How to interpret the Lifecycle report
The LifeCycle Grid is similar to a spreadsheet, with columns and rows. On the horizontal (x) axis we've Recency (how many days has gone since customers latest purchase), and on the vertical (y) axis we've got Frequency (how many orders customer has done).
The point of the Lifecycle Grid is to help you visualize the whole customer base and instantly know where the dynamics of your customer base are taking your business.
Some example questions could be:
- Are you at the risk of losing your best customers?
- Are you gaining more returning high-value customers or more one-time purchasers?
- What products are your most (or less) valuable customers buying?
- How many +3 time repurchasers do you have?
How to read the Lifecycle grid
Box number one at the center-left would be read like this: There are 6 customers who have made a purchase in the last 30 days (Recency) who have purchased 3 times in total (Frequency).
The light blue cell in the center (2.) would be read like this: There are 724 customers who have taken action between 90 and 119 days ago (Recency) who have purchased exactly 1 time in total (Frequency).
As a customer becomes less and less Recent (more days have passed since an activity, Friction rising), their “location,” or the intersection of their Recency and Frequency, moves across the grid from right to left through consecutive “cells.” As they become more and more Frequent (Friction falling), they move from the bottom to top of the grid. Best customers are in the upper left of the grid; worst customers are in the lower right of the grid. In the middle is the great “unwashed,” customers who don’t seem to be either best or worst.
The further customers move to the right in this grid, the more likely it is you have lost them as customers. As they move, they are becoming less Recent (Friction rising), and therefore less likely respond to promotions or service offerings you use to get them to act a second time.
Drilling down into the data
For segmentation, the lifecycle grid offers the same filters as the lifetime value report. The filters can be accessed in the upper right corner. Filtering enables you to segment your customer base and compare different segments. If the grids demonstrate clear differences between the segments, you should be able to draw conclusions about where marketing budgets are most effectively spent.
Another way to drill down to get actionable insights is to find and compare the characteristics of different customer groups: What products your highest frequency customers have bought on their first order? What product categories are they buying? What are the top products?
This can be achieved by selecting the wanted customer groups by clicking the cells and then running an analysis using the "Show analysis" button in the top-right corner.
The resulting analysis will show the following data points for the selected customer groups:
- top products
- top collections
- top first-order products
- top first order collections