When I describe what I define as a “loyal” customer, I see sour faces. The kind of face one makes when accidentally biting into an onion that was mistaken for an apple.
My definition (get ready to make the face):
- A customer is “loyal” when the customer has a 60% or greater chance of purchasing again in the next year.
I see your face.
Here’s the thing … it doesn’t matter how you define a loyal customer, do it however you like. But come up with a consistent definition and stick with it. Maybe it is “Spending ‘x’ or more dollars across ‘y’ years”. That’s fine.
In nearly forty years in this “industry”, I’ve learned that customer behavior and financial gain changes when the customer has a 60% chance or better of buying again next year. You might have three customers with different characteristics, but all three have the same chance of buying again next year.
- Purchased 4 times in the past four years, AOV = $100.
- Purchased 2 times in the past four years, AOV = $200.
- Purchased 3 times in the past four years, multi-category buyer, purchases full priced merchandise, uses proprietary credit.
Those are three different customers, all equally valuable in the future.
Regardless, create your own definition. There is no right/wrong answer. But stick with your definition once you define it.
