How do you measure success of your business or marketing campaigns? Do you look at Sales? Conversion Rate? Some kind of engagement KPI? These are all pretty common and give a good indication of the short-term impact and performance of a campaign.

But how do you measure the long-term success of your business? One practice I typically recommend to my clients is to look at 5 key customer segments and how these grow / shrink over time. The 5 Segments each of these has criteria that could be changed according to your business and customer lifecycles, but these are the most frequently used figures.

  1. Prospects: These are all of your non-buyers that you have acquired contact information for (think email subscribers).
  2. New Buyers: Any customer who has only placed 1 order and that order was within the last 6 months.
  3. Growth Customers: Any customer who has purchased 2-3 times, with their most recent purchase within the last 6 months.
  4. Loyal Customers: Any customer who has purchased 4 or more times, with their most recent purchase within the last 6 months.
  5. Lapsed Customers: Any customer who has purchased at least 1 time, but has not purchased in the last 6 months.

Tracking Long Term Business Success:

Once you define your segments, you can start tracking business success over time. I recommend pulling the segment sizes every month (or at least every quarter) so you can see how each group is growing or shrinking. Signs of a healthy business would be steady figures in the “New” group, growing figures for both the “Growth” and “Loyal” groups, and steady or declining figures for the “Lapsed” group.

Each time you evaluate change from the previous period, you get a very transparent look at your customer base from which you can derive insight into whether or not your campaigns during that time period helped grow your base both from an acquisition and retention standpoint.

3 Quick Things to Think About:

  1. Seasonality – if you are using 6 months as your lapsing window, you will likely see a spike in the Lapsed segment around June or July, as all of your one-time holiday shoppers hit that 6 month mark since their last purchase.
  2. Lost Customers – from my experience, the largest segment is always the Lapsed Customer group. The reality is there will always be one time customers who no longer engage with your brand. Consider narrowing this group to a “lapsing” audience that you want to target for reactivation, and leave the rest in a severely unengaged group that you no longer actively market to.
  3. Product Releases – for the most part, segment changes month over month will be small percentages (less than 5%). However, major changes tend to be seen around major product drops or collection releases. Keep this in mind when evaluating marketing campaign success vs. normal business trends.

I hope you are able to take the approach above and apply it to your own business. Looking beyond the day-to-day performance and tracking long term success is a sign of business and marketing maturity.

If you have any questions about the approach or would like to learn more, feel free to reach out using the simple form below: