There are two options for working with a customer. The first (CPO model): simply buy advertising, attract new customers
Make sales to them and repeat the cycle again (and we don’t care what happens to old customers). The second (LTV model): attract customers and work on their loyalty so that they return to the store in the future and make one, two or ten more purchases there.
That is, the first
option is pure mammoth hunting. The second is breeding domestic mammoths.
We want to tell you in more detail about the difference between cambodia phone number data these two models, which of them is more profitable
and a few simple techniques on how to make customers make repeat purchases.
How to tame a mammoth: why is it necessary
The current model for working with a customer for most e-commerce businesses: CPO (cost per order). The indicator is defined as the ratio of the cost of attracting a customer to the number of orders. And then they act like this: they calculate how much is spent on attracting a customer on average, calculate the average check for one purchase – and subtract one from the other. The result is profit from one client (or loss).
The advantage of this scheme is that it is simple. Even if you have no time to think about customer loyalty and returns, you can stay afloat at the expense of new customers.
Working to improve
the CPO indicator comes down to reducing the cost of attraction. That is, in fact, to finding new advertising channels, maintaining effective ones and eliminating the least effective ones.
Profit generation by LTV
However, this approach is good for a time. It is like with primitive hunting: people searched for and exterminated more and more new prey (CPO), until they realized that this very prey can be tamed and bred (LTV).
LTV (lifetime value) is the total profit from a buyer over his life cycle.
A noticeable trend in e-commerce in recent years: a shift in some of the most important link types focus from CPO to the LTV model.
Working with LTV: the subtle matter of loyalty
LTV is much less straightforward: you can’t just pour money into an advertising channel so that LTV grows on its own. Like CPO. Here, work is done with user loyalty: and this means balancing kuwait data between “being useful” and “not being intrusive”, generating not only discounts, but also unusual content. And with all this, do not forget about cold calculation.