How to do customer lifecycle marketing driven by cohort analysis, CLV maximization, repeat rate optimization and retention reports.
Note: This is an opinion piece by the Metrilo marketing team. Its purpose is solely to offer a new angle of looking at things. It’s healthy to challenge our ingrained beliefs from time to time!
Ecommerce store owners struggle to increase traffic to their sites all the time. Traffic is probably the most popular topic in any seller discussion group. The first question newbies ask is, “How do I get traffic?”
Well, maybe that’s wrong. Maybe that’s the wrong thing to focus on.
Customer lifetime value is proving to be one of the most important ecommerce metrics. More and more online brands discover customer lifetime value as an indicator of brand loyalty, stable financials and possibilities for growth. We’ll see why in a bit.
Customer lifetime value is the total amount of money someone spends with your brand over the complete period of their customer lifetime. This is from their first purchase ever to the last one before they drop out as a customer and never shop from you again.
Emails that drive repeat sales are the best emails. Forget about basic email marketing that teaches you to send promotions every week or touch base with customers more often, e.g. every day.
To see a real return on marketing, you need to use email to its full potential – it’s a (nearly) free marketing channel that you own and have complete control over. No pay to play like ads. Emails for customer retention are the best way to drive revenue without extra spending.
Customer lifetime value is the best indicator for a healthy business.
Customer loyalty is usually based on a strong connection with the brand and a positive experience. Emails that drive customer loyalty keep this relationship going through useful, timely and relevant content and offers.
Aron Levin went over Casper’s S-1 filing (preparation for IPO) and his verdict is “Casper is screwed”. That seems harsh for the poster child of DTC brands, but Levin presents his findings and the financials don’t look good. At least Casper’s growth looks unsustainable.
Why is that?
“20% of direct-to-consumer orders in 2019 came from repeat buyers.”
Also, in the documents, the company says it increased its advertising budget by 23% in the last year (before filing for IPO).
This means they increased their investment in marketing and still got only one-fifth of orders from old customers. Adding the fact that Casper relies immensely on brand awareness and it turning into brand loyalty, things are looking weird.
The holiday season has most probably drained your marketing budget – ad costs are sky-high because of the fierce competition. That’s why it’s worth a try to get a better return on the money invested.
If you get your holiday shoppers to shop again, those purchases will get you a higher profit margin than the first (if you even managed to make any) and most likely offset the cost of acquisition. We outline a few ways to do that in this piece.
If you have an unlimited pool of potential customers and also unlimited budget to acquire them, this article is not for you. Your shop can survive with one-time sales.
If your target audience or budget, though, is not so huge, you need repeat purchases to stay in business.