Back to our reactivation model. I scored all 13+ month customers based on model results. Here is a 20-tile distribution of predicted probability of reactivating within a year.
Notice that most lapsed customers have a minimal (close to no) chance of purchasing in the next year.
We need to link the probabilities above to our SPEND / EXPERIMENT / SAVE framework.
SPEND = 12% or Greater Chance of Repurchasing in the Next Year.
EXPERIMENT = 5% to 11.9% Chance of Repurchasing in the Next Year.
SAVE = 0% to 4.9% Chance of Repurchasing in the Next Year.
"Spend" translates to an approximate 1% chance of the customer purchasing in any given month. This is the level where many brands can make reactivation efforts work out and potentially be profitable.
We'll look at customers by recency tomorrow, showing how Spend / Experiment / Save relates to different customers.
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