How to calculate customer value?

Banned 9 years ago

Originally Posted by lunaBEAM

I'm not sure if I made the question clear enough...

Neither am I.

Are you asking as a vendor, or as an affiliate? (Not easy to tell, when you say "maybe makes a purchase or something"! What might the "something" be?).

Lifetime customer value, or lifetime subscriber value? You said "customer" in the title, but I'm guessing that you probably mean “subscriber”, really. And that way it’s totally my fault if I’ve guessed wrong.

Anyway, different people monitor this in very different ways, and you have a range of options open to you. It's good that you want to do it, anyway.

Which method of doing this will suit you best is likely to depend both on the niche (some, like "house-foreclosure avoidance", tend to be very fast-moving, others quite the opposite), the traffic demographics, and your own marketing methods.

One method that can work quite well is to monitor your total monthly income and compare it with the mid-month or month-end subscriber numbers, hoping eventually to work out an average figure of "income per subscriber per month". Many people use this or a variation of it. From that figure, and your average "length of subscription" figure, you can eventually estimate the "lifetime subscriber value".

I do it very differently, myself, using a parameter I haven't seen others discussing here. I try to monitor "the proportion of subscribers who buy one or more ClickBank products through my affiliate links at some point during the course of the email series they receive from me." It's considerably harder to measure reliably (I'm an affiliate, not a vendor), but it's also far more helpful and meaningful information to me, because - given my traffic demographics - it even has considerable cross-niche relevance, too.

Originally Posted by lunaBEAM

Can I use aweber?

"Aweber or GetResponse" is the realistic choice, for autoresponders. This thread will help you: http://www.warriorforum.com/email-ma...te-thread.html

Originally Posted by lunaBEAM

What tools should I use?

Now, you're really going to have to explain exactly what you're doing, for anyone to answer that one! Really, you may get more helpful and less confusing answers from others than from me, if you can give more information about exactly what you’re doing.

.

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salegurus

9 years ago

Just insert the variables yourself and voila...

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lunaBEAM

9 years ago

I'm asking as a vendor.

I see that others use InfusionSoft to get this data as it has more options than aweber.

What I'm asking is how do I figure out the customer lifespan and then the lifetime customer value from that because I can't see how I can do this in aweber even if I try to move buyers to a different list.

And I don't want to do it manually... taking each person one by one and such...

Thanks
3 replies

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VictorCognovit 9 years ago

I would imagine that as long as the customer doesn't ask for a refund, they saw value in it. What else do you mean by their value? Like seeing how many times they purchased, how often, and how much money they spent?
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LFGdating 9 years ago

This is the simplest way to do it IMO:

Create an excel spreadsheet, and export at least the following data form MySQL: user email address, last name, first name, and any other relevant columns you'd like to use.

This will essentially be a rolling roster of your users who have submitted their emails, and I personally would set the default value for those users who have only joined your list, but not bought anything at zero. From there it's pretty easy: I'm not sure what your pricing structure is like or if there are rebills built in and what not, but basically you can use the exported user data to plug in who bought, when, and for how much, and track it over time (one column = one month of the year, etc). From there the metrics you're looking to get are easy to run, and once you've got this setup you'll be set for good as all you have to do is export the new users from your database, and paste them into Excel.

Hope this helps!
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ACandi

9 years ago

Originally Posted by lunaBEAM

I'm asking as a vendor.

I see that others use InfusionSoft to get this data as it has more options than aweber.

What I'm asking is how do I figure out the customer lifespan and then the lifetime customer value from that because I can't see how I can do this in aweber even if I try to move buyers to a different list.

And I don't want to do it manually... taking each person one by one and such...

Hello lunaBEAM;

I know an internet marketer who uses InfusionSoft as a vendor, and from his comments on webinars it seems to be able to give him features that tracks customers in a number of different ways including long term; like years down the road.

One feature mentioned was the ability to separate leads from customers on different lists automatically when the lead becomes a customer. This feature also allows different followup messages to be sent.

Such a product I'm sure is expensive, but if you can afford it I think you'll get value for your money. You should find out from the vendors if it can do what you want before any purchase.

LB.

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KamesCG

9 years ago

You have 3 main variables when approaching a question like this.

Traffic Volume: How many people are you actually engaging?
Conversion Rate: How many people take an action?
Conversion Value: What's the returned value of each specific value?

Let's take an example as follows...

Traffic Volume = 100,000
Conversion Rate = 1%
Conversion Value= $3.00

First, we calculate the total actions possible using our current model, which is 1,000.

