Case Study: Customer Response To Merchandising Changes

Let's approach this discussion in bite-sized pieces.

This table reviews repurchase activity for Apparel Tops ... the best-selling category that Beans: The Internet's Only Variety Store sells.

Yes, there's a lot going on here.

An introductory tidbit ... in the past year, 79% of demand in Apparel Tops comes from customers who haven't bought in at least a year or are first-time buyers. Only 16% of demand came from last year's Apparel Tops customers and just 5% of demand came from other twelve-month buyers.

If you are the marketer trying to grow Apparel Tops (your best-selling category), what might your approach be?

• Awareness (organic social) and Search (product listing ads).

You could try to squeeze more out of existing buyers, but what is the point? If your efforts were positive and increased sales among existing Apparel Tops buyers by 10%, total demand would grow by 16%*10% = 1.6% ... meaningless.

When a merchant tells you that the marketer is not getting her product in front of the "right customers", the merchants is both wrong and right at the same time.

• Wrong, in that the merchant usually has minimal experience with marketing techniques.
• Right, in that most categories benefit from exposure to prospects who haven't bought the product previously.

Pay attention to rebuy rates over time.

• 16% to 15% to 14% to 11% for existing buyers.
• 7% to 6% to 6% to 4% among all other twelve-month buyers.

This is a mystery that requires professional levels of communication.

• The category is stable because new/reactivated customers are buying the product.
• The category is stable because new/existing items are being managed reasonably.
• The housefile ... twelve-month buyers ... are increasingly less likely to buy this product, but their share of total demand is not sufficient for management to notice there is a problem.