Acting Sooner vs. Later
Let's look at what happens if we boost response in Month = 01, Month = 02, Month = 03 ... by 10% ... via a Welcome Program that goes after brand new customers right after they were acquired.
You boost response, and over time you have a better cumulative repurchase rate.
Now, let's bump response by 10% at Month = 15, Month = 16, and Month = 17.
Here, you multiply 10% gains against response figures that are close to zero ... giving you close to zero benefit.
We work so darn hard to "reactivate lapsed buyers". A lot of hard work. But the hard work doesn't translate into a meaningful difference ... because the customer simply isn't responsive anymore.
We need to act sooner ... sooner instead of later. When the customer is acquired, we need to act immediately ... just like we do when a loyal customer buys from the 7th time ... we jump all over that opportunity.
Focus on a customer who bought for the first time, and get that customer to buy for a second time quickly while the customer is still responsive.
Customer Journey Builder
Number One complaint from those of you in the reading audience, when I harp incessantly on the need for a Welcome Program:
- "That's going to require too much customized work, and frankly, we don't have the resources to do that, sorry."
This Email Service Provider (click here) allows you to Create Customer Journeys. They show you how to do it in the article ... just go read it (click right here folks).
When you respond with "well, they cater to small businesses and as you know we're a unique $40,000,000 omnichannel print-centric brand", then I'd counter with the concept of getting your existing ESP to replicate what is shown there. And if they can't replicate the software and functionality for you, it's time to change your ESP, don't you think?
I watch what my online clients do with email, and I watch what established companies with print/retail history do with email, and my goodness, there's a pretty big gulf between the two. A Welcome Program requires you to do some work. Go do the work.
P.S.: I had a client ask me the following question ... "why can't you just come in here and do the work for us so we don't have to even think about it?" Ponder the essence of the question ... the client was saying that a Welcome Program was important, but wasn't something the client wanted to think about. Just let that thought sink in for a moment.
You are an important person. You matter. You WANT to have to think about things, because that means you understand your business better than anybody else, and that allows your career to progress at a faster pace. Your company will make more profit. Your salary & responsibilities will increase faster. Please, you want to have to think about things! Thinking is good.
P.P.S.: A marketer recently wasted a month of my time with proposals and counter-proposals, before choosing a competitor over me. And while that happens in this business, he said something to me that made the time spent worthwhile. Here's what he said:
- "If possible, we want to outsource everything we do. We'll pick the product, sure, but we just don't care about marketing because it's pointless. Marketing can be outsourced to the cheapest provider, and that's how we thrive."
Why share that? Because a Customer Journey Builder means that you have to do some work, but the trade-off is that you aren't the person who wants to outsource everything. Again, you want knowledge ... not of a process but you want knowledge of a customer. And you can't have knowledge of a customer if you outsource the knowledge of the customer to somebody else.
Recall our Life Table for first-time buyers (click here).
What happens to the Monthly Rate after Month = 12?
It's pretty much over, isn't it?
One month after the customer was acquired, 8.12% of first-time buyers who haven't repurchased yet buy in Month = 01.
Fifteen months after the customer was acquired, 0.86% of first-time buyers who haven't repurchased yet buy in Month = 15.
This is why a Welcome Program is so darn important. If you don't capture the customer when the customer is INTERESTED in what you have to say, you don't get other opportunities.
Ultimately, marketing is divided into three core functions.
- Awareness / Customer Acquisition.
- Welcome Program.
- Customer Loyalty.
We constantly read about (1) and (3), don't we??
We almost never think about (2), do we??
And yet, (2) is critically important.
12 Months After a First Purchase
Recall our Life Table for first-time buyers (click here).
Read down the MONTHLY RATE column. You see the high level of response in the first few months after a customer becomes a buyer. Then response quickly sinks. Now look at what happens at Month = 12.
Tell me what you think is happening there?
This outcome is common in my project work ... customers "reawaken" briefly at Month = 12.
Say a customer purchased for the first time on Cyber Monday. That customer will "reawaken" twelve months later ... which ironically enough would be next year's Cyber Monday.
This timeframe (Month = 12) is the final timeframe where you (the marketer or analyst or Executive) make an effort with your Welcome Program. It's your last hurrah!
A Compressed Timeframe
The "Monthly Rate" is the probability of a customer who has yet to repurchase through "x" months repurchasing that month. Tell me what you observe as you look down that column?
The "Cumm Rebuy" column represents the cumulative probability of a cohort of new customers repurchasing over time. After twenty-four months, 39.1% of first-time buyers (in our example ... actual data) have purchased for a second time.
Read down that column (Cumm Rebuy). How many months does it take for half of the audience to repurchase?
In other words, if you don't convert the customer (quickly), it quickly becomes unlikely that the customer will repurchase.
Look down the "Monthly Rate" column ... go to month = 17. If the customer has not purchased for a second time after sixteen (16) months, the customer has a 0.75% chance of buying again in month = 17. Yeah, in other words, the customer has close to no chance of repurchasing that month.
The customer is highly responsive in months 0/1/2/3, is somewhat responsive in months 4/5/6, then begins to lapse, and by month = 14 the customer is dormant.
As marketers, we think we can get the customer at month = 14 to "reactivate". Let's say we increased repurchase rates that month by a whopping 30% (which won't happen). The incremental repurchase rate changes ... from 0.97% to 0.97*1.3 = 1.26% ... still close to zero.
Meanwhile, imagine increase rebuy rates by just 10% for customers at month = 2 ... the rate that month goes from 4.6% to 5.1%.
Go after your new customers during the compressed timeframe when they are most likely to respond. Don't let your opportunity slip away, ok?