Understand Your Business
Chapter 2: Know Your Numbers Before You Send More Emails
Before changing your email program, establish what is happening in the business. A platform revenue figure is one part of that picture.
You need to understand who buys, who returns, what they spend, and whether those orders make economic sense.
Watch the walkthrough
Nick’s seven retention metrics
Measure subscriber quality, first-purchase speed, and the customer relationship beyond opens and clicks.
Section 1
Define the question before choosing the metric
Different metrics answer different questions. Keep their definitions, time periods, and customer groups consistent so comparisons mean something.
Nick’s seven priority retention metrics form the main scorecard. These definitions make the reporting conventions explicit rather than assuming every platform calculates them identically.
Subscription-to-purchase rateDo subscribers become first-time buyers?
Definition: Subscribers who were noncustomers at signup and made a first purchase by a stated cohort age, divided by all noncustomer subscribers in that signup cohort.
Interpretation: A weak result prompts review of traffic quality, the offer, welcome content, abandonment, and product pages.
Caution: Compare cohorts at equal ages; exclude existing customers at signup. Eventually requires a stated observation cutoff.
30-day purchase rateHow quickly does signup turn into a first order?
Definition: Noncustomer-at-signup subscribers who first purchase within 30 days of signup, divided by noncustomer subscribers in the evaluated signup cohort.
Interpretation: Faster first purchases can improve cash flow and acquisition-cost recovery.
Caution: Only include cohorts old enough to complete the full 30-day window; do not count recent signups as failures.
Repeat purchase rateDo first-time buyers return?
Definition: Customers with at least two orders by a stated cohort age, divided by all customers in that acquisition cohort.
Interpretation: Investigate product experience and relevant follow-up when fewer customers return.
Caution: Compare equal cohort ages and similar product mixes; a durable product may have limited reorder demand.
Time between ordersHow long does returning take?
Definition: Average elapsed time across the evaluated inter-order intervals; state whether these are first-to-second or successive orders.
Interpretation: Shorter intervals can indicate more timely replenishment or relevant cross-sell.
Caution: This excludes customers who never return. Pair it with repeat purchase rate and keep the interval convention consistent.
Customer lifetime valueHow much revenue does a customer relationship generate?
Definition: Revenue generated per customer across the relationship. For an observed cohort, divide cumulative customer revenue by its customer count through a stated age.
Interpretation: Use it as the retention scorecard alongside the cost of acquiring and serving customers.
Caution: Observed customer revenue is not predicted lifetime value or profit. Label forecasts separately and compare cohorts at equal ages.
Revenue per subscriberHow valuable is the list rather than how large?
Definition: Email-attributed revenue over a stated period divided by the evaluated subscriber count; record whether that count is average or end-period.
Interpretation: Higher revenue per subscriber can reflect better audience quality, conversion, or sustained engagement.
Caution: Use the same revenue definition, attribution model, subscriber-count convention, and period. Attribution does not establish incremental revenue.
Returning-customer revenue percentageHow dependent is revenue on new customers?
Definition: Revenue from orders placed after a customer’s first order divided by total order revenue in the same period. Apply the same treatment of discounts, refunds, shipping, and tax to both.
Interpretation: Track the balance between acquisition and repeat business rather than maximizing this share blindly.
Caution: Classify at order time, including second orders within the period; product type and acquisition changes affect the share.
Section 2
Keep the baseline consistent
Record the reporting period, source, and definition next to each metric. Use comparable periods and note promotions, stock issues, or unusual acquisition activity.
Your baseline worksheet
Saved on this deviceSection 3
Read the numbers together
AOV (revenue divided by orders) and contribution (revenue less documented variable costs) provide supporting commercial context. Keep revenue and cost definitions consistent.
Opens, clicks, and signup rate are diagnostics, not retention outcomes. Privacy-protected opens are unreliable; clicks do not guarantee purchases, and more signups do not guarantee better customers.
A higher order value can coexist with fewer repeat purchases. More attributed email revenue can coexist with weaker total business performance. Look for an explanation across related measures before deciding what to change.
Illustrative example
A promotion increases orders but reduces contribution per order. Before repeating it, review the economics and whether those customers return.
Section 4
Use BM Analytics
Closing takeaway
Your baseline is a reference point. Next, use it to decide where the customer journey needs attention.
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