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Business Insights from Andrea Hill

They key to a good marketing strategy is asking and answering the questions who is buying your stuff, how often do they buy it, and how much do they spend?

Marketing Strategy Uno: What Are Your Customers Up To?

Originally Published: 17 December 2012
Last Updated: 26 October 2020

Software & Service Links

The links below are for services offered by Andrea Hill's companies (StrategyWerx, Werx.Marketing, MentorWerx, ProsperWerx), or for affiliate offers for which we may receive a commission or goods for referrals. We only offer recommendations for programs and services we truly believe in at the Werx Brands. If we're recommending it, we're using it.

Your Marketing Strategy Will Be as Good as Your Insights

The best time to create your marketing strategy for the following year is in September and October,  so the marketing plans can be included in the company budgets. But invariably I get a dozen or more frantic calls in December from companies that want to make marketing plans in a hurry. I don't judge - I can procrastinate with the best of them.

Rather, my concern is that most of these professionals want to decide what to do without first analyzing what they have done. Failure to analyze past marketing data will lead to weak marketing decisions in the future.

For today, let's look at the following questions and how to answer them:

Who is buying your stuff, how often do they buy it, and how much do they spend?

If you don't understand your current buyer behavior you can't determine how to improve it. The issue I see most is that customers do not return for repeat purchase. If you spend your time and money finding customers but never see them after the initial purchase, your marketing strategy is pouring money down the drain.  You can't guess at this number - you have to do the math.

  • Figure out how many customers from 2011 bought from you again in 2012. How many times did they buy in 2012?
  • Figure out how many new customers bought from you in 2012.
  • Figure out how many bought 1X, 2X, 3 or more times.
  • See if you can determine any important differences between the 1X and the 2-3X (this is in a year, not in a lifetime) purchasers. Look for similarities/differences in gender, income bracket, zip code, types of things they purchase - examine every clue at your disposal to come up with patterns.
  • Try to determine why the 1X purchasers did not come back (a phone call to ask why is a really direct way to do this, and is often quite well received if it's framed as an I want to improve my business call and not a sales call).

Next, figure out the average transaction size of your customers. This is a simple number:  Total revenue over a specific period of time divided by the total purchases. The lower that number is, the harder you'll have to work to make a profit.  Now break it down further: What is the average transaction size of 1X customers versus 2X and 3X?

Once you have asked and answered these questions you'll be armed with a lot of new insights, insights that are valuable to creating a strong marketing strategy for the year to come.