Calculating Customer Lifetime Value: From Analysis to Loyalty
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Calculating Customer Lifetime Value – From Analysis to Loyalty
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Understanding customer lifetime value (LTV) is one of the most complex and important analyses a business can tackle. Every part of your organization affects the outcome of the calculation: acquisition costs, revenue, customer service, and returns. Learn about: - Calculating customer lifetime spend. How can you measure customers who've purchased and their distribution of lifetime purchases over time. - Real-world decisions based on lifetime value. How can you use LTV data to focus marketing and drive repeat purchases? - Modern web-based analytics tools. What tools can help you foster collaboration, explore data in greater depth, and ensure cross-company use of data to drive smarter growth?
Transcript of Calculating Customer Lifetime Value: From Analysis to Loyalty
Calculating Customer Lifetime Value – From
Analysis to Loyalty
• Traffic acquisition• Sales targeting and
costing• Re-marketing efforts• Customer support focus• Product decision
making
Customer lifetime value sits at the center of every important business decision.
Roadmap
• Where to start understanding loyalty• How to perform basic cohort analysis• Simple ways to predict LTV better• Extensions and improvements to your model• Applications across the business• Q & A
Who We are
Al GhoraiVP of Finance, Planning and Analytics, thredUp
Colin Zima Chief Analytics Officer, Looker
About thredUp
thredUP is the nation’s leading (r)ecommerce marketplace for buying and selling the highest-quality used women’s and kids clothing.
We are reinventing the way consumers shed old clothing and shop for clothing online.
About Looker
Looker is a data exploration solution that operates in the database
to enable anyone across an organization to explore data in all its detail.
Some of Looker’s Customers
Understanding Customer Loyalty
Finding Deeper Loyalty Signals
thredUp Loyalty Signal
Womens Kids Mixed0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%2014 Users By Purchased Gender
More thredUp Loyalty Signals
LTV With Cohort Analysis
Is there implied future value?
Examining Trends in Cohorts
Engagement Metric
2012-02
2012-03
2012-04
2012-05
2012-06
2012-07
2012-08
2012-09
2012-10
2012-11
2012-12
2013-01
2013-02
2013-03
2013-04
2013-05
2013-06
2013-07
2013-08
2013-09
2013-10
2013-11
2013-12
2014-01
2014-02
2014-03
2014-04
2014-050%
10%20%30%40%50%60%70%80%90%
100%
Engagement Rates of Users with 2+ Purchases
julaug
2012-02
2012-03
2012-04
2012-05
2012-06
2012-07
2012-08
2012-09
2012-10
2012-11
2012-12
2013-01
2013-02
2013-03
2013-04
2013-05
2013-06
2013-07
2013-08
2013-09
2013-10
2013-11
2013-12
2014-01
2014-02
2014-03
2014-04
2014-05
2014-060
500
1000
1500
2000
2500
3000
3500
Engagement Profile by Cohort
DeadLostAt RiskEngagedUber Engaged
tU TV Campaign
pre campaign campaign0%
20%
40%
60%
80%
100%
120%
140%
160%
103%113%
Orders / User
controltarget
pre campaign campaign0%
20%40%60%80%
100%120%140%160%
104%
146%
Rev / User
controltarget
10% lift in order rate from users in campaign 40% lift in revenue over same campaign
Model Improvements
Controlling For Costs
Measure at the Widget Level
gross revenue $10.00 returns ($2.00)discounts ($1.00)other revenue $0.50
cash $7.50
material cogs $2.00 labor $1.50 other cogs $0.75
cogs $4.25
profit $3.25
Every point along the P&L is an opportunity to differentiate a user
Isn’t this the real measure of a customer?
Estimating Virality
When 100 customers is more than 100 customers
Why Does This All Matter?
• Driving users towards inflection points– How can product create “better” users
• Smarter marketing spend– What channels have the highest value users– What can we pay to re-engage a user
• Cultivating support for better users– Focus time on your most valuable customers
Questions
Looker.com/request-demo
See for yourself.Get a demo.
