Loyalty Builders Attacks Growing Problem in Direct Marketing: One-time Buyers

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Loyalty Builders reveals new methodology to win the second sale from one-time buyers

Loyalty Builders
Historically, the problem has been swept under the rug and we’re here to bring it to the forefront of every marketer’s attention. In our eleven years of helping direct marketers, we’ve learned how to size and solve this problem.

Loyalty Builders has uncovered a growing challenge in direct marketing that has huge implications on profitability and customer loyalty if unaddressed. The one-time buyer problem(purchasers who place one order and don’t come back for another sale) affects most companies today, many of whom do not even realize they have a problem.

An analysis from Loyalty Builders revealed that on average for companies doing direct marketing, 41% of a customer population is comprised of one-time buyers. Loyalty Builders has seen companies have as high as 89% one-time buyers. These shocking results came from a recent study where Loyalty Builders analyzed the transaction data for almost 50 client companies—spanning a wide array of industries—to find the percent of active populations with only one order.

In today’s highly competitive markets, heavily influenced by the Internet, companies struggle more and more with maintaining customer loyalty while the number of one-time buyers continues to grow. For most cases, the gross margin from the single purchase does not cover acquisition costs, making the one-timers highly unprofitable.

“Historically, the problem has been swept under the rug and we’re here to bring it to the forefront of every marketer’s attention,” says CEO and Founder Mark Klein. “In our eleven years of helping direct marketers, we’ve learned how to size and solve this problem. As you might expect, the information you gather when sizing the problem is the key to the process you’ll use to solve the problem.”

Loyalty Builders has put a three step process in place to reduce the one-time buyer problem and get the second sale.

1) Analysis: Companies already know more than they may realize about their one-time buyers from existing transaction data. From that data, Loyalty Builders first identifies when the purchase was made, what merchandise or services the customer bought, how many items were on the first order, and how much money they spent. With further analysis, Loyalty Builders looks at the number of first time buyers in a customer population, the likelihood that these customers will purchase again in the next 12 months, the optimal window of time to reach these customers, what products to offer them, the revenue opportunity from getting this group to make the second purchase, and a comparison to industry averages.

2) Target: This valuable information helps Loyalty Builders segment out the optimal customers to target, know the best times to send out marketing communications, and what products/services to offer.

3) Campaign: The last step puts this insight to work with effective, true one-to-one (1:1) direct marketing campaigns that are highly individualized for each recipient. Loyalty Builders has documented case studies proving that individualization and true 1:1 marketing produce significantly higher returns and response rates.

Loyalty Builders has posted a wealth of additional information on their website’s One-time Buyer Resource Center, including a sample report that demonstrates how to start sizing and attacking your own company’s one-time buyer problem.

About Loyalty Builders
Loyalty Builders Inc, founded in 1999, delivers actionable customer insights and metrics that help clients increase revenue from their existing customers through true 1:1 marketing. Using advanced predictive analytics and customer segmentation techniques, Loyalty Builders pinpoints exactly which customers will buy next, what products or services they will buy, and when they will buy them. It uses this information to build early warning systems to spot potential defectors and to create highly individualized marketing campaigns -- cross-sell, up-sell, customer retention, and getting the second sale from one-time buyers. Clients span a variety of industries including retail, distribution, health services, financial services, transportation, technology and manufacturing. Loyalty Builders offers its Customer Marketing Management platform, Longbow, to clients as a web-based software service.

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