TrafficVolume x ConversionRate = totalActions

100,000 x 1% = 1,000

Second, we multiply our totalActions by Conversion Value.

totalActions x ConversionValue = CollectiveCustomerValue

1,000 x $3.00 = $3,000

ValueReturned = $3,000

The question boils down to how many actions are available to visitors and how much value you attribute to each action. It's super easy when a customer is purchasing a product with a monetary value, but it's gets more complicated when you attributing values to non-monetary actions (like sharing on Social Media).

These answers are not as complicated as some might lead you to believe

Essentially you want to use a basic formula like the one above and attribute value to every action you think is worth tracking. If it's not worth tracking it's probably not valuable.

You would run these calculations on each value and could ultimately add them up to get the answers you were looking for. I would totally recommend paying a developer $40 - $100 to build a simple calculator that would help you solve this problem much quicker.

Thanks

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lunaBEAM

9 years ago

LFGdating I'm looking for a way to not do this manually because if there are hundreds of people then this would be a gruesome task.

KamesCG - this is not my question

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1 reply

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KamesCG

9 years ago

Originally Posted by lunaBEAM

LFGdating I'm looking for a way to not do this manually because if there are hundreds of people then this would be a gruesome task.

KamesCG - this is not my question

Hmm... You are asking how Aweber can help you can track the value of your customer. It would appear to me you might have to ask a better question then, because you seem to be confused about what it is you are doing.

It sounds like you don't have any integrated systems: website, email, crm, etc... so ultimately there is nothing you can do, because you have no way of tracking anything tangible. Since, you have no tools, you probably have very little customers, which means the question really doesn't even matter.

Why do you think Aweber tracks sales across platforms (which I assume you are doing somehow), while also automatically keeping tabs on different event based actions to correlate value with a customer?

Have you connected it with any other online applications using the API?

How are you currently tracking customers?

Thanks

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lunaBEAM

9 years ago

whenever someone buys something I put them in one list, and when he buys something else I put them in a different list...
this is the only way I do it
but it does not calculate average customer value over the customer lifespan
I know aweber doesn't track sales, but it can do basic list segmentation functions...
albeit not very useful for my question... how do I get the customer value number...
so yes, I am asking for tools to do this...
I know infusionsoft can do this but it's quite expensive monthly
Do you understand my question? Based on your questions and answers it sounds like you don't know the answer either

Thanks
1 reply

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LFGdating

9 years ago

Originally Posted by lunaBEAM

whenever someone buys something I put them in one list, and when he buys something else I put them in a different list...
this is the only way I do it
but it does not calculate average customer value over the customer lifespan
I know aweber doesn't track sales, but it can do basic list segmentation functions...
albeit not very useful for my question... how do I get the customer value number...
so yes, I am asking for tools to do this...
I know infusionsoft can do this but it's quite expensive monthly
Do you understand my question? Based on your questions and answers it sounds like you don't know the answer either

I still stand by my approach: once you get it setup, it shouldn't take more than five to thirty minutes a day depending on how many transactions you're talking about because Excel will do all the calculations for you.

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Jason Moffatt

9 years ago

Calculate Your Customer Lifetime Value in 15 Seconds

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savidge4 9 years ago

the simple math? # of clients... gross # in sales ( $ ) and divide. this will give you your average client value.
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- lunaBEAM 9 years ago
  
  Originally Posted by savidge4
  
  the simple math? # of clients... gross # in sales ( $ ) and divide. this will give you your average client value.
  
  but this doesn't take in consideration the customer lifespan... someone might join the list just last month and someone else might be a subscriber for 6 months...
  
  Thanks
  
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BrianMcLeod

9 years ago

Check out Putler... seems like a perfect fit for you.

Insightful Business Analytics for Web Entrepreneurs - Putler

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robert johns

9 years ago

Zaxaa has an LCV report if you use them as your cart/affiliate management system. I have no skin in the game recommending them. Just another tool for you to consider if you're interested in LCV and profit predictions etc.

RJ

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TeKn1qu3z

9 years ago

It depends on each situation.

Depending on your company model, and pricing model, it all depends.

Basically just take your profit and subtract anything you used to get that 1 customer.
This can be fees, marketing, other expenses, etc.

Then factor in if you are doing re-bills, etc.

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tyronne78

9 years ago

Here is an epic post on the subject of customer value optimization:

Customer Value Optimization: How to Build an Unstoppable Business