One (Customer) Number

Ron’s post Why Do Marketer’s Test? reminded me of an incident that keeps repeating itself. 

The presentation I do as part of the Web Analytics BaseCamp includes a section on the importance of measuring marketing success at the customer level as opposed to the campaign level.  Then I get this question: “If you were to measure just “one customer number” what would that be? 

Putting aside all the reasons why measuring one customer metric is a faulty approach for the moment, I reply “Percent Active”, meaning:

What percent of customers have initiated some kind of transaction with you in the past 12 months, or 24 months if you are highly seasonal?  Higher percentage is better.

Initiated being the key concept.  Just because someone is “balance active” or is receiving a statement doesn’t mean they are “Active”, or if you prefer, “Engaged”.  And for some businesses, for example utilities or help desks, a lower percentage will be better – the lower the percentage of customers who have initiated a trouble call or a billing problem, the better.  “Transaction” can be most anything, define it for your business – what generates profit or cost for you?  That’s a good place to start, among other things like inquiries and so forth.  Adjust for your business, keep it simple. 

If you don’t sell anything, consider shortening the 12 month window.  If you are a highly interactive business and depend on that interactivity as a business model (MySpace, Facebook) consider using 3 months.

It is truly amazing to me how many folks don’t know what this number is for their business.  And often, truly shocking to them when they find out what the number is.  I have seen their faces.

This number is so simple to calculate and track, and simple to measure success against, why don’t people have it?  It’s a very powerful predictor of the future health of a business.  It’s like a searchlight showing you the way, giving you the head’s up when things are not right in customer land.  All this crap about being customer centric and not one number to fly by, it’s really pretty sad.

All I can conclude is folks simply don’t want to know what the number is.  Am I wrong? 

Why don’t you know this number for your business, or why doesn’t your boss care about this number?  I want to hear all the excuses and have a list of them right here so we can refer to them in the future!

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