possesses key inflection points - and my new Loyalty / Inflection Points pilot project is designed to help you find them, score your customer base, and then act upon what you learn.

Read here for more details.




Customer Loyalty:  Inflection Points

Kevin Hillstrom: President, MineThatData

September 13, 2023

  

 

 

Inflection Points > Points

 

In my Loyalty projects, there are inflection points in the trajectory of the customer that matter. When the customer purchases as a result of reaching an inflection point, the customer becomes more loyal.

 

The marketers I work with view this almost from the opposite point of view. They create programs that offer points, thinking that customers are motivated by points to the point of spending more to earn more points faster so that the customer can earn a discount. This process rearranges the transfer of profit from the customer to the brand. The brand (in theory) holds more profit in the short-term, giving up profit longer-term in exchange for a customer that (in theory) is more loyal. Would the customer have become more loyal without the loyalty program? Few can answer that question, and that’s the problem when brands view Points > Inflection Points.

  

 

What Are Inflection Points?

 

Inflection Points are situations where customers transition from being less-valuable to more-valuable. Every brand has situations where the customer makes a decision that significantly alters future profitability.



Inflection Point:  When a customer purchases for the first time, there is a small window where the customer is likely to purchase again. This window is typically open for 3-12 weeks. The customer expects the first purchase experience to be good (not perfect), and the customer sometimes looks to “complement” the first purchase with additional merchandise. If you want loyal customers, you have to assist the customer as the customer goes through this critical inflection point. This situation is not solved by “earning points”. This situation is solved by paying attention to the customer. Are you a B2B marketer? Yes? Did you reach out to all first-time buyers who spent more than $500 on a first order to make sure that the order was executed perfectly, and if not executed perfectly, did you remedy the situation? Are you a B2C marketer? Yes? Did you analyze your visitation data to see if the customer is looking to complement the first order with additional merchandise, and if the answer is “yes” did you do something to encourage the customer to purchase for a second time? These are all important components of a loyalty program. You cannot have a loyal customer unless you convert a first-time buyer to a second purchase. Inflection Points > Points.

 

 

Inflection Point:  Anniversary events are very important. Say you sell products that help an organization run an annual conference. For each of the past two years, the customer spent $12,000 with your brand in July. What are you doing with this specific customer this June/July? Are you a B2C brand? You have a significant minority of your customer base who only purchases in November/December. How much money do you spend trying to convert the customer to a purchase in January-October? How much money do you spend trying to convert the customer to a purchaser prior to the Anniversary (Christmas) Inflection Point? Should you spend money on a purchase that will likely happen anyway? Should you spend money trying to force the customer to do something the customer does not want to do? There aren’t easy answers to those questions. There are, however, Inflection Points that need to be addressed. Learn what your Inflection Points are, and have a strategy in place to address customers who are about to enter a key Inflection Point.

 

 

Inflection Point: At some point, your customer changes behavior. If you work at Starbucks, you notice that Heather is buying a drink every single morning, Monday – Friday. That’s an Inflection Point. Heather is transitioning to a full-on addiction. Your job changes as well – you harvest profit from her addiction by making her purchase experience as easy as possible. She’s going to purchase every morning, so 20% off doesn’t make any sense. Points “might” make sense if you are leading Heather toward something she aspires to. If you work in B2B, the customer who previously spend $250 a year spends $1,400. That’s an Inflection Point. The customer trusts you more, and as a consequence you need to work harder to keep that trust. Many marketers wait for an Inflection Point like “The Customer Just Spent $2,500 in Total, The Customer is Now Loyal and Eligible for Points”. View this in an opposite manner. Think this way … “The Customer Just Reached An Inflection Point and is About to Become Loyal so Let’s Close the Deal”.

