How to increase your online store's LTV in 7 strategies
Posted: Tue Dec 24, 2024 5:33 am
The acronym represents the expression lifetime value , or lifetime value for the length of the relationship between your business and customer.
So, let's understand everything about this metric and how to calculate LTV, as well as learn strategies that will make a difference in your online store!
What does LTV, or lifetime value, mean?
And why is it important to calculate the LTV of an online store?
6 metrics needed to calculate LTV
How to calculate LTV step by step
Tips for analyzing your e-commerce LTV
What is considered a good lifetime value in e-commerce?
How do I increase the LTV of my online store?
What does LTV, or lifetime value , mean ?
LTV is an acronym that stands for lifetime value . In other words, it is an indicator that calculates the lifetime value or the amount that a customer will spend with your online store during the period that they are involved with it.
The concept of LTV is widely used in marketing and business analysis and is essentially linked to a company's profitability.
Consequently, LTV also represents how much a business can lose if that customer decides to no longer consume the products or services.
And why is it important to calculate the LTV of an online store?
If you still have doubts that calculating LTV is essential for the financial health of your e-commerce, take a look at these numbers from the Global Overview Report :
In January 2023, there were more than 5.15 billion internet users;
Of these, 43.4% of the population uses it to search for products and brands ;
76% of the most visited websites in the world are shopping websites ;
29.3% of people say they make some online purchase weekly .
What does this mean?
That people are increasingly present in the online environment, and that consumption and purchasing habits continue to grow in e-commerce.
In this context, LTV also represents customer loyalty to your busin indonesia phone number data ess. The added value linked to the shopping experience makes these people return to your online store.
With recurring and valuable customers , your company guarantees the sustainability of the business in the medium and long term, understanding the acquisition cost and the monetary value that results from this relationship.
We will better understand the important metrics for calculating LTV in the next item.
6 metrics needed to calculate LTV
To calculate LTV, you need to understand some metrics that are relevant to your business – and that directly impact lifetime value .
We have separated 6 valuable and necessary metrics in the process:
Conversion rate : represents how many people actually completed a purchase on your e-commerce, compared to the number of visitors;
Average ticket : represents the average value of each sale on your website in a given period;
Customer Acquisition Cost : also known as CAC, is the amount invested to acquire new customers through advertisements, discounts, social media campaigns;
ROI : similar to CAC, but focused on a specific channel, it is the rate that shows how much of the value allocated to a media or channel generated results (which can be conversion, clicks, visits);
Churn rate : represents the average number of customers who stopped buying from your store in a given period of time;
Repurchase and retention rate : represents how many times the same customer makes purchases in your online store, within a specific period of time.
Now that you know which metrics you should keep an eye on, let's learn how to use these values to calculate your online store's LTV.
So, let's understand everything about this metric and how to calculate LTV, as well as learn strategies that will make a difference in your online store!
What does LTV, or lifetime value, mean?
And why is it important to calculate the LTV of an online store?
6 metrics needed to calculate LTV
How to calculate LTV step by step
Tips for analyzing your e-commerce LTV
What is considered a good lifetime value in e-commerce?
How do I increase the LTV of my online store?
What does LTV, or lifetime value , mean ?
LTV is an acronym that stands for lifetime value . In other words, it is an indicator that calculates the lifetime value or the amount that a customer will spend with your online store during the period that they are involved with it.
The concept of LTV is widely used in marketing and business analysis and is essentially linked to a company's profitability.
Consequently, LTV also represents how much a business can lose if that customer decides to no longer consume the products or services.
And why is it important to calculate the LTV of an online store?
If you still have doubts that calculating LTV is essential for the financial health of your e-commerce, take a look at these numbers from the Global Overview Report :
In January 2023, there were more than 5.15 billion internet users;
Of these, 43.4% of the population uses it to search for products and brands ;
76% of the most visited websites in the world are shopping websites ;
29.3% of people say they make some online purchase weekly .
What does this mean?
That people are increasingly present in the online environment, and that consumption and purchasing habits continue to grow in e-commerce.
In this context, LTV also represents customer loyalty to your busin indonesia phone number data ess. The added value linked to the shopping experience makes these people return to your online store.
With recurring and valuable customers , your company guarantees the sustainability of the business in the medium and long term, understanding the acquisition cost and the monetary value that results from this relationship.
We will better understand the important metrics for calculating LTV in the next item.
6 metrics needed to calculate LTV
To calculate LTV, you need to understand some metrics that are relevant to your business – and that directly impact lifetime value .
We have separated 6 valuable and necessary metrics in the process:
Conversion rate : represents how many people actually completed a purchase on your e-commerce, compared to the number of visitors;
Average ticket : represents the average value of each sale on your website in a given period;
Customer Acquisition Cost : also known as CAC, is the amount invested to acquire new customers through advertisements, discounts, social media campaigns;
ROI : similar to CAC, but focused on a specific channel, it is the rate that shows how much of the value allocated to a media or channel generated results (which can be conversion, clicks, visits);
Churn rate : represents the average number of customers who stopped buying from your store in a given period of time;
Repurchase and retention rate : represents how many times the same customer makes purchases in your online store, within a specific period of time.
Now that you know which metrics you should keep an eye on, let's learn how to use these values to calculate your online store's LTV.