Lifetime Value (LTV) in MerchantSpring

Understand how MerchantSpring approaches LTV metrics and how it differentiates from other tools in the market.

Why is LTV an Important Metric?

Lifetime Value (LTV) is crucial because it provides a comprehensive view of the total value a customer brings to a brand over their entire relationship. With rising advertising costs, especially for products that lead to repeat purchases, LTV allows businesses to compare customer acquisition costs against their long-term value, offering a more strategic perspective than focusing solely on the initial purchase.

How Do You Calculate LTV?

MerchantSpring calculates LTV metrics using your raw order data. Customers are identified by unique identifiers, such as email addresses or masked emails and are grouped into cohorts based on their first purchase date. We analyze these cohorts by calculating the total revenue generated and dividing it by the number of unique customers in each cohort. The more data you have in MerchantSpring, the more accurate the LTV calculations, as we utilize all available data for these metrics.

What Makes MerchantSpring Different from Other LTV Tools?

MerchantSpring stands out due to several key features:

1. Comprehensive Order Inclusion: We include both FBA (Fulfillment by Amazon) and FBM (Fulfillment by Merchant) orders across all channels, not just Amazon but also Walmart, Shopify, eBay, etc.
2. Granular Time Periods: Unlike most tools that provide monthly cohorts, MerchantSpring allows you to drill down to daily cohorts. This flexibility enables precise LTV determinations for customers acquired during specific events like Prime Day.

How Long Does It Take for Customer LTV Metrics to Become Available in My Account?

LTV metrics are calculated as historical data is synced to MerchantSpring. Because these calculations rely on unique customer identifiers, existing customers may need to refresh some of their data to ensure completeness. This process might take some time and typically happens in stages. For new customers, LTV metrics will be available almost instantaneously. For specific timelines, please contact your Client Success team member.

Will Lifetime Value Metrics Be Available During My Trial?

During the trial period, you can evaluate the reporting and interface, but the LTV metrics will not be fully accurate due to the typical 90-day data history restriction. Accurate LTV metrics become available once you activate your plan, become a paid customer, and MerchantSpring syncs all your historical data.

Will LTV Metrics Be Available for Walmart?

Walmart Marketplace provides limited access to historical data, initially restricting our ability to retrieve extensive order histories. However, as you build up a greater dataset over time in MerchantSpring, the accuracy and comprehensiveness of LTV metrics for Walmart will improve.

How Do I Change the Granularity of My Customer Cohorts?

You can adjust the granularity of customer cohorts using the chart interval selector in the Time Selector at the top right of the screen. Changing the chart interval will not only modify the length of the customer cohorts on the chart but also split the cohorts in the detailed table below for greater granularity.

 

GLOSSARY

 

Average LTV

Average Life Time Value. The total sales per customer over their lifetime. 

Average Repeat LTV

The total sales per customer over their lifetime for customers who have made multiple purchases. 

CAC

Customer Acquisition Cost. The total advertising spend incurred during the time period divided by the number of new customers during that period.

Cohort

A group of customers who made their first purchase within the same time period selected. 

LTV:CAC Ratio

Lifetime value to customer acquisition cost ratio. The ratio of the value each customer brings relative to the advertising cost spent to acquire that customer.

New Customers

The number of unique customers that made a purchase for the first time during time period selected.

Repeat Customers

The number of unique customers that made a subsequent purchase during the time period selected.