 

When I worked at Nordstrom (2001-2007), we held our Anniversary Sale every year in late July – early August. Our merchandise was offered at 20% off – new Fall products. Customers went bonkers over this sale – we only had five sales per year so 20% off was meaningful. However, we allowed “special” customers to have early access to our merchandise. They could “preview” the assortment a week prior to the sale, going “behind closed doors” to see the product. They could pick out whatever they wanted. We’d hold the products for them, and on the first day of the sale the customer could walk into the store, pass the feeding frenzy, and walk out with his/her merchandise, showing off to the customer that s/he was “special”.

 

If a customer spent $700 in the year prior (I believe it was $500 if the customer was a Nordstrom Credit customer), the customer earned this “pre-sale” experience. We sent period messages to the customer, telling the customer how close the customer was to earning this “status”. Our deadline, if I remember correctly, was June 1 to earn “pre-sale” rights. We’d send messaging to the customer leading up to June 1. No points. No other incentive. Just spend $700 to earn the right to buy merchandise one week early … no discount/promotion on top of the sale price every other customer paid.

 

On an annual basis, we learned (via control groups) that our customer base spent $100,000,000 more per year (generating more than $25,000,000 per year in incremental profit) … splitting dollars during Anniversary Sale and in the months leading up to the sale to hit a $700 spending level. Inflection Points were critically important … Anniversary Sale was a key Inflection Point … communication in April/May telling the customer that the deadline to spend $700 was fast approaching was another key Inflection Point.

 

Also – we knew that our better customers purchase about six times per year … $700 of annual spend translated to about six purchases per year. The $700 Inflection Point (which triggered special status during the Anniversary Sale) matched the point where we knew that Customer Lifetime Value surged.

 

You have similar dynamics in your business. Learn how your customers interact with your Events. Do any Inflection Points interact with key Events? If the answer is “yes”, you too can create a Nordstrom-like loyalty experience.

 

 

Inflection Point: Each business has an Inflection Point where the customer has a 60% chance of purchasing again in the next year. This is the point where “loyal behavior” happens. For many of my clients, this happens after a fifth purchase. Carefully analyze when your customers achieve a 60% chance of buying again in the next year. If you want to pursue a traditional loyalty program, this is the audience you want to focus on. If your annual repurchase rate is under 35%, do not expect to identify a large audience with a 60% or greater chance of repurchasing in the next year. Your job changes – you shift your focus from Loyalty to Inflection Points.

 

 

 

 


 

Inflection Points and Loyalty:  An Analysis

 

 

For my long-term client base and readership audience, I preview new products at a reduced price. In this case, I am previewing my “Inflection Points” analysis at the reduced price of $12,000.

 

Long-term clients and my readers get an opportunity to help shape what a future Inflection Points analysis looks like at a significant discount. I will analyze your customer base, identifying the Inflection Points that can be acted upon to create a more loyal customer base. I will analyze purchase transitions … first to second, second to third etc. to learn what Inflection Points exist. I will tell you when a customer becomes “loyal” (i.e. annual repurchase rate is 60% or greater). I will identify any Anniversary Events (i.e. customer purchases every November/December or buys seeds every March). I will thoroughly describe the process the customer takes as the customer goes from a first purchase to a loyal buyer.

 

Some elements of this analysis are similar to the Customer Development work I performed back in 2021.

 

The outcome of this project are “Loyalty Scores” … a model that describes the stage the customer belongs to on the trajectory from first purchase to loyalty to inactive customer. You will learn, for every customer, where the customer is on that journey.

·       Loyal Buyer.

·       Inflection Buyer (just crossed an inflection point).

·       Active Buyer.

·       Anniversary Buyer (about to approach an Anniversary Event – take action!).

·       Lapsed Buyer.

·       Abandoned Buyer (i.e. no longer likely to purchase again).

 

If there are other segments that need to be included, I will include them.

 

I will provide pseudo-code that allows you to score your own file on a weekly basis, so you can act upon what is learned from this project. You should be able to identify an “Inflection Buyer” and take action as soon as the “Inflection Activity” happens.

September 19, 2023

Inflection Points

In one instance, the customer had a 30% chance of buying again next year, but if the customer accepted merchandise on subscription, the customer had an 80% chance of buying next month via subscription. AOVs went down, product diversity went down, but the customer was considerably more profitable.

