Back in the day when my second company Channel Computing sold packaged software, we knew that someone wasn’t a customer just because he or she bought our product. Not until they opened the box, installed the software, and used it regularly did we feel they were a customer.

Today, especially for catalogers and online merchants, there is an analogous situation. You spend a lot of money and effort on customer acquisition, but that buyer is not really a customer until they make a second or third purchase. Getting that second purchase is really part of the acquisition process. Unless you get that second sale, the money you spent on acquisition is wasted.

Part of the problem is that most companies aren’t being as smart as they could be in making that next sale. We’ve seen too many cases where if a buyer’s first purchase is product X, they are offered another opportunity to buy X rather than what is mathematically determined to be their next logical purchase. Or maybe the one-time purchaser is carpet-bombed with more catalogs. In our experience, it is uncommon for a company to make the offer that would be most attractive to the potential second time buyer.

From analyzing many companies, we’ve learned that in a healthy company one time buyers comprise less than 25% of the customer population, often way less. In contrast, many catalogers and online merchants have one half to two thirds of their so-called active customer database in that category. Where does your company fit? I’d love to hear how you are attacking this problem.

Tags :