I ran an analysis, measuring how much future value (demand/sales over the next twelve months) a customer will generate after being acquired within each merchandise category. If a category does a great job of bringing in new customers and those customers don't spend money in the future, well, we've got a problem.
Here's a summary table of what I learned.
Apparel Tops is a high-volume category, and fortunately it is a top-three category in terms of future value (NY Value).
Notice that most categories generate customers that buy from nearly two categories in the next year if the customer repurchases.
However ...
However, there is a problem in this table.
When a customer is acquired, regardless of category, the customer spends very little in the next year. Seasonal is worst ($6.40) ... Outside is best ($11.33).
In other words, there is very little customer loyalty associated with this brand. Newly acquired customers have a low chance of buying in the first year with the brand (between 14% and 18%), and if they buy the don't spend much ($46.00 to $63.00).
This is one of those moments when the Consultant realizes s/he is about to anger people. Yes, you can run a profitable business with a customer base that simply doesn't spend much, but it means everything regarding the p&l is dependent upon generating profit off of a first purchase.
Tomorrow, I'll share what the conversation looked like regarding exceptionally low future value metrics.
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