That is an Inflection Point.

In another instance, the customer bought for the first time in November 2021, then bought again in December 2022, and bought for a third time in May 2023. The May 2023 purchase was an Inflection Point ... the customer changed behavior ... going from a Christmas shopper to adding a new season.

Every business possesses customers who navigate through Inflection Points. Customer behavior "changes", and changes are generally good when tied to purchases.

If you could list five inflection points that your customers go through, what would they be?

September 18, 2023

Clown Show

How do you know if your business strategy qualifies as a "Clown Show"?

Well, that term is a bit harsh. Let's not say something nasty.

You can find plenty of businesses that are mismanaged, however.

  • No program to quickly convert a first-time buyer to a second purchase. This is the period when you can make the biggest difference in the trajectory of your relationship with the customer.
  • A fundamental misunderstanding of how sales are generated. One company I worked with craves customer relationships - and doesn't have many of them - they sell stuff the customer simply doesn't need very often. Management simply does not understand that the customer does not need what the brand sells very often. It would be like if your microwave broke, you bought a new one at Best Buy, and then Best Buy sent you incessant messages encouraging you to purchase another microwave ... just a fundamental misunderstanding of how sales are generated.
  • Now a diversified marketing portfolio. You'll see this in Customer Acquisition counts, where two sources account for 85% or more of new names.
  • Too few unattributed new customers. When a brand tracks 80% or more of all new customers to a source, the brand has no "word of mouth". That's a bad thing. It means the brand does nothing that causes prospects to talk.
  • < 25% of sales come from email marketing. Yup, that's a problem. Your email marketing program should be your primary vehicle for having a relationship with a customer (with socials being second). It's even worse if < 25% of sales come from email marketing and the brand sends 2-3 "blasts" per day.
  • Declining sales from new items (new in the past year). A sure sign of mismanagement and a fundamental misunderstanding of how success is derived over time.

Maybe a business that possesses these attributes isn't technically a "clown show". But it is mismanaged.

September 17, 2023

It's Time ... Again!

Every four months!

And this time we're in the middle of FORECASTING SEASON.

It's time for another run of The MineThatData Elite Program. Existing clients pay $1,000, new clients pay $1,800 for the first run ($1,000 thereafter).

  • Data Through 9/30/2023.
  • Data Received at the MineThatData Global Headquarters by 10/15/2023.
  • Payment Received at the MineThatData Global Headquarters by 10/15/2023.
  • Writeup Delivered by 10/31/2023. #halloween

You will receive my standard suite of metrics and of course there is a mini-forecast in there for you to see how your business is likely to evolve over the next year ... because it is FORECASTING SEASON.

Send me a message (kevinh@minethatdata.com / 206-853-8278 / @minethatdata) and I'll send you an invoice to get you started. During last year's FORECASTING SEASON, more clients participated in this program than at any point in the prior eight years. Of course, this happened because it was FORECASTING SEASON!

September 14, 2023

Messing With Rebuy Rates

One of the mysteries of FORECASTING SEASON is understanding the impact of price increases on repurchase rates, orders per buyer, and items per order.

It's common to see the following (your mileage will vary greatly ... averaged, you get the outcome below).

  • Rebuy Rates Decrease by 5%.
  • Orders per Buyer are Not Significantly Impacted.
  • Items per Order Decrease by 5%.
  • Price per Item Purchased Increases by 10%.
  • New/Reactivated Buyers Decrease by 5%.

When this happens, you end up with fewer customers ... with fewer customers, it is harder to grow in the future in spite of the price increase.

As prices went up in 2022 and stayed high in 2023, we traded higher prices for fewer customers. Now that FORECASTING SEASON is upon us, it's hard to show that 2024 will be robust after two years of customer count declines due to price increases.

