The CLV Revolution: Transform Your Ecommerce with Customer Value Optimization

The most critical aspect of this step is expanding your view of the dominant numbers. Until you start to monitor and measure key metrics related to CLV, and build a game plan towards improving them, you will continue to over-optimize the two or three dominant numbers you’re used to.

The acquisition will always be tied to growth, but the mantra of “acquire, acquire, acquire” is ill-conceived. With CLV at its center, the new mantra is “acquire, inquire, acquire.” See what I did there? Inquiring into why your customers buy, whether you are reading the story of the data, or asking them directly, will help avoid churn and burn.

The fact is CLV is not a fixed reality. Impacting it is well within your reach if you know where and how to look inside the numbers.

to improve CLV, my company, and all companies for that matter, must have three solid pillars: • What they sell (the product) • What they do (the customer experience) • What they say (their marketing)

Depending on the vertical and the maturity of a company, returning customers can generate up to 90 percent of the total revenue. Here is a picture of aggregated data from my company’s benchmarked data, including two thousand e-commerce companies. It shows how the revenue from returning customers grows in importance as a company matures.

Acquisition marketing alone does not work long term for all business models. If what you sell gets bought multiple times, it may work for short bursts, but in the long run, it’s called “churn and burn” for a reason—you will burn yourself out.

one north star metric that can capture the essence of a company’s health: Customer Lifetime Value.

To stay cash positive, you must continue to understand your unit economics. Many companies calculate the CAC Payback Period based on revenue. This is misleading. I’ve provided two examples below to help demonstrate my point. In them, I have calculated the CAC, and aggregated the data to show CLV across a series of timeframes: 30, 60, 90, 180, 365,

The CVO methodology is a working process that helps e-commerce professionals and businesses deliver value across every stage of the customer’s journey: acquisition, onboarding, retention (prevention), and reactivation.