Series 2, Part 13: How Many of Your Customers are Casual?

My past few posts have focused on ways pool retailers can improve retention of new customers. That’s because there is a big problem with new customer retention along with substantial opportunities for improvement. 

How big is the problem? Our research has uncovered an astonishing amount of instability with active customers. The number of customers that buy one year and not the next (or lost customers) is higher than any of the participating retailers imagined going into our research. The same goes for new customers, or those who did not buy from a particular retailer in the previous year. One successful retail manager commented, “I did not realize how many of our customers were casual.”

Because of the individual comments, we analyzed our entire database of 88,000 pool retail consumers, tracking them over a period of four years.Blog 2 13 Chart V1

The results

The above chart provides a picture of the customers flowing in and out of the combined pool retail businesses each year. We found there are many more “here today, gone tomorrow” customers than any owner expected. These are “casual customers” as one retailer referred to them. The amount of annual churn for each is pretty surprising. Every year more than 40 percent of existing customers are “lost” only to be offset by a like number of new customers. 

The problem and the opportunity

This phenomenon masks an underlying weakness. With so much churn, what if the lost customers aren’t offset? On the other hand, think of the benefit if a retailer could keep more of the lost customers. We found that the best of our participating retailers lost significantly fewer customers, experiencing only a 27 percent gain and loss each year. That suggests improvement is clearly possible if retailers take it seriously. 

We have been working with a few that do, and I look forward to sharing results in the future. In the meantime, here is a “what to remember” list taken from my recent posts that address new customers:

• New customers are fragile. The first 90 days in the experience of any new customer — the customer onboarding period — are especially critical. 

• Customers that are effectively onboarded will stay with the company longer and spend more money.

Welcome campaigns serve the useful purpose of introducing new customers to a company’s value proposition: who the company is, what the company does, and what’s in it for them.

• The best time to focus on a welcome campaign is during the first purchase.

• Welcoming always makes sense because the sooner a new customer is contacted after the first visit with a relevant message, the more likely he or she is to make a second purchase. 

• One of the most common mistakes pool retailers make is not paying enough attention to new customers.

Your turn

How do you identify new customers and use that knowledge to your advantage? Do you think you pay sufficient attention to the initial customer experience? What are you doing that is working? How do you track and measure it? What ideas do you have that you have not implemented? What is getting in the way? 

Read the previous post in this series: One Marketing Campaign Pool Retailers Must Not Ignore

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