September 13, 2023

Customer Loyalty Ideas

Posted overnight on LinkedIn for your perusal:  

https://www.linkedin.com/feed/update/urn:li:share:7107930463972818944/

The 30% Annual Rebuy Rate

When I first started consulting, my clients averaged an approximate 35% annual repurchase rate.

Today, the average annual repurchase rate is about 30%.



This means an average client possesses a customer base where 30 of last year's 100 purchasers buy again this year ... if they repurchase, they buy 1.939 times this year spending $121.21 per order for a net value of $70.49 (0.30 * 1.939 * 121.21).

This is, pretty much, the average e-commerce business in 2023.

If 30 out of 100 of last year's buyers purchase again, you quickly come to the conclusion that Customer Acquisition is the focus of FORECASTING SEASON.

Right?



September 12, 2023

FORECASTING SEASON: Somebody Wants To Squeeze More Juice Out Of The Lemon

You'll hear that quote - I've been hearing it since starting my consulting practice in 2007.

Across a thirty-five year career, I've learned that there is a clear relationship between Rebuy Rates, Orders per Repurchaser, and Average Order Value. The relationship looks like this:



This is one of the most important tables I've ever created - I use it to help leaders understand the relationship between rebuy rates and orders per buyer per year.

At a 20% annual rebuy rate, customers on average purchase 1.7 times per year. With an average $122 AOV, a customer in a business model with a 20% rebuy rate will generate $42.06 in annual sales.

At a 30% annual rebuy rate, customers on average purchase 1.9 times per year. With an average $121 AOV, a customer in a business model with a 30% rebuy rate will generate $70.49 in annual sales.

At a 40% annual rebuy rate, customers on average purchase 2.3 times per year. With an average $120 AOV, a customer in a business model with a 40% rebuy rate will generate $109.30 in annual sales.

At a 50% annual rebuy rate, customers on average purchase 2.8 times per year. With an average $119 AOV, a customer in a business model with a 50% rebuy rate will generate $167.96 in annual sales.

At a 60% annual rebuy rate, customers on average purchase 3.8 times per year. With an average $118 AOV, a customer in a business model with a 60% rebuy rate will generate $271.20 in annual sales.

Do you see what is happening as rebuy rates increase?

As rebuy rates increase, existing buyer momentum accelerates. Average customer spend increases from $42.06 to $70.49 to $109.30 to $167.96 to $271.20. Incremental increases are about $28, then $39, then $58, then $104.

This is where the trap happens. 

Somebody ... usually the CEO or CFO, will demand that you "squeeze more juice out of the lemon". They'll (correctly) observe that as rebuy rates increase, purchase frequency increases, and the business improves significantly.

How, exactly, are you going to "squeeze more juice out of the lemon"?

If the formula existed with your current marketing strategy and current merchandising strategy, you'd have done it ... likely a decade ago or more. You aren't dumb!

Rebuy rates (leading to increased annual purchase frequency) can be influenced by marketing - until you achieve marketing proficiency. I mean, if you didn't have a credible email marketing program, yes, your rebuy rates will increase when you implement a credible email marketing program. But eventually your marketing efforts are "credible", across the board. At this point, marketing isn't irrelevant, but it isn't the process that improves rebuy rates or purchase frequency.

At this point, your merchandise assortment can drive improved rebuy rates (and by definition, improved purchase frequency). There's a reason department stores have high repurchase rates ... there's a reason why "marketplaces" have high repurchase rates. They leverage partners to grow the merchandise assortment to a point where what is sold needs to be purchased. often ... or your assortment is so broad (Amazon) that in entirety it must be purchased often.

If you want to squeeze more juice out of the lemon, consider creating a menu that requires more lemons.



September 11, 2023

FORECASTING SEASON!

We're approaching mid-September, which means it is FORECASTING SEASON!

During FORECASTING SEASON, there are easy fixes, and there are hard fixes. Somebody will run a forecast and get this as a result.


