Sure, some clients have a seasonal business (i.e. gardening) that requires different logic. But for everybody else?
I’ve talked about this concept for nearly twenty years … and when I analyze your data, it’s obvious nobody listens.
Nobody.
Here’s an example. The graph below shows the number of newly acquired customers by month.
We see the obvious signature of a company that “doesn’t get it”. This brand goes for the low-hanging fruit. This brand acquires customers when the fish are biting … November and December. Low cost of acquisition. Everybody raises a toast to a job well done.
One problem.
It’s not a job well done.
Here’s a graph of customer value over the next twelve months, by acquisition month.
Customers acquired in December are worth $42.84 in the next twelve months.
Customers acquired in September are worth $58.83 in the next twelve months.
Just as important:
- Twelve-Month Rebuy Rate of Customers Acquired in December = 32.5%.
- Twelve-Month Rebuy Rate of Customers Acquired in September = 39.3%.
I first observed this trend in (checks notes) 1995.
Why does this happen?
When you acquire the customer in September, the customer is “recent” for the highest response months of the year (October, November, December). The customer is likely to convert to a second purchase quickly.
- When you acquire a customer in December, the customer is “recent” during a dormant response period (January / February) … by the time October/November/December roll around, the customer has lapsed and is less likely to repurchase.
If you want to see if a company is “smart”, observe their customer acquisition efforts in September. Are they doing things that seem unusual or run contrary to industry best practices? If so, they’ve learned the secret to customer acquisition.
P.S.: If you want to understand why your annual rebuy rate isn’t great, check to see if half of your new customers are acquired in November/December. If the answer is “yes”, you have a business disconnect … you are acquiring Christmas buyers then trying to sell them Spring/Summer/Fall stuff … that’s a disconnect.
