Kontagent CEO, Jeff Tseng has highlighted the importance of understanding Customer Liftetime Value (CLTV) in the digital economy. Tseng explains that the analytic allows businesses to evaluate their most valuable customers, how to gain more of them (for less) and how to cater to and retain high-value users. A recent RJMetrics infographic employed the metric to compare the profitability of different E-Commerce approaches. The report compared the average lifetime spending of customers acquired through Google as opposed to Facebook as well as the financial outcomes of of daily deals, flash sales, group buying and traditional online retail strategies.
The analysis suggests that “customers originating from Facebook Ads could be more valuable in the long-run,” given that the average Facebook customer “spends 8% more in a lifetime than those from Google.”
The report also reveals the impact of sales strategies on repeat purchases. Flash sales produce approximately 4 times the repeat spending of traditional online retail. Flash sales also lead group buying and daily deal sales in repeat spending.
When it comes to purchase frequency, findings show that daily deals (every 48 days) outperform flash sales (every 49 days), group buying (every 52 days) and traditional online retail (every 89 days).
While all other sales strategies proved more effective than traditional online retail in terms of first year repeat spending and purchase frequency, the average order size was highest for traditional online retail. With an average order size of $105, traditional online retail outperformed daily deals, flash sales and group buying by approximately 50%.
View the complete infographic below.