This business is contracting. The business needs to be fixed. Somewhere, somebody in Finance looks like this:



This brings us back to the topic of easy fixes and hard fixes. People avoid hard fixes. People embrace easy fixes. Easy fixes happen in Marketing. "What if you increased your paid search budget by 20% per year, does the business grow?"

Here you see tradeoffs ... you give up more than a million dollars of profit in the short-term, then the business improves in the long-term.

And ... the core issue isn't solved here ... spending 20% more on paid search just mitigates the sales decline somewhat, but it is still there.

During FORECASTING SEASON it's our job to get these scenarios out there. Flood the airwaves with Marketing Budget Experiments designed to help our Leaders understand (well ahead of time) what various "solutions" actually solve.


P.S.:  There is a difference between most "brands" and those who embrace FORECASTING SEASON. Those who embrace it believe in something. They're working toward something. Maybe their approach is full of red-tape, but they are working toward something. Why do I bring this up? Well, last night I posted something on LinkedIn asking my readers what is their overriding marketing principle that they do not budge from (mine would be the importance of Customer Acquisition). Here's a link to what I wrote. As of press time, the article has been viewed 411 times and has ZERO likes and ZERO comments. If I write something like "Macy's Bizarre Omnichannel Strategy" I'll have 15-25 likes and a half-dozen comments with enough thought leadership to fill a conference agenda ... and it is meaningless nonsense, all of it. Ask the reader to share what they stand for, and not a single reader can do that? My goodness. Those of you who embrace FORECASTING SEASON stand for something ... you are trying to ward off trouble in the future by addressing trouble today. That matters.










September 10, 2023

What Will It Take To Grow?

We enter the numbers from last year:


From there, we forecast next year - what do demand/sales look like, what do twelve-moth buyers look like, with varying rebuy rates and varying new/reactivated customer counts?


You started the year with 100,000 twelve-month buyers ... the intersection of a 30% rebuy rate and 60,000 new/reactivated buyers takes you to 90,000 twelve-month buyers.

Oh oh.

What gets you to 100,000 twelve-month buyers?
  • At a flat rebuy rate, you need 72,000 new/reactivated buyers ... +20%. Good luck!
  • With a 34.5% rebuy rate (+15% ... good luck!), you need 66,000 new/reactivated buyers ... +10%.

You either need a 20% increase in new/reactivated buyers, or the combination of a 15% increase in rebuy rates with a 10% increase in new/reactivated buyers.

What will it take to grow?

Heck, it will take a lot just to keep the file static.

It's FORECASTING SEASON ... you are executing against your November/December plan, but somewhere behind the scenes somebody in Marketing and/or Finance and/or Inventory is deep into FORECASTING SEASON for 2024. Somebody has run this scenario (above), and somebody has already told your Executive Team what is coming ... in this case, your Executive Team is not looking forward to 2024. They are planning ahead, as is their job, to combat what looks to be a problematic situation.







September 07, 2023

They're Telling You To Acquire New Customers In November And December

Yes they are.

A CEO once told me to "catch the fish while they are biting".

What happens if all you catch are guppies?

I've been analyzing these trends since 1990. It isn't always best to catch the fish while they are biting. Sometimes you need to hold out for bigger fish. Here is an example of what four-year future profit looks like for customers acquired by month ... your mileage will vary.

  • $22.94 in January.
  • $24.55 in February.
  • $27.70 in March.
  • $27.47 in April.
  • $27.03 in May.
  • $24.66 in June.
  • $22.81 in July.
  • $23.08 in August.
  • $25.12 in September.
  • $23.37 in October.
  • $19.44 in November.
  • $15.88 in December.

This happens frequently - it's easy to acquire a customer in December ... but the customer doesn't have value. You acquire 30% of your new customers for the year after Thanksgiving, they pay you back poorly, then you wonder why your rebuy rates are so tepid?

It's important to have a holistic customer acquisition program that generates ample new customers every month of the year.

September 06, 2023

Then The CEO Smashed His Fist On The Table

Pre-COVID, I'm visiting a client. Customers have a 30%ish annual repurchase rate, and the rate hasn't changed in a decade. In fact, any modest change in the metric has been negative.

