Podcast 18: An Introduction to Recency – A Key Predictive Metric

In this episode, I introduce the concept of Recency as it applies to an online business, and show how it's critical to figuring out the campaigns that will lead to growth. EXCLUSIVE RESOURCE: For tons of freebies and to be notified when my next episode on Recency is released, sign up for the Nerd Marketing newsletter Subscribe: iTunes | Stitcher Highlights A dating quiz from Drew's love life Recency is the #1 most powerful predictor for future customer behavior The problem with using Life Time Value (LTV) when you're a start-up A basic definition of recency Using recency to understand which customers to focus on Recency vs. Latency Using recency in your advertising and A/B tests Much more! Transcript Prefer to read rather than listen to the podcast episode? No problem, you'll find a text transcribe below, and you can also download it for later. → Read the Transcript Hey everybody. Welcome to the Nerd Marketing podcast. Got a bit of a question for you today, who is Drew Sanocki more likely to marry? Woman A, the woman I dated in college who I thought was my perfect match. Intellectually compatible, smart, we had the same group of friends, we had a very stable, loving relationship, or woman B? We will call her the mildly psychotic woman B. It's a woman I dated 10 years later, who I fell head over heels for. We had a completely unstable relationship full of chases, long email rants back and forth, multiple breakups, backstabbing. That's the question I put forth to you today, and before I give you the answer, I just want to welcome you to the nerd marketing podcast, the only podcast where you can hear Drew Sanocki make the magic of data driven marketing easy to understand, and fun, and profitable for you. Want to save this transcribe for later? CLICK HERE to download as a PDF. Today's topic is recency. Recency is a metric. It's one I would love if you could learn to love in the way that I loved both of these women. I love recency because it's the number 1, most powerful predictor of future behavior, future customer behavior. Because of that, it's a critical metric for you running your digital business. The problem with start ups is that you don't know lifetime value. There's a lot of writing online about lifetime value. "Oh, just figure out the lifetime value," "Figure out which campaigns drive which kinds of customers with which kinds of lifetime value, and put your money behind the campaigns that drive the highest lifetime value," but the problem with a start up is that you don't know your customer lifetime yet. You're just coming out of the gates. All the big LTV calculations on kiss metrics, they don't apply to you. In those cases, there's some other metrics that are very helpful, and probably the best is recency because it's predictive. Recency predicts future value. The idea is this, recency is the number of days, or the time since an action has been performed. The more recent, the more likely you are to repeat an action. The less recent, so the more days or time since an action has been performed, the less likely you are to perform that action. It's largely because you've found substitutes, or you've had your needs met, or you've found another product, or something like that. Let me give you a couple examples. First, non-business examples. I talk about the gym a lot because I'm not creative, and all I have are gym examples, but who's more likely to go to the gym today? Is it the guy who went to the gym yesterday, or is the guy who last has been in a gym a year ago? Recency means that the dude who was in the gym yesterday is much more likely to go to the gym today than the dude who was last in the gym 12 months ago. Easy enough, right? Applies to everything. Diet, who's going to eat a healthy meal at lunch today? It's the person who probably had a healthy meal at breakfast versus the person who last had a healthy meal in 1990. Okay, so that's recency.