A leading footwear brand used customer purchase data in partnership with an external data partner to identify high-lifetime-value customers and the attributes that made these customers different. The brand fed the intelligence into its demand management platform to target “look-alike” audiences, which significantly increased return on ad spend. The brand adapted its strategy to drive short- and long-term results using digital commerce.
Gartner’s CMO Spend survey data showed that senior management has heightened expectations for marketing teams to retain and grow the customer base. Long-lasting customer relationships can yield higher customer lifetime value (LTV) and greater shareholder value through increased purchase frequency, greater loyalty and retention.
“Marketing leaders with digital commerce responsibility are expected to grow online revenue, but they can make a greater impact by creating lasting relationships with high-value customers,” said Jennifer Polk, Gartner for Marketers research director.
Marketers should target growing customer LTV, designing and optimizing digital commerce experiences to grow customer profitability, and using digital commerce to support the full customer journey, often uncovering new revenue streams. To deliver on these goals, marketers need to fully understand the drivers and components of customer LTV.
Define and measure lifetime value to set a baseline
At a high level, LTV will be affected by three components — average profit per customer, active customers and churn rate — measured across the expected customer life cycle.