1 - When a recession is looming, your customer analytics will point out the pending problem before it is a problem.
2 - The first sign of trouble is customer acquisition.
Simply put, you'll find it is becoming difficult to find new customers at an acceptable cost.
Simply put, you'll find it is becoming difficult to find new customers at an acceptable cost.
3 - This pushes people in a different direction ... you'll start to hear a lot of chatter (especially out here) about customer loyalty.
4 - In other words, you won't hear folks tell you that they are failing at acquiring new customers. Instead, you'll hear about the "critical importance" of protecting your best customers.
This is frequently code for "a recession is coming and we are struggling with newbies".
This is frequently code for "a recession is coming and we are struggling with newbies".
5 - In a second stage of a looming recession, customer loyalty begins to decline, modestly at first. This amplifies the "loyalty narrative". Response will drop among lapsed buyers first, while holding somewhat flat with good/best customers.
6 - In other words, you look for customer acquisition failures first, followed by lapsed buyer problems second, followed by best customers. When you see that pattern, trouble is on the horizon.
7 - This is where you pull out your comp segment analytics by merchandise division.
If you see negatives across the board, recession is coming or is here.
If you see some negatives and some positives, it means your merchandising team is causing problems.
If you see negatives across the board, recession is coming or is here.
If you see some negatives and some positives, it means your merchandising team is causing problems.
8 - Another common sign that recession is coming is price increases ... if your merchandising team (often at the prodding of the CFO) is raising prices on new items and your customer metrics are pointing negative, then a recession may well be coming.
9 - If you see price increases coupled with significant discounts (i.e. prices go up from $27 on new items to $30 followed by $30 at 20% off), you know that trouble is brewing.
10 - In 2019, you'll want to look for these signs ... starting first with customer acquisition, then lapsed buyers, then best buyers coupled with merchandise productivity that is down across the board, then price increases, then discounts.
Questions?
KH
Questions?
KH
