1 - When you focus on Customer Development, you look for key inflection points that cause customers to become more valuable.
Most companies have a customer rebuy rate table that looks something like this (some better, some worse).
Most companies have a customer rebuy rate table that looks something like this (some better, some worse).
2 - Read down the "Freq = 1" column. This is the probability of a first-time buyer purchasing in the next year, given that the customer hasn't purchased in "x" months (that's the column labeled "Recency").
Tell me what you observe, compared to the other columns?
Tell me what you observe, compared to the other columns?
3 - That column shows us just how unlikely first-time buyers are to purchase again.
This is a credible company with good repurchase rates (overall). But after a first purchase, the customer is not terribly likely to buy again.
This is a credible company with good repurchase rates (overall). But after a first purchase, the customer is not terribly likely to buy again.
4 - And if you let the customer lapse, the odds of the customer buying again constantly get worse. So you HAVE to work hard to convert the customer to a second purchase, and quickly. That's why you have to have a credible Welcome Program.
5 - Please read across the Recency=1 row.
What are the rebuy rates for 1x buyers, 2x buyers, etc.?
1x = 24%.
2x = 43%.
3x = 51%.
4x = 59%.
5x = 64%.
6x = 69%.
7x = 73%.
Where does the biggest jump happen?
Going from a 1st purchase to a 2nd purchase.
What are the rebuy rates for 1x buyers, 2x buyers, etc.?
1x = 24%.
2x = 43%.
3x = 51%.
4x = 59%.
5x = 64%.
6x = 69%.
7x = 73%.
Where does the biggest jump happen?
Going from a 1st purchase to a 2nd purchase.
6 - This is why focus on Loyalty, while important, is not as important as having a strong focus on converting a first-time buyer to a second-time buyer.
7 - You'll never have a loyal buyer if you don't first acquire the buyer.
You'll never have a loyal buyer if you don't convert the customer to a second order (hopefully quickly).
You'll never have a loyal buyer if you don't guide the buyer through Emergence (2nd-4th orders).
You'll never have a loyal buyer if you don't convert the customer to a second order (hopefully quickly).
You'll never have a loyal buyer if you don't guide the buyer through Emergence (2nd-4th orders).
8 - The key, then, is not to focus on Customer Loyalty, and it is not to focus on Customer Acquisition.
The key is to have a process that moves a customer from Awareness to a 1st Purchase, then a Welcome Program that quickly converts a customer to order #2, then Emergence.
The key is to have a process that moves a customer from Awareness to a 1st Purchase, then a Welcome Program that quickly converts a customer to order #2, then Emergence.
9 - If you do all of that (Awareness to Acquisition to Welcome to Emergence), you'll have more Loyal buyers than you previously had, and they'll throw money at you like it is going out of style.
Overly focusing on Loyalty causes you to miss out on every step prior to it.
Overly focusing on Loyalty causes you to miss out on every step prior to it.
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