calculating customer lifetime value: from analysis to loyalty

Calculating Customer Lifetime Value – From

Analysis to Loyalty

• Traffic acquisition• Sales targeting and

costing• Re-marketing efforts• Customer support focus• Product decision

making

Customer lifetime value sits at the center of every important business decision.

Roadmap

• Where to start understanding loyalty• How to perform basic cohort analysis• Simple ways to predict LTV better• Extensions and improvements to your model• Applications across the business• Q & A

Who We are

Al GhoraiVP of Finance, Planning and Analytics, thredUp

Colin Zima Chief Analytics Officer, Looker

About thredUp

thredUP is the nation’s leading (r)ecommerce marketplace for buying and selling the highest-quality used women’s and kids clothing.

We are reinventing the way consumers shed old clothing and shop for clothing online.

About Looker

Looker is a data exploration solution that operates in the database

to enable anyone across an organization to explore data in all its detail.

Some of Looker’s Customers

Understanding Customer Loyalty

Finding Deeper Loyalty Signals

thredUp Loyalty Signal

Womens Kids Mixed0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%2014 Users By Purchased Gender

More thredUp Loyalty Signals

LTV With Cohort Analysis

Is there implied future value?

Examining Trends in Cohorts

Engagement Metric

2012-02

2012-03

2012-04

2012-05

2012-06

2012-07

2012-08

2012-09

2012-10

2012-11

2012-12

2013-01

2013-02

2013-03

2013-04

2013-05

2013-06

2013-07

2013-08

2013-09

2013-10

2013-11

2013-12

2014-01

2014-02

2014-03

2014-04

2014-050%

10%20%30%40%50%60%70%80%90%

100%

Engagement Rates of Users with 2+ Purchases

julaug

2012-02

2012-03

2012-04

2012-05

2012-06

2012-07

2012-08

2012-09

2012-10

2012-11

2012-12

2013-01

2013-02

2013-03

2013-04

2013-05

2013-06

2013-07

2013-08

2013-09

2013-10

2013-11

2013-12

2014-01

2014-02

2014-03

2014-04

2014-05

2014-060

500

1000

1500

2000

2500

3000

3500

Engagement Profile by Cohort

DeadLostAt RiskEngagedUber Engaged

tU TV Campaign

pre campaign campaign0%

20%

40%

60%

80%

100%

120%

140%

160%

103%113%

Orders / User

controltarget

pre campaign campaign0%

20%40%60%80%

100%120%140%160%

104%

146%

Rev / User

controltarget

10% lift in order rate from users in campaign 40% lift in revenue over same campaign

Model Improvements

Controlling For Costs

Measure at the Widget Level

gross revenue $10.00 returns ($2.00)discounts ($1.00)other revenue $0.50

cash $7.50

material cogs $2.00 labor $1.50 other cogs $0.75

cogs $4.25

profit $3.25

Every point along the P&L is an opportunity to differentiate a user

Isn’t this the real measure of a customer?

Estimating Virality

When 100 customers is more than 100 customers

Why Does This All Matter?

• Driving users towards inflection points– How can product create “better” users

• Smarter marketing spend– What channels have the highest value users– What can we pay to re-engage a user

• Cultivating support for better users– Focus time on your most valuable customers

Questions

Looker.com/request-demo

See for yourself.Get a demo.

Thank YouAl Ghorai

al@thredup.com

Colin Zima colin@looker.com