I present my findings, stressing the dire need for new customers. Every few years the client had a good customer acquisition year, especially when the marketing leader focused on new customers. It wasn't that the brand couldn't acquire new customers at acceptable rates - it was that the brand chose to not do it every-other-year, then had to go back to the drawing board when the subsequent year stunk after marketing budget cuts.

After presenting my findings, the CEO smashed his fist on the table. "WE ARE GOING TO FIGURE OUT HOW TO CREATE LOYAL BUYERS. WE ARE GOING TO SQUEEZE MORE JUICE OUT OF THE LEMON!"

Let's just say that, after years of visits, I wasn't invited back again.

The challenge we have is simple.
  • We sell products that customers don't frequently need. We aren't Target.
  • The products we sell dictate our rebuy rates.
  • Rebuy rates can be marginally moved by marketing efforts, but at a cost.
  • If customers don't need your products often, any increases in frequency are marginal.
  • This means you need a constant flow of low-cost new customers.

When I worked at Nordstrom, our customers bought six times per year. A 10% increase in purchase frequency resulted in an additional 0.6 purchases per year per customer.

For most of my clients, customers purchase 1.5 times per year. A 10% increase in purchase frequency results in an additional 0.15 purchases per year per customer. You'd barely notice the difference.

This is why you need a steady diet of new customers!

September 05, 2023

The Numbers Haven't Been Good in a Long Time

Based on all the data I get to see, here's what customer acquisition trends look like over the past decade, using 2014 as a base.


Among my catalog clients, there was a long-term trend ... a negative trend, that was disrupted by the COVID-bump. Now we are working our way back into the trend. For a few years, the issues was masked (see what I did there) by the pandemic. Reality is hitting in 2023, and is going to sting in 2024 unless something changes.

The e-commerce trend (in red) is equally disturbing, just in a different way. Unfettered growth is ending. Like with catalogers, the COVID-bump masked the fact that customer acquisition was getting harder and harder.

There are many people who tell you daily customer acquisition trends out on the socials. It's really hard to see what history tells us and then project forward as a consequence. But follow those red bars and project them out a few years ... what does the trend tell you?

Back in 2016 I had to beg readers to pay attention to customer acquisition. I traveled the country, speaking at conferences begging attendees to pay attention to customer acquisition. The e-commerce audience could have laughed off the plea in 2016 ... it's harder to laugh it off today.

The catalog portion of my readership is facing a reckoning. I know this audience doesn't want to hear that, and there are plenty of vendor leaders who will tell you otherwise. There's a reason they are telling you otherwise. What is that reason?

2024. Time to find new ways to find new customers. Go!




September 03, 2023

Behind The Curve

Tee hee!



Think of the difference a day makes.

On Friday, September 1 Deion Sanders was the confident/arrogant new coach of a college football team that went 1-11 last year. He brought in eighty-six (86) new players ... so much for the concept of a student-athlete ... he was a day away from game one. He had, let's say, some "doubters".

After his son (the quarterback) threw for more than 500 yards in a 45-42 win at TCU, Sanders held his first post-game press conference as Colorado head coach. It was something to behold (click here). 

If you've ever been doubted in your life, you'd like to to do this ... of course, it isn't a good look for most of us to do this.

When you are behind the curve, you doubt. Have you ever read the nasty articles about Amazon from the catalog community in the old DM News, circa 2002? As Deion would say, "do you believe now?"

Once reality hits, you want to jump on board (hence, the tweet above).

There's a customer acquisition reckoning coming. I can yell at you all day long about it, but 2024 is the year when, if you are behind the curve on this topic, you pay a price. Forecast your business accurately for 2024, and then do something about it, before business does something to you as a result of being behind the curve.


P.S.: Speaking of behind the curve ... from 2007:





Your Low-Cost Items

In most of my projects in the past nine months, the importance of having "something" at a low price repeats ... a recurring theme ...