Obviously, a one-time buyer is a new customer who never made it to the second sale. Unfortunately, it happens so often that these customers have earned catch phrase: “one and done.” One of our pool clients uses the term “one-hit wonders,” but the problem is not very wonderful. Having a large one-time buyer population means that retailers are missing out on significant revenue from future sales.
Most companies have large percentages of one-time buyers (OTB). Available market research suggests that in e-commerce, where price often drives purchase, it is common to see OTB counts represent more then 80 percent of an entire customer set. B2C retailers with a brick-and-mortar presence do a little better, posting OTB numbers ranging from 30 percent to 60 percent.
In my experience, the vast majority of pool retailers ignore these one-timers. Sure, they add them to their direct mail and email lists, but that’s about it. The belief that they are not worth any extra effort is pretty common. But is that belief supported by evidence? We decided to find out.
A case study of one-time buyers
Using our proprietary database, we selected a group of approximately 18,000 consumers who made total purchases in excess of $12 million from multiple pool retail stores between 2009 and 2013. Then they were screened to identify one-time buyers. The below chart shows the results.
The results
You may be surprised that one-time buyers made up 28 percent (5,169) of all customers. That’s huge, and it also points out wasted marketing expenses. Including OTBs in general mailings means that you are sending offers that are just not relevant.
How can I make this bold statement? Because the POS data provides the evidence. None of the OTBs made a second purchase despite receiving years of marketing offers.
Wasted marketing resources are only one issue. Despite the fact that they made up a healthy 28 percent of all customers, OTBs only represented 3 percent of sales over this five-year period. That’s a big difference. It demonstrates that the overall contribution of OTBs is far less than other customers. But is it a mistake for pool and spa retailers to ignore them? To find out, we examined our point of sale database.
An opportunity hidden in plain sight
Because one-time buyers made a purchase, we have important information that would not be available if we had bought contact information of pool or spa owners. Filed neatly away in our point of sale database is purchase data along with contact information. Looking for characteristics that could lead to a second sale, we examined their purchase categories. Here is an example:
- 22 percent (1,125) of the one-time buyers bought pool chemicals. This means they likely own a pool.
- One-time pool chemical purchases averaged $52.
- Using a basis of $350 per year for average residential pool chemical purchases, these 1,125 customers would have bought almost $2 million in pool chemicals somewhere during this five-year period ($350 x 5 x 1,125). But only 3 percent ($58,000) of that was spent with our retailers in this sample!
Whoa! It would indeed be a mistake to ignore these OTBs. Getting a second sale from these customers and putting them on track to be repeat customers is a very important task with great potential. We are actually helping one of our clients do this very thing. Stay tuned for more!
Your turn
Does your company know how many one-time buyers it has in its database? If so, what product categories do they fall into? If you were given a list of 1,125 one-time buyers from your company that made chemical purchases, what would you do with it? How do you treat one-time buyers? How would you compare this effort to marketing to your best customers? Do you know why your OTBs only made one purchase with you? What might their lifetime value be if converted to loyal customers? What kind of help would you find valuable?
