We created Activity States as custom dimension to help you better understand the composition and engagement of your customer base.
A customers activity state is made up of his frequency state (how often did he buy) and his recency state (when was the last time he bought).
Why?
Because when we looked at the data across all our shops we saw that frequency and recency often contribute 90% or more of the predictive power of likely someone is to buy again.
And essentially, that what we want. For our customers to buy again or at least identify those that might not so that we can move them towards a purchase or find out why they are no longer interested.
Frequency States
We defined four different levels of frequency:
One-time Buyers - Customers who have only bought once
Repeats - Customers who bought at least twice yet but are not loyal
Loyals - Customers that you can expect to keep ordering
Evangelist - Your biggest fans and high frequency users
How these are defined is unique for every single business. Customer bases differ and different products have a different expected usage frequencies.
Two things that always apply is that repeat customers have at least two orders and to be a Loyal or Evangelists a customer must have placed at least four orders.
Recency States
We also defined four different levels of recency:
Active - Customers still have a high probability to organically buy again.
At Risk - Customers who have placed an order somewhat recently but have now entered a stage where their probability of buying again is decreasing quickly..
Defected - Customers who have placed an order a while ago and are unlikely to organically place another order.
Reactivated - Customers that were previously defected but have placed an order again and can therefore be considered active. Only with a more interesting purchasing behaviour.
Again, how these are calculated is unique to every single shop.
Not only that, but the Recency State also depends on the Frequency State of the customer.
A one-time buyer for example will different expected next order date than an evangelist.
What Do I do With Activity States?
For now, we integrated Activity States in the Customer Segments builder.
Because we believe they are so crucial, we actually pre-build the different combinations of activity states as a segment.
We will build more reports in the near future that allows you to better understand your customer activity states composition and movement over time.
Plus, help you understand what differentiates customers in these groups from each other.
Stay tuned ✌️
If there is anything specific way you'd like to use Activity States, please reach out to us.