Thread by @minethatdata

1 - I've noticed that too few e-commerce professionals ... and almost no vendors (and it isn't their job to understand this) understand the fact that if few customers repurchase then the entire focus of the marketing department needs to be on customer acquisition.

2 - You'll miss this point if all you ever look at is conversion rates.

3 - Here's an example I just analyzed, with numbers scaled down to be easily understood.

The brand had 100 twelve-month buyers. 25% of those customers bought again in 2018. The brand then generated 70 new+reactivated buyers.

Next Years Buyer Count: 100*0.25+70 = 95.

4 - Going into 2019, the brand has 95 twelve-month buyers ... five percent fewer than the year prior.

In other words, the brand is at a "sales disadvantage" heading into 2019. Business needs to be better than average just to get the business back to 100 twelve-month buyers.

5 - The brand sees that there is a problem, so they work hard to improve loyalty efforts. And their efforts "work". They now get 27 out of 100 buyers to repurchase.

However, they had to spend money on loyalty efforts, so they cut back on acquisition efforts.

6 - In 2019 then, we have 95 buyers and 27% repurchase, but there are only 67 new+reactivated buyers:

95*0.27 + 67 = 93 customers.

The business contracts again.

7 - If your annual repurchase rate is under 40%, you have no choice but to focus the vast majority of your marketing efforts on Customer Acquisition.

Very few "brands" do this.

Smart "brands" do this as a simple muscle reflex.

8 - Any questions?

KH