Equity & Lifetime Value
Determine each customer’s value to your company
Not every customer makes regular and expensive purchases, which unfortunately means that you can’t afford the same costs to maintain all of them.
It’s important to attempt to predict each customer’s future in your company before making decisions. To do that, you must know their equity and lifetime value to your store.
There are numerous ways to calculate these values but, because your company is unique, so is the formula with which you obtain them.
Customize & Automate. Explore the possibilities.
Relevant Variables
Just like customers, companies are not equal! That’s why Green Flying Panda allows you to
customize virtually any aspect of your store, including what to take into account while calculating
equity and lifetime value.
Nevertheless, we highlight some variables you might want to consider using.
Average Customer Lifespan
Prediction of the number of years left of your customer’s activity in your store (number of years they will remain a customer).
Average Revenue
Prediction of their future yearly or periodical revenue, based on previous orders and price paid.
Rate of Discount
Interest rate used in discounted cash flow analysis to determine the present value of future cash flows.
Retention Rate
Ratio of the number of retained customers in your company from one period to the next.
Profit per Customer
Customer revenue minus all costs for your company, including shipping costs, taxes, publicity, etc.
You can use the Sales Extra Costs feature to keep track of all outgo.
Order Average
Average orders amount in your store.
Sales Extra Costs
Keep track of important information regarding your investments.
Taking thorough notes will help you justify possible sales variations and compare their statistics to the values you expected with each campaign.
Sales Extra Costs are also taken into account while building your equity formulas.
Specify and explain investment amounts
Describe each campaign’s purpose
Delineate start and end dates for each campaign
Define sales amount goals
Define custom prices per customer and segment!
Interpret your company’s Retention Rate values
Success isn’t only about the numbers – it’s about people. Having more customers from one year to the next doesn’t necessarily mean you’re doing well: if you’re not maintaining your customers, you must be doing something wrong…
Don’t underestimate customer loyalty!
It’s important to gather new cutomers, but you should always prioritize your current clients. Long term decisions pay off!
Explore
Did you know…
It’s about 10 times cheaper to invest on Customer Recovery Marketing than on trying to gather new customers! Customer loyalty always pays off.
Read more!