Expanding The Concept

If we can analyze reactivation customers in this manner, we can analyze any customer in this manner.

In other words, I can model the probability of a purchase for all customers ... not just reactivation customers ... and then segment customers based on their loyalty levels. Combined with reactivation candidates, I derived the following segments.

• Elite 12 Month Customers (probability of buying next year > 75%).
• Loyal 12 Month Customers (probability of buying next year 60% - 74%).
• Quality 12 Month Customers (probability of buying next year 40% - 59%).
• Average 12 Month Customers (probability of buying next year 20% - 39%).
• Struggling 12 Month Customers (probability of buying next year 0% - 19%).
• Lapsed "Spend" Segment (probability of buying next year > 12%).
• Lapsed "Experiment" Segment (probability of buying next year 5% - 11%).
• Lapsed "Save Money" Segment (probability of buying next year 0% - 4%).

Those of you who adore loyalty efforts would target Elite customers, potentially Loyal customers as well.

Quality customers should be a goal ... there should be far more Quality customers than Elite/Loyal customers, thereby expanding your profit opportunity.

Average customers are just that ... average. Nothing special. However, future Quality / Loyal / Elite customers come from this audience, so you have to work hard to develop these customers. You don't develop them with a week-long 60% off campaign via email marketing, right?

Struggling customers are going to dominate the 4-12 month 1x buyer segment ... in e-commerce in particular, there just aren't enough tools available to properly develop these customers, so they gently lapse into oblivion. It's a wasted opportunity. If I were asked where e-commerce brands should focus efforts, it should be with 0-3 month and 4-12 month first-time buyers.

And then we have our lapsed buyer segments, as described previously.

I ran counts for the brand we are studying. The counts are fascinating.

• 2,205  Elite 12 Month Customers (probability of buying next year > 75%).
• 5,226  Loyal 12 Month Customers (probability of buying next year 60% - 74%).
• 28,082  Quality 12 Month Customers (probability of buying next year 40% - 59%).
• 114,608  Average 12 Month Customers (probability of buying next year 20% - 39%).
• 238,398  Struggling 12 Month Customers (probability of buying next year 0% - 19%).
• 108,508  Lapsed "Spend" Segment (probability of buying next year > 12%).
• 329,768  Lapsed "Experiment" Segment (probability of buying next year 5% - 11%).
• 410,980  Lapsed "Save Money" Segment (probability of buying next year 0% - 4%).

You can see the unfettered mismanagement of this brand from a customer standpoint. Anytime you have 388,519 twelve-month buyers and only 7,431 are Elite / Loyal, you've got problems. Big problems. As the kids would say, "Mistakes Were Made".

Hint - this is the situation many/most of you are in. You just don't know it yet.

Within my Playbook, this framework allows you to develop plans for customer segments to improve the future health of your brand. You're going to spend very little on Lapsed "Experiment" buyers, you're going to spend no money on Lapsed "Save Money" buyers. You're going to work to move "Struggling" buyers to "Average" buyers, you're going to work to move "Average" buyers to "Quality" buyers. Your future Elite/Loyal buyers will come from "Quality" buyers. It all fits together.

Now it's up to you to do something about it.