The Most Important Customer Metric of All Time

July 18, 2019

Corey Talking to a Camera About The Most Important Customer Metric of All Time

Featuring Corey Pierson, CEO and Cofounder of Custora


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If you care about driving loyalty, it's like anything in your organization, anything that you want someone to improve in your company, you need a metric for it. You are what you measure. 

Often, the case will be, we'll talk to a CMO, say, "Hey, what's your lifetime value?" They’ll give us a stat of what the average customer in their database spent last year.

That's not lifetime value. That's, I've got 30 million customers in my database, maybe, a small percentage of them bought something and the ones that bought spent this much.

Lifetime value is different. Lifetime value tracks when I have a new customer, how much do they spend over time? How much they spend in their first year? In their second year? In their third year? 

Or, if I look at all my customers in my database right now, forward-looking, "How many are going to spend between 100 and 200 bucks next year? 200 and 1,000? How many spend nothing this year?"

These are all concepts related to the theme of lifetime value but the central unit is how much customers, whether they're existing or new, are going to spend at your business over time? 

Without fail in every brand we work with, the top 10% of customers, the 10% of the biggest spenders, the highest lifetime value customers, can spend anywhere, it can drive anywhere between 50 and 70% of revenue, for the whole company. They are the gold, they are the cream of the crop that can drive growth in the business. 

So lifetime value is the metric that enables you to operationalize activities around getting more of those customers.

If I can, through a collection of activities across my organization, make it so now there's 11% of those all-stars, instead of 10%, I added 5 points of revenue to the business. That's a shit-ton of revenue, it's a lot. Think about that, how many little conversion widgets? How many investments are you going to make? How many improvements to the creative are you going to do that are going to move the needle? There are some.

Five points of revenue and is achievable but it all starts with having a real focus, a laser focus on a metric, a lifetime value metric and using it to organize cross-team functions, all kinds of campaigns around that goal but the opportunities are so large when these brands do that.

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