Every retailer outside the grocery sector has the same holy grail: one more visit.
Grocery stores have it good. The average customer probably shops 40+ times a year. The average non-grocer, on the other hand, has probably 2-6 visits per customer on average.
This number masks a lot of variation. Often, 50% or more of the customers have only one visit per year. This the infamous “one and done” segment (I will refer to them as 1AD from now on).
Every retail executive dreams of getting a fraction of the 1AD to visit just one more time. The impact would be dramatic!
How can we get an 1AD customer to come back soon? There are many ways one can contemplate.
Sending them highly relevant offers matched to their tastes is one way.
But first, let’s be realistic. We have to apply two filters: upgradability and addressability.
While over 50% of the customers may be 1AD, not all of them are “upgradable”.
Conceptually, we can think of a few different segments amongst the 1AD.
- the customer who has absolutely no intent to visit ever again (e.g., she doesn’t have kids but visited to buy a gift for a friend’s child)
- the customer who will have a need to buy in your category again but only a year from now (e.g., the holiday gift shopper)
- the customer who will have a need to buy in your category over the course of the next 12 months and will satisfy that need somewhere
The first two segments are not upgradable. The 50% number drops when you take them out but, in our experience, not meaningfully. There will be a lot of customers in that third segment.
The second filter is addressability. To send them highly-relevant communications, you need to be able to address them, either via email or direct mail. There will certainly be a significant drop in the 1AD customer count due to this filter. But, again, in our experience, you will still be left with a lot of customers who make the cut.
Now we come to the essence of the problem:
How can we possibly determine the tastes of a 1AD customer, who
- shopped just once in the last 12 months (by definition),
- bought a small number of items (since, by definition, we are considering non-grocers)
Setting modesty aside :-), we believe we have cracked this problem.
I will say more in future posts. For now, in the style of Dustin Hoffman’s The Graduate, I leave you with one word: attributes.