The Art & Science of Retention – Part 2 – Basic Definitions
Retention – Basic definitions:
If I bought something from you 5 years ago – am I a customer? What about yesterday? Does it matter how or why I bought something – that it was a matter of convenience or that you bribed me with an aggressive price? Maybe I haven’t yet earned the right to be called a customer – maybe its better to consider me a buyer instead?
In this age of ROI justified marketing it is important the enterprise understands the type of person it is dealing with and learn to develop the appropriate programs to migrate people to higher levels of engagement. So lets us agree on the following:
A retained buyer is anyone purchasing your brand during the period of time (ie 1 year) you deem to be relevant (consideration must be given to longer consumption cycle products – ie cars, life insurance)
Anyone in your database who has not made a purchase in that time period is deemed a lapsed buyer and either a potential reactivation candidate or a lost buyer.
Retained buyers will vary in their level of brand engagement which is to be defined behaviorally as the share of requirements the brand has captured (ie. 75% of all purchase occasions) and psychologically by the attitudinal orientation the consumer has toward the brand. Purposely excluded from this are “window shoppers” who may be psychologically engaged with the brand but not behaviorally (Alas much like my unrequited engagement with the Aston Martin)
Not all retained buyers are profitable. Not all acquired or retained buyers will increase their Share of Requirements. The effort (among profitable customers) is to ensure the brand solicits the maximum purchase transaction AND seek to capture its maximum share of category purchase occasions.
It may be useful to distinguish buyers along an engagement continuum by creating a three tier classification:
a) retained buyers
b) brand customers
c) committed brand partners
Next: The Periods of Truth