Top 12 Analysis: Customer Life Cycle

Here's one of the analyses that "some" clients really appreciate. What you see below isn't the full analysis, it's a portion of the table with easy-to-understand metrics.

Every business has a "DNA", a hard-written code that dictates where the brand goes. The brand depicted above possesses the classic "discounting" DNA. It's a lazy, stupid brand (it's from my "Beans: The Internet's Largest Variety Store" study).

As the customer matures, AOV increases from about $42 at a first order to $48 after ten orders. On the surface, this should be a good thing. It's not. We can see that the increase in AOV is manufactured. Look at Average Margin Value (margin dollars per order). We start at $29, loyal customers finish at $31. AOV increases by 14% as the customer becomes more loyal. AMV increases by just 6% as the customer becomes more loyal. The brand (like so many) is creating empty calories ... discounting to get the customer to spend more, not pushing gross margin far enough in the process (and hint - that's what matters).

Look at the percentage of an order that is represented by new merchandise.

• 1st Order = 40%.
• 11th+ Order = 63%.

A first-time buyer wants to purchase what is trusted (or what Google trusts - which is an interesting distinction). A loyal buyer wants to be excited by newness. This should shake you to your core, causing you to re-evaluate everything you do from a marketing standpoint.

Look at the percentage of an order that is represented by full-priced merchandise.

• 1st Order = 79%.
• 11th+ Order = 66%.

We can see that the brand gives away more to loyal buyers, which marketing pundits LOVE to do. Of course, marketing pundits are WRONG, but that's a story for another day.

I have a client who acted upon this information ... they trigger their email campaigns based on the knowledge gained in a Customer Life Cycle analysis. No batch-and-blast for everybody. Just smart merchandising to individual customers.

My offer stands ... act by August 15 and you get my Top 12 Analysis framework for $12,000. Contact me now (kevinh@minethatdata.com).