Unlock your Customer Lifetime Value

Customer acquisition is a significant value lever that brands seek to pursue both offline and online. Online customer acquisition is an expensive, challenging, and iterative proposition that requires expertise and constant enhancements to processes involved in the acquisition phases. In order to maximize the value of customers acquired, brands work towards a superior retention strategy. A typical SWOT analysis will help brands understand the opportunities and threats they are faced with.

Our anecdotal assessment of the recent e-Commerce landscape leads us to the following conclusion:

1. The barrier to entry continues to drop
2. Switching costs are either low or non-existent  

What the above premise means to brands: high Customer Defection Rate (CDR). Depending on your business and the industry vertical in which you operate, your Cost of Acquisition (CoA) will vary largely. Also, your focus might be higher on acquisition as opposed to retention. It is worthwhile to note that building a superior retention strategy is perhaps of greater importance for the simple reason that it costs much higher to acquire a new customer versus retaining an existing one. Secondly, but more importantly, customer retention helps maximize the ‘Lifetime Value’ (LTV) you derive out of your customers. Interestingly, while a lot of businesses focus on ‘Breaking even,’ measuring ‘Lifetime value’ is the most significant metric for businesses. This is also the least understood and most overlooked metric.  
This whitepaper seeks to help with maximizing your ROI by identifying measures to reduce your online acquisition costs, measure LTV, and Customer Retention Rate (CRR), and finally value levers to improve LTV.  
Simply put Lifetime Value (LTV) is the total value that a customer contributes during the entirety of his association with a business. A more complex way of measuring this will be the summation of current average order value and the Net Present Value (NPV) of all future orders minus acquisition and retention costs. Acquisition and retention costs include but are not limited to advertisement costs, digital infrastructure costs, customer service costs, operational overheads, loyalty bonus, cross-sell/upsell costs, etc.

To read the complete white paper, download the PDF version from the link below: