How to Use Customer Lifetime Value for eCommerce?
Customer Lifetime Value is a key metric that illustrates a prediction of the net profit of an entire future relationship with a customer in eCommerce and other businesses.
And today we know that CLV also empowers online retailers to build their business strategy and allocate their marketing expenses and organizational efforts in a way to benefit the most valuable customers — those that buy more; purchase more often and tend to be loyal to the brand.
“Find more growth through identifying and building the business around the valuable customers.”,
-Peter Fader
Knowing your CLV for eCommerce can help you:
✅ Segment your customer basis in a smarter and more precise way.
✅ Define objectives — growth, turnover, future sales, net profit.
✅ Balance other KPIs like acquisition cost, repeat purchase rate, growth in average shopping basket value, churn rate and more.
✅ Forecast the customer satisfaction.
✅ Innovate and optimize the marketing tools, tactics and channels.
✅ Adjust the communication campaigns and messages.
✅ Conduct adequate and more profitable loyalty programs as well as reactivation campaigns towards the right customers.
✅ Cross-sell and up-sell based on individual patterns of buying.
And even more.
And that is a necessary transformation for any online shop as to meet the customer’s need for an individual treat.
Yet, only 5% of online shops actually measure and use CLV.
Learn more about how to calculate CLV, what is its business impact, how to start or improve CLV and its drivers: