The Lifetime Value, Retention Rate, and RFM dashboard gives you an overview of key lifetime value and retention metrics. Getting insights into customer behavior both at an aggregate level, as well as having your customer base segmented out by potential determinants of customer loyalty and lifetime, allows you to focus your energies on nurturing relationships with customers that stand to provide the most value to your brand.
The LTV Dashboard has two sections:
- Lifetime Value and Repurchase Metrics
- RFM: Recency, Frequency, Monetary
Lifetime Value and Repurchase Metrics
The top row of this dashboard (below) shows key statistics related to the size and health of your customer base. This includes total emails acquired (via Shopify), the number of customers who have ever purchased, customers who have purchased in the last 12 months, and the % of customers who purchased in the last 12 months.
Shopify considers an email a "customer", but we find this to be confusing if there has not been a purchase.
Total customers ever purchased/active customers includes only valid orders. Read more on valid orders here.
The first charts shows the average customer lifetime value (LTV) and repurchase rate by a customer’s “Time on Books” (TOB). The TOB metric represents how long an individual has been a customer. For example, on the day your customer made their first purchase, their TOB equals 0. The next 30 days following that, that customer’s TOB is equal to 1. TOB 2 represents the 60 days following their first purchase, and so on. This allows you to assess your entire customer base through the course of their customer journey, regardless of when they first became your customer.
Lifetime Value ( LTV ) is a running total of your average Gross Margin per customer, which equals (Product sales revenue - Product costs) / Total Customers, by TOB. TOB 1 includes the Gross Margin for every customer who has reached TOB 1, regardless if they became a customer 1 month ago or 2 years ago.
The bar charts in the center display LTV and Repurchase Rate at key customer milestone since acquisition. 12 and 24-month LTV are common timeframes to reference.
The chart to the right contains all TOBs (months).
Repurchase rate only shows the likelihood of a customer’s second purchase, it doesn’t capture subsequent purchases after the second
The next graphs represent LTV and Repurchase Rates by two very common questions Daasity receives from merchants:
- By Marketing Channel in which Customer was acquired. This is based on your unique rules entered into Channel Mapping in your Brand Data sheet
- By First SKU purchased. Keep in mind that customers can purchase multiple SKUs in their first purchase.
By First Order Channel
Knowing which marketing channels are bringing you the most valuable customers is vital information to better inform your acquisition strategy.
By First Order SKU
These tiles show the lifetime value (Gross Margin per Customer cohort) and the Repurchase percentage cohorts based on the first SKU the customers purchased. These tiles help identify the most valuable SKUs to advertise to potential/new customers.
Layer Cake Graph
The “layer cake” graph displays sales by quarter of acquisition cohort. This graph places a customer into a cohort according to the quarter in which they made their first purchase, and then stacks those cohorts on top of each other using an area graph. Each cohort creates a "layer" of revenue, with the goal being to have a balance of revenue from new customers and those acquired in prior quarters/years.
The large peaks are from newly acquired customers, and then those peaks drop off to be thinner layers each subsequent quarter as a portion of those customers come back and produce additional sales.
RFM: Recency, Frequency, Monetary
The final section is Recency, Frequency, Monetary (RFM); the traditional database marketing approach to customer segmentation and scoring. The three donut charts below that show the percentage of your customer base falling into each of your recency, frequency, and monetary segments. The lower visualization shows Average Gross Margin per Customer by RFM decile. The RFM decile places each customers into 1 of 10 segments based on their RFM score, which takes into account the recency, frequency, and amount of a customer’s lifetime purchase history.
Read more about RFM here.