Now, you’ve mentioned measuring, and this is a how to video – I’d like for us to share your knowledge on how you go about measuring lifetime value!
Yes, obviously a crucial KPI needs to be accurately measured. On a basic level, you just need a way of differentiating and identifying a specific customer. And then you need a method of identifying how much income you’re gaining from that unique customer over the course of their time being a customer with the brand.
That in and of itself though is quite a cumbersome task, to measure the lifetime value of every individual customer. So what brands usually do and what we recommend is that you use a methodology to get a more top-line view of your average lifetime value. And measure that in a way that allows you to determine how lifetime value varies depending on different variables of your strategy and your programme.
One of the most common, key and flexible ways of doing that is through measurement of lifetime value off the back of voucher codes. You can then determine kind of the lifetime value of any customer account associated with the redemption of a particular code. And that code is associated with a particular account ID and then you can aggregate the view of how much money you’re gaining from accounts with that one code. That then gives you an overall view of what lifetime value is.
But the use of the voucher code element of measuring lifetime value gives you that flexibility, because you can change up the use of those voucher codes depending on how you want to measure lifetime value. For example, you can determine which particular performance channels are driving the best levels of lifetime value by allocating uniquely identifying codes per channel. Then you’ve got a view per channel of which channel is technically the most profitable based on lifetime value metric.
You also have the flexibility of allocating specific voucher codes to specific partners that you’re working with, and then that allows you to measure the lifetime value driven from particular partners that you have on board as well. That allows you to make decisions on which partners you want to optimise with and work with more, because they’re driving more valuable customers from your side.
I think most crucially, with the voucher code methods, it allows you to determine the lifetime value of the promotions that you’re putting into their space. So, a particular code obviously is associated with a particular offer. And if you’re measuring the lifetime value of the code, you’re measuring the lifetime value of the offer that you bring to customers as well. That means you can be a lot more flexible in your offer strategy within the programme.