Lifetime Value for Brands

Philip Andersen

Chief Product Officer

Tuesday Tip

We recently published a blog post, which addresses the importance of Lifetime value (LTV or CLTV), the brand associated with your customers’ first purchase, and how understanding the link between the two can benefit your business. 

Good ecommerce business is all about repeat customers, as you typically don’t have the same acquisition costs for getting your customers back to buy more. Therefore, if you can see that LTV is higher when customers buy a certain brand the first time they place an order with you, you should focus on those brands when advertising on Facebook, Google Ads, social media, etc. 

This week we are focusing on the brands that create high LTV, as well as repeat customers for the Fashion, Pets, Outdoors and Electronics industries. If your business is a part of the mentioned sectors, we hope this information supplies you with valuable insights and a competitive edge.

A prelude to the industry trends figures:

  • LTV is the total value we see during the entirety of a customer’s relationship with a business, who also purchased the specific brand as their first order.
  • Median LTV indicates the typical LTV of the majority of the customers.
  • From Avg. is how the average value is compared to the average in the industry. It always refers to the column immediate to the left, namely, LTV or the No. of Orders.
  • No. of Orders is the (average) number of purchases that the same customer who first bought the specific brand does. If the value is 3, it means that the customer tends to come back and place 3 orders in total. 

When looking at LTV for certain brands, you can easily be enticed by the highest number, but more information might be hiding in plain sight. If you look at the table below for Fashion, you can see that Parajumpers has very high LTV, but a glance at the order count reveals that customers tend not to buy more than once. Moreover, although many of the Parajumpers products are priced well over 700
€, most of their customers will not convert more than 500€. This means that while the LTV for Parajumpers is high, you might not, depending on the margin, want to focus on this brand in your advertising.

The margin does play a big part. Even if e.g. LEGO holds the highest LTV for you, you might have a lower than the average margin, which may sabotage your efforts in promoting it.

Looking at the fashion industry, we recommend advertising brands from the list of “Brands with most returning customers” below, as they have an above average LTV and the most number of orders. In addition, we also specifically recommend Dea Kudibal for women dressing and Billi Bi for boots because they have the highest LTV and an above average number of orders. Some brands like Parajumpers and Bally are expensive, and while they have a high LTV, many customers never return.

Brands with highest LTV

Brands with most returning customers

For Pets, you will see that high ticket items for horses create a very high LTV, but the customers tend not to come back. So while the LTV is high, you will have much more repeat purchases for the smaller ticket items. We recommend looking into creating better retention for customers buying horse products and trying to upsell more expensive items for the smaller 4-legged pet owners (cats & dogs).

Brands with highest LTV

Brands with most returning customers

In electronics, there is typically a big difference between the margins of the products. While TVs and similar products are expensive, they usually have a low margin, whereas cheaper products such as cables have a higher margin. In general, the industry has a low return rate for customers – they buy once and then move on to the next shop. There are a lot of opportunities here to build a brand that customers come back to.

Brands with highest LTV

Brands with most returning customers

For the outdoor industry, there is a lot of variation in the brands to sell, and most perform quite similarly. Only brands like Alpina and Nalgene stick out. We suggest you focus on the LTV top list and, at the same time, focus your efforts on retention.

Brands with highest LTV

Brands with most returning customers

If you are interested in knowing what brands you should sell the most, then log into MyHelloRetail and take a look at the Insights functionality.

Want more data?

See our Audience solution

If you wish to see the LTV, Average order count and other metrics for a specific brand on your online store, remember that you can do so with our Audience solution by simply choosing the segment “Products bought the first time”.

Thank you!