Here’s one of the analyses that “some” clients really appreciate. What you see below isn’t the full analysis, it’s a portion of the table with easy-to-understand metrics.
Every business has a “DNA”, a hard-written code that dictates where the brand goes. The brand depicted above possesses the classic “discounting” DNA. It’s a lazy, stupid brand (it’s from my “Beans: The Internet’s Largest Variety Store” study).
As the customer matures, AOV increases from about $42 at a first order to $48 after ten orders. On the surface, this should be a good thing. It’s not. We can see that the increase in AOV is manufactured. Look at Average Margin Value (margin dollars per order). We start at $29, loyal customers finish at $31. AOV increases by 14% as the customer becomes more loyal. AMV increases by just 6% as the customer becomes more loyal. The brand (like so many) is creating empty calories … discounting to get the customer to spend more, not pushing gross margin far enough in the process (and hint – that’s what matters).
Look at the percentage of an order that is represented by new merchandise.
- 1st Order = 40%.
- 11th+ Order = 63%.
A first-time buyer wants to purchase what is trusted (or what Google trusts – which is an interesting distinction). A loyal buyer wants to be excited by newness. This should shake you to your core, causing you to re-evaluate everything you do from a marketing standpoint.
Look at the percentage of an order that is represented by full-priced merchandise.
- 1st Order = 79%.
- 11th+ Order = 66%.
We can see that the brand gives away more to loyal buyers, which marketing pundits LOVE to do. Of course, marketing pundits are WRONG, but that’s a story for another day.
I have a client who acted upon this information … they trigger their email campaigns based on the knowledge gained in a Customer Life Cycle analysis. No batch-and-blast for everybody. Just smart merchandising to individual customers.
My offer stands … act by August 15 and you get my Top 12 Analysis framework for $12,000. Contact me now ([email protected]).
