Email marketers have historically been obsessed with campaign level metrics of opens, clicks and conversions. But to understand your customer base, the health of the database and to figure out where to focus your energies you need to step out of campaign analytics into customer analytics.

Customer analytics also help those parts of the business which are simply looking at the bottom line in sales and profit, without understanding the mix of customers that make up those numbers.

Here are just 6 of the KPI’s and reports we use when working with customers to educate and get management aligned with our CRM plan, and to help measure our overall success over time.

1) Purchase Recency

How many in your database have purchased in the last 6 months or a year? It’s almost certain to be high which then highlights an easy action to retarget these customers with a lapsed programme as even if you only get a small slither of these to return, that small slither is actually likely to be a substantial sum to add to the bottom line.

2) Open Recency

Alongside purchase recency open recency is a great measure to get a picture of the health of your database in relation to how engaged they are. Using just open rate on individual campaigns can give a mis-leading picture – is it the same people opening each time?

Typically, 40-60% of your standard target audience will not have opened a single email in the last 6 months, a number that normally shocks a few managers.

3) 2^nd Purchase Rate

Most e-commerce and travel brands have an issue with the majority of customers buying once and never returning. This is often in the 80-90% territory. When we know it costs so much more to acquire a new customer it is often madness how little attention is placed on the one-time customer bucket. Existing customer orders are more profitable than new orders.

What the 2^nd purchase is also usually a proxy for is loyalty. For every additional purchase a customer makes, the greater the habit and commitment becomes, and the more likely they are to go onto make further purchases on their own accord.

If you get customers to make a 2^nd purchase (or perhaps it’s a few more) customer behaviour becomes self-teaching and repeating, so monitoring this and putting in place strategies to boost it have a huge knock on effect for overall revenue.

4) % of Revenue from Repeat Customers

Does the company report on how much of the revenue was from new vs. repeat customers? A key role of the CRM team is to highlight how much easier it is to grow the bottom line if more of the revenue split is coming from repeat purchases. You can’t keep growing new customer acquisition in double digits year on year.

In fact, if you look back at revenue over the last few years of the business you can usually see a pattern between growth in repeat revenue driving the overall growth of the business.

When you see that it focussed minds on investing in CRM and allows a greater forecasting accuracy.

Beyond this though you can start looking at what percentage of revenue comes from say your top 20% of customers. The saying goes 80% of revenue comes from 20% of your customers is usually roughly true. Pulling out that top 10% or 20% allows you to think about how the business might be able to offer this group even more products and services tailored to their needs, but specifically monitor this group. If your business is so reliant on such a small group of customers churn in these areas has extra impact.

As an example, for a business that matches the 80:20 rule exactly with a turnover of £1M and 5,000 customers in total, this means that the top 20% of customers (1,000) spend an average of £800 each a year.

If 10% of these top 1,000 customers were to churn its only 2% of your customer base – you can live with that. But it means you lose 8% of company revenue.

5) Cohorts

Not all customers are equal. Some customers are by their nature more likely to spend more over their lifetime. A classic example of this is customers who found you of their own accord and placed a full price order for their first purchase versus customers you have effectively bribed with a big discount to acquire.

In this specific instance you will often see a much lower lifetime value from the bribed customers, with a much lower percentage making a 2^nd purchase.

This has an overall impact on business growth as several months after these customers are acquired the repeat revenue you would be expecting doesn’t materialise. It also of course makes the role of CRM harder as your efforts in the ongoing communications will bring fewer rewards.

This is why Cohort reporting is so important for a business. This typically works by grouping customers into the week or month they were acquired, and then plotting in each week or 30 day period after this various numbers such as revenue per customer, the percentage active in each period and more.

Here is an example showing the percentage of customers still active in each 30 day period after their first order:

This then clearly highlights which time periods of new customer acquisition generated the best quality customers, and which ones added a lower quality of customer. Further work can then be undertaken to drill into these further, helping you analyse specific new customer promotions or advertising campaigns did or didn’t deliver the quality customers you needed.

It can be some of what you see is seasonal – for example in the fitness industry you will see a high number of new customers in January, but you know traditionally these will not stick at it as long as customers that arrive in other periods of the year for the first time.

Plus there might be other reasons why new customers don’t go onto convert into long-term customers over different time periods such as if you change product lines that are popular with new customers.

Either way cohort reports will help identify issues faster than if you wait for a drop in revenue.

6) Lifetime Value

We can’t talk about CRM KPI’s without mentioning customer lifetime value (LTV). Simply put this is how much a customer will spend (sometimes expressed as profit) with you front heir first purchase onwards. Usually to aid useful comparisons this will be expressed over a time period such as their first year.

Having LTV numbers allows the business to understand how much they can afford to spend to acquire a customer, or perhaps incentivise lapsed customers to return. It shifts the mindset away from a simple cost of sale model on channels such as PPC to give greater flexibility on how much you can afford to spend.

One LTV figure is not enough – and the reason for this is mis-leading averages.

You might want different LTV figures based upon the acquisition channel so you can see what a PPC customer is worth versus someone acquired organically.

You might also want to look based upon customer attributes – something simple like the average LTV of someone who reaches say 5 purchases in their first 3 months will be exponentially higher than the basic average, and allow you to place a value on the jump to 2, 3 or 5 purchases beyond just the revenue you collect on those orders.

Where to start?

This is just a small selection of the type of numbers and reports we look for to understand the health of a customer database, work out our priorities and plan strategy going forward.

There are many ways to approach getting these numbers – from manually crunching in Excel, through to implementing a BI Analytics tool. If you need help in building these have a chat with us to see how we might be able to setup you CRM dashboard.