– Predicting LTV (Lifetime Value) in ecommerce is difficult due to numerous variables outside of a brand’s control.
– Instead of focusing on retention modeling, businesses should prioritize acquiring new users and creating great products with a positive customer experience.
– By focusing on the right things and going against conventional advice, businesses can achieve high conversion rates, healthy profits, and a high return customer rate.Focus on acquisition of new users and building amazing products with a great customer experience rather than investing a ton of time into retention modeling.Everyone in e-commerce who says they have software to help you predict your LTV is lying to you. LTV is a goal that has too many variables required to factor in, the majority of which are outside the control of a brand. LTV is a goal that you have for every customer, starting when they first come to your website and is tied to a variety of different factors that you can’t control. In fact, LTV can’t start until someone decides to buy something, which means it’s entirely dependent on the ad, landing page, website, product page, description, word of mouth, strength of brand, just on the brand side. Then, on the customer side, you need: need, want, desire, timing, materials, product, activities, hobbies, priorities, budget, weather, geography, travel, and a whole lot of other things that a brand can’t control. Then the actual product has to fit in with all of that. This is why I don’t think retention modeling is real or something you should be investing a ton of time into. Instead, the majority of businesses would be better off focusing on the acquisition of new users and building amazing products with a great customer experience. If you want to hit your LTV goal, you need to get all the basics in place first and relentlessly search for the best fitting, highest quality audience that gets the most benefit from your products. This is how you create a brand that becomes known for a specific set of goods. But even then, in most cases, the LTV has to be tied to a lifestyle choice or element (which changes over time) or a hobby or activity (which can also change over time). Yes, we actually tested this by not focusing on retention at all. No SMS, no sales, no emails selling goods, no special offers, only an email campaign every 2 weeks sent out on a Saturday where a link was an invitation back to the store at the bottom. Normal e-commerce agencies would tell us we’re doing everything wrong, that we need to send more emails, more deals, more offers, etc. Our conversion rate is north of 5%, our profit is healthy, and our return customer rate is more than 40%. When we send out emails, people reply to us. It’s kind of crazy what can happen when you focus on the right things and go in the opposite direction of what everyone says. #ecommerce #LTV #marketinghttps://www.linkedin.com/in/jivanco