Hit-&-run customers are the hardest to identify because they imitate all of the other customer types. They look like active customers when they make multiple orders, but there is definitely a difference. Once the hit-&-runners make the final purchase in their series, they leave. No amount of marketing or discounts will entice them back.
Here are 5 defining characteristics to help the identification process:
1. They typically make one to three purchases, but have been known to make up to five. If they order multiple times, it is within 90 days from their first purchase. The ones that do this make it extremely hard to separate them from active customers.
2. The Internet is the channel of choice. It is extremely rare to receive a telephone or mail order from a hit-&-runner.
3. Search is the traffic driver for these customers. They use search engines to find your products and/or services.
4. They often purchase from a specific product category. When they place multiple orders, the items complement or are accessories for the product first purchased. (i.e. The first order is for a doll. Following orders are for additional clothes and accessories for that specific doll.)
5. First time customers shipping to an alternative address are often hit-& runners because they are buying a gift for someone with different tastes. They look like discount customers when they buy sales items. Again, there is a difference. Hit-&-run shoppers are rarely motivated by discounts. They are fulfilling a one-time need and got lucky that the item or items were on sale.
There are a few identifying characteristics that appear consistently when we study hit-&-run customer behavior. The old saying, “hindsight is 20-20 vision” applies here. The trick is recognizing them before heavily investing marketing dollars.
For example, if you typically spend $1 per active customer per month and consider every customer who has purchased in the past 12 months to be active, then you are wasting $12 per year for each hit-&-run customer.
If your active customer database is 100,000 and 10% are hit-&-runners, that is $120,000 off your bottom line. The previous example is a best case scenario because most companies spend more than $1 per month for each active customer and hit-&-runners usually account for more than 10% of the active database. There will always be some waste because it takes time to identify them. The earlier you recognize the behavior, the less you’ll lose.
Since hit-&-runners are so hard to identify early in the process, consider a marketing channel shift when new customers haven’t made a second purchase within 30 days of the first order. Emails are more economical than catalogs and direct mail pieces. Instead of mailing every month until the newbie cycles out of the active customer segment, shift to a quarterly mailing strategy combined with a customized email program. It will reduce your marketing costs while you are learning about your customers.
Debra Ellis (email@example.com) is the founder of Wilson & Ellis Consulting (www.wilsonellisconsulting.com), which specializes in improving customer acquisitionand retention using marketing, analytics, service, and strategic planning.