“One and Dones” – The mystery of disappearing leads

December 23, 2010 - 4 minutes read

Disappearing Sales LeadsYour lead generation machine is working tirelessly to bring in new leads and appointments. Marketing keeps hot prospects focused on the message and proposition. Your sales team has done an excellent job of converting them into a first time buyer.

And then something not-so-good happens. The shiny new customer does not come back to make a second purchase. Months go by, and they end up in this no man’s land called “one time buyers.” As a lead, they are coveted. As a buyer they are ironically abandoned. Countless artists have sung the “one and done” blues. Stevie Wonder even has a top hit on this, I think.

True cost of leads

The consequence of underperforming leads is enormous – from metrics such as cost per lead, multi-buyer conversion, average initial sale to cost per buyer. Indications are that a hidden deficiency to turn first-time customers into repeat buyers seriously understates the true cost of customer acquisition.  Lead generation should not stop with the initial sale, rather it should cultivate prospects that contribute to maximizing long-term franchise value. This can only happen through continuing repeat purchases and higher level of engagement.

It’s a safe bet that you do not make money on the first sale after subtracting net profit from the cost to acquire the customer. When you amortize the cost of up-front lead generation costs, consider adding another metric so you can measure against cost to make two purchases, three purchases, five purchases and so on.  Given the incremental profitability of repeat purchases, it should come as no surprise that the ROI becomes exponential.

What you can do

So how can you reap the benefits of this promise? Identify the symptoms, then interpret the signals and take decisive corrective action so these leads never slip into the no man’s land. Let us discuss each of these stages in detail.

First, identify how many customers have made only one, two or three purchases. Look at this in time intervals of six, twelve and twenty-four months since initial purchase. Also perform a vintage analysis by quarter for the past two years.

Second, look at the purchase details. Were most customers buying just accessories? Were they rush shipments? Were products only in one product category? Only on sale? Online or offline?  Are some sales teams more prone to the “one and done” problem than others? By segmenting these buyers, you will begin to get a good idea of what is producing the majority of these customers.

Finally, put in place a campaign or process to touch these customers early. Inquire about their buying experience. Look at an attach that you could drive immediately.  Set multiple touches based on the first order amount, profitability of the product purchased, or time since the initial purchase. Offer a value added service that “welcomes to the organization.”

There are many reasons why a customer may not make a second purchase. But a significant reason often is that there is no follow-up. By establishing a proactive process, you can extend the ROI of lead generation significantly through simple steps that resonate with the shiny, new customer.

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