Introduction to Customer Purchase Latency

Once you've gone through the cost and effort to land a customer, you want to make sure you keep them.

It's far easier to hang onto someone who's already made a successful purchase from you than chase and hook another, and a private app can help you automate that relationship.

One of the best ways to build customer loyalty and increase repeat sales is to treat customers like VIPs. When they get insider deals, they're far more likely to keep ordering from you than go hunting for another hot deal somewhere on the internet.

While there are lots of strategies for specials that you can dangle in front of customers to entice them to make another order, the strategy we're going to focus on has a very technical name: purchase latency.

Timing is Everything

Basically, purchase latency is the average amount of time between purchases. Whether your store offers lotion, software or underwear, there's a typical span of time from when a customer makes a purchase and when they need to reorder.

A private app can not only calculate that time for you, but then automatically take an action such as send out a coupon or promotional code if a customer has passed the typical purchase window. It's a simple, effective way of nudging your customers without spending money on a fancy marketing campaign or requiring you manually contact and send offers to your past customers.

Reorders the Right Way

For this process to work seamlessly for you and your customers, there are a few basic strategies for you to follow. Hit customers with reminders too soon or too late, and your reorder rate will be lower or you'll be offering discounts to customers who would be willing to pay the full price.

Here's a reordering plan that you can use for almost any products in all specialty stores.

1. Calculate the average time between purchases.

This might be one month, three months or more, depending if you're selling a beauty product, software licenses, the next level of your online course, or ink refills for a fountain pen.

Here's the process to calculate your customer purchase latency. You can do it by hand, though you'll probably want to use a spreadsheet or software to save time and prevent errors.

2. Send out a reminder email without a coupon.

Some customers will only need a little nudge to get them to reorder right on time -- at full price. You don't always have to ding your profits to make a sale.

3. After 10 days, send an email with a small discount.

Everyone loves a good deal, so many customers who didn't reorder right away but intended to will jump at the chance to have a discount. Make this first discount small -- around 5-10% or free shipping -- so your subsidy cost to keep this customer is still very minimal.

4. Each 10 days or so afterwards, send out an email with a slightly deeper discount.

In other words, you could offer a 20% discount after 20 days, a 30% discount after 30 days, and so on.

While those discounts may sound steep, remember that the cost to you per customer is actually very low when compared to your costs for attracting new customers. Also, if we follow the principle of recency, we know that the longer customers wait to reorder, the less likely they are to make a purchase at all.

Offering larger discounts to this late-to-reorder crowd is actually a good risk because very few people are going to take you up on a 30% discount since they're generally less motivated to reorder. For example, it's common to have a 20% response rate to the first small discount (ex: 10% off), but only a 1% response rate to a greater discount (30%).