This is Why Your Customers Lapsed
Repeat after me – “my catalog is not the most important thing in my customer’s life.” Once you take that to heart, you will blossom into a better marketer.
I have been driving for 39 years. I am on my sixth Ford F150 pick-up. I kept my last F150 for 11 years, which I traded in for my current truck 7 years ago. As consistent and loyal a Ford customer as I am, I’ll bet the Ford Motor Company does not consider me a good customer, because I never respond to any of their offers – either for service at the dealership or for a new truck. I only buy a new truck when the monthly repair bills at my local garage start to equal the monthly payments on a new truck loan.
My truck is not the most important thing in my life. It is a means of transportation from point A to point B – with room to carry all the junk, tools and general “stuff” I carry around. So even though my truck is not “top-of-mind” in my life, I still consider myself an “active” Ford customer. The marketing guys at Ford probably consider me “lapsed”.
Just recently, one of my clients questioned why I was recommending that they mail names on their holiday book that had not responded since 2007. Their logic ran something like “if someone hasn’t ordered in more than 3 years, why would I want to mail them?” I explained that based on last holiday’s results, reactivating the older customer names – by simply mailing them – did very well, and that we could probably profitably mail back even further than 2007. The client was not looking at the supporting data – they were simply using their intuition and logic that after 3 years, their customers were no longer interested in them.
I’ve always been puzzled why many catalogers have two categories for the recency of their customer’s last purchase: anything within the past 12 months is “active”, and beyond 12 months, the customer is “lapsed”. The dictionary defines lapsed as “being invalid because it is no longer being used or renewed, having ceased to be active in practice”. Often, I have heard mailers imply that it is the customer’s fault that they have lapsed – because isn’t our catalog the most important thing in everyone’s life? It was as if those customers had willfully decided to not purchase for a specific reason, such as out of ignorance or spite.
There are all kinds of reasons why customers don’t buy from you again. The main reason is simply because you are not offering anything the customer needs at the moment.
I love Cabela’s and LL Bean. I love the buyer satisfaction that goes with buying either a new flannel shirt or new wool sweater from either one each fall. But I stopped doing that a few years back because I have a closet full of both shirts and sweaters. As tempting as it is to purchase, I don’t need to, so I don’t. That doesn’t mean that either companies have bad products and that I’m not longer loyal to each company – I just don’t need another shirt right now.
Home furnishings mailers know that customers purchase in cycles, usually based on redecorating a room in the house. Most consumers don’t redecorate the entire house at once. They do one room, and then a few years later, another one. You clearly see that pattern when reviewing customer activity from those types of catalogs.
Gift merchants always seem to think they have the perfect assortment of gifts with each new mailing. What they tend to forget is that when I get someone a gift from their catalog – including “gifts” for myself, that does not necessarily signify I want to start a long relationship with that company. It was because they had a product that seemed cool to me at the time, and which I thought would be appreciated by the gift recipient. When I don’t make a second or third purchase right away, don’t consider me lapsed. I’m not “invalid” as defined by the dictionary; I’m simply no longer in need of what you have. Said another way, your merchants have not determined a logical follow-up product for me to purchase that appeals to me, based on my first/last purchase.
When trying to affix reasons as to why customers have not purchased again, or stopped purchasing, don’t blame the customer. And unless there has been a circulation screw-up of giant magnitude, don’t blame marketing. Take a hard look at your catalog merchandise – and answer some of these questions:
· Has the quality of our products cheapened?
· Are our products still fashionable/cutting edge?
· Has the overall mix of products shifted to exclude the needs/wants of an existing group of customers?
· Are we introducing enough new products to look vibrant, or are we too complacent in pursuing what is truly “new?
· Do our products tend to be “one shot” orders with no need/reason for repurchase?
· Are our products still value priced to our target customer?
· Has the re-purchase rate among our existing customers decreased?
· Has the length of time between the first and second order from new-to-file customers gotten longer?
The answers to these questions will tell you why your customer lapsed, and how to adjust your growth strategy. If you need help determining the answers to these questions, contact me – I can help.
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by Bill LaPierre
VP – Business Intelligence and Analytics
Datamann – 802-295-6600 x235