What is the frequency of your customer buying?

*         One-time

*         Recurring

Are you tracking it?

Without knowing this number, you could have a false sense of security.

Suppose a company is adding a lot of customers and sales are growing rapidly in the process.  Life is good, but is it as good as it seems? 

It could be that the growth in revenues is all coming from new customers.  One or two orders and then the customers are done.  In order to keep up the sales growth, lots of new customers need to be added.

That can build momentum in the short term for a year or two.  Sooner or later, however, the customer growth will slow down.  Revenues will slow down even faster.   A hyper-growth company one year could turn into a mature looking firm pretty quickly.

That happened to one client of ours.  What can you do?

1.       First, track the number.  Know what you are up against.  In this case, we found that the average customer was ordering just 1.7 times.

2.       Second, dig down deeper to the product level.  Are there certain products that get more velocity?

3.       Third, look at the new product pipeline.  What is coming up that could give you a reason to go back to past customers?

4.       Fourth, look at product correlations.  Are there certain products that stimulate more buying?  In this case, I found that customers who bought a flagship book tended to buy much more.

5.       Fifth, circle back to past customers.  Find out why they aren't buying?

6.       Sixth, look at possible loyalty programs that could encourage more buying.

Know how much of your sales are coming from repeat versus new customers.  That can give you a glimpse into the future and forecast a possible slowdown.