Inventory Management Software Ireland

Inventory management for manufacturing, wholesale and retail business Ireland #1 online, scalable inventory management software
 
999 Items
Shopping Cart
You have no items in your shopping cart.

Do you know your Customer Purchase Latency?

Thursday, July 14, 2022

Are you able to find customers that are about to defect from you company? How many loyal customer have you lost this year and not noticed? Sure it’s easy to find a customer who complains, but what about repeat customers who just stop buying from you after one bad experience, one way is to use RFM to detect customer defection, but sometimes this is too slow to notice the change. In order for an RFM value to change it would require your customer to delay orders for long enough that they fall into the lower 40% of your customer base for Recency. That can cause RFM to lag behind potential defections.

A much better way is to use the latency between orders, which is automatically tracked in Turbo Inventory.

For example if your store has 31 days in-between orders on average, then on day 32 you can assume a customer is starting to defect as they should have placed an ordered already. “Average” though means that some customers are active and buy after that period. 31 days isn’t your magic number, it’s the midpoint between all of the latencies of individual customers. It can be used as a good indicator, but I would also recommend adding a buffer to be certain.

How much buffer will depend on your actual latency and your marketing plans.

If you’re starting up a soft reminder campaign, then having a small buffer is fine. You won’t upset people if you started to gently remind them 36 days after their purchase (possibly by an email).

A hard-sell campaign or a win-back campaign with discounts might be more aggressively pursuing the sale. Starting it shortly after the Average Latency mark risks giving away too many discounts too soon, and even worse it might increase your customer latency with them expecting to get a discount if thwy wait a few extra days.

A buffer in the range of 20% to 50% is probably a good start. Meaning if your Average Latency is 31 days, starting a defection campaign around day 37 through day 46 is good.

In Turbo Inventory you can find your Average Latency on you main Dash board and also in the Customer Latency Report. It’s also listed against each customer under the Customer View

Inventory Management Blog

14 JulyDo you know your Customer Purchase Latency?
Are you able to find customers that are about to defect from you company? How many loyal customer have you lost this year and not noticed? Sure it's easy to find a customer who complains,
details

Comments
Only registered users can leave comments.
Comment title:
Comment:  

Subscribe to our Masters of Inventory newsletter for expert insights

Join over 4000 other businesses getting better at managing their inventory