Create Your Own Luck With Data
March 16, 2018
With St. Patrick's Day around the corner, you may be hoping for a bit of luck with your sales. We say make your own luck! Using data, you can discover your company’s four-leaf clovers—or highest-performing customers—and create strategies to keep them shopping.
Here are four data points you can use data to identify valuable customers—and actionable steps to retain them:
1. Customer's Lifetime Value (CLV)
CLV is a common metric used to find a company's high performing customers. It’s defined as the revenue that a customer has generated by making purchases at a company, and it’s calculated by summing the purchase totals for each customer. Let’s say that a customer has three purchases with totals of $50, $80 and $20. This customer would have a CLV of $120. Customers with higher CLVs could be identified as more valuable.
2. Customer's Lifetime Number of Orders
This metric is also useful for knowing a customer’s value. This metric totals the number of times a customer has placed an order on your site—which can be used to quantify a customer's loyalty to your company.
3. Customer's Average Order Value (AOV)
Once you have the customer's lifetime number of orders, you can use it to find their average order value (AOV). AOV tracks the average dollar amount spent each time a customer places an order. To calculate a customer's average order value, simply divide the customer's total revenue by the number of orders. For example, let's say John Doe has a total revenue of $150 dollars over 5 orders. His AOV would equal $30.
4. Age of Customer's Most Recent Order
The fourth and final metric to use when uncovering your four-leaf clovers is the age of their most recent order. This calculates the amount of time that has passed since a customer has made a purchase. Let's say Jane Doe has a high CLV, but hasn't made a purchase since 2014. She may be high-performing, but she’s not really a current customer.
Actionable Steps to Retain Your Best Customers—and Find New Ones
Where your customers are coming from is as important as what they’re doing on your site. Your site analytics should give you data on the source of your customers, but you should also be tracking your marketing campaigns. Most social media channels also provide insights and can integrate with data analytics tools to tie behavior to individual customers. For example, the Magento Business Intelligence Facebook integration includes an entry for every campaign/set/ad combination for each day, along with statistics including KPIs such as impressions, clicks, cost, cost-per-click, cost-per-thousand, click-through-rate, reach, social reach, and spend. This can be used to find which campaigns are the biggest draw for your best customers.
The most popular ways we’ve seen Magento Business Intelligence users act on this are providing exclusive offers to their most valuable customers and investing in targeting similar shoppers. Providing exclusive offers like private sales, coupons, and other shopping opportunities is a great way to show your four-leaf clovers some love and keep them engaged as customers. Investing in targeting shoppers similar to your most valuable customers (e.g. with Google or Facebook campaigns) is a great way to focus your efforts on shoppers with the most potential. What business doesn’t want to acquire more four-leaf clovers?
By using data to create your own luck, your success will extend far beyond St. Patrick's Day!