1 - The image below shows a key tenant of the Customer Development Thesis.
When you acquire a customer, you have about three months to convert the customer to a second purchase before the customer fades away.
When you acquire a customer, you have about three months to convert the customer to a second purchase before the customer fades away.
2 - The curve is virtually identical for most clients. Sure, some clients are better-than-average, some clients struggle (typically because of the product/merchandise offering, not due to marketing failures), but the shape of the relationship almost always looks like this.
3 - When you acquire the customer, the first month is critical. This is the month when the customer is most responsive. Every month thereafter the customer is lapsing, becoming increasingly less interested in a relationship going forward.
4 - After the third month, the customer generally becomes unresponsive.
Yes, some customers repurchase.
Yes, this adds up to decent numbers over time.
Yes, there is seasonality causing increased response.
Also - yes - the customer is fading away.
Yes, some customers repurchase.
Yes, this adds up to decent numbers over time.
Yes, there is seasonality causing increased response.
Also - yes - the customer is fading away.
5 - I repeatedly encourage readers to employ Welcome Programs to maximize response during this three-month window.
The tactic is generally eschewed by readers - the tactic is not part of the normal marketing flow that marketers love.
But the tactic is necessary. Oh yes, it is!
The tactic is generally eschewed by readers - the tactic is not part of the normal marketing flow that marketers love.
But the tactic is necessary. Oh yes, it is!
6 - If you want a newly acquired customer to become loyal, you have to push the customer from the 1st purchase to the 2nd purchase.
You may as well do that when the customer is most responsive (i.e. first three months after a first purchase).
You may as well do that when the customer is most responsive (i.e. first three months after a first purchase).
7 - If you nudge the customer (and it isn't easy) into a 2nd purchase fast, you gain the benefit of what is called "velocity".
8 - All things being equal, a customer will be more responsive if the customer has 2 purchases in 2 months than if the customer has 2 purchases in 22 months.
The Welcome Program increases future responsiveness due to improvements in "velocity".
The Welcome Program increases future responsiveness due to improvements in "velocity".
9 - So, these are some of the reasons why a Welcome Program becomes really important if you ever want to have a database filled with loyal buyers.
Questions?
KH
Questions?
KH
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