With the holiday sales season behind us, leading merchants are
now using data to look back on the performance of their holiday
strategies. These data-savvy retailers know how to squeeze the
most valuable insights from their many disparate data sources,
providing powerful insights into acquiring new customers,
driving repeat purchases, and increasing customer lifetime
At the NRF Big Show this week, I joined forces with Magento
client Sean Fisher, Director of eCommerce at the leading
kitchen, bath, and home product retailer Signature Hardware, to
map out the Analytics Playbook of High-Growth Merchants.
Sean and I shared data from Magento Business Intelligence’s
Holiday Benchmark Report, as well as the customer insights
and innovative marketing strategies that have helped propel
Signature Hardware to the number 222 spot on the Internet
Retailer Top 500 merchants list.
In the session, we delved into three key performance indicators
– customer acquisition, customer retention, and customer
lifetime value – and discussed how they can be applied across a
variety of industry types. Here are some of the takeaways:
We reviewed customer acquisition data from the top 25 percent
of merchants and found that, by the end of their second year,
these top performers are acquiring five times
more customers each month than their counterparts.
Moreover, this margin of leadership grows exponentially over
time. By the end of the third year of their life, the top 25
percent have a customer base that is 2.5 times larger than
their peers in the second quartile, and over 10x larger than
the rest of the pack.
In reality, however, many high-performing businesses don’t
follow this same steady growth pattern. Signature Hardware is a
perfect example. While they ended their third year on par with
other top performers, their growth started out much more slow
and linear. It wasn’t until about halfway through their second
year of operations that Signature Hardware experienced a rapid
spike in growth.
This was no surprise to the Signature Hardware team, who knew
the unique characteristics of their industry and its customers.
After all, when customers buy bathtubs and vanities that can
cost thousands of dollars per unit, buying behaviors are quite
different than in more traditional online retail verticals.
There is a longer purchase consideration cycle for customers in
this category, along with a larger delay between purchases,
which led to a longer delay before any snowball effects could
kick their growth into high gear.
Signature Hardware was able to find strength in these unique
customer characteristics, closely tracking the data on what new
customers were buying and how it impacted their customer
For most merchants, 68 percent of customers will never make a
repeat purchase. But for high-growth businesses, our data shows
there is often more revenue coming from repeat customers than
new ones. This trend is typically driven by strong customer
loyalty and data-driven remarketing to the existing customer
Because many of their customers purchase high-value items for
rare home improvement projects, Signature Hardware is not the
kind of business you would expect to have a high repeat
purchase rate. This proves true in the data, with the
average Signature Hardware customer making fewer repeat
purchases than the average customer at other retailers.
However, if you segment the data to only those customers making
a first purchase of over $900, the repeat purchase rate jumps
Knowing this has provided Signature hardware with a powerful
perspective on how to invest in its growth and increase the
proportion of customers who are coming back to buy more.
Customer Lifetime Value
Top merchants acquire more customers, have a higher average
cart size, and drive more customers back to make repeat
purchases. All of these factors combine to impact one key
metric: Customer Lifetime Value (CLV). Customer segmentation
can help determine the CLV of specific cohorts of customers,
informing smarter business actions and strategies.
Signature Hardware created CLV models by vertical that allowed
them to smartly invest their marketing dollars in categories
that attracted high-CLV customers. They also employed creative
merchandising to increase cart size and promote matching pieces
that tended to sell well with the items already in a customer’s
By segmenting their data and identifying the best KPI’s for
their industry and business model, Signature Hardware developed
a truly data-driven strategy for growing Customer Lifetime
The fastest-growing merchants in the world have three things in
common: They acquire customers in high volumes, they bring
these customers back for repeat purchases, and they employ
strategies to increase Customer Lifetime Value. To drive these
metrics for your business, the key is instrumenting your data,
understanding your customer segments, and pulling the right
levers to keep your audience engaged and coming back for
Don’t miss Bob Moore share insights on The Essential
Dashboards of Online Leaders at MagentoLive UK 2017.
Register today and join us in London on June