Measuring & Increasing LTV

June 24, 2019
dan

This week’s #EcomChat will be on the theme of data & insights, and more specifically on “Measuring & Increasing Customer Lifetime Value”. The chat will take place at 1pm UK time on Twitter.

Lifetime Value – as you will likely know – is the idea that businesses should not treat a customer’s relationship with them as a set of individual transactions, but should understand that a customer will deliver an amount of ‘value’ over a given lifetime.

An example of the shift here may be: an online retailer knows they make £10 profit for an average transaction, and therefore they allow themselves to spend £8 in marketing for every transaction gained, in order to grow more quickly. Shifting to a ‘lifetime value’ model, they may instead analyse their data and see that an average customer purchases 2x per year and therefore, taking into account a 2-year ‘lifetime’, they make £40 profit per customer, and therefore can spend much more than £8 for each new ‘customer’ gained, rather than looking at everything one transaction at a time.

As ever, there will be 3 conversation starter questions:

  1. Should every ecommerce business focus on ‘customer lifetime value’? Why/why not?
  2. What are the best methods and tactics for understanding and growing customer lifetime value?
  3. Who does ‘lifetime value’ well, and are there any big pitfalls to avoid?

Thanks, Dan & James.

Join us at 1pm UK time on Monday 24th June and do share this post either on Twitter or via email with anyone you think would be interested.

p.s. If you’re wondering “what’s this about?” there is a page explaining all just here.

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