Expected Lifetime Value Analysis
Forecasting the lifetime value of customers as they place more orders is one of the most important aspects of any business of any size.
Below are the steps to create analyses to understand your current customers’ lifetime value and forecast how lifetime value increases with more orders.
Building a Metric
The first step is to construct a new metric with the following steps:
-
Navigate to Manage Data > Metrics
- View the existing Avg lifetime revenue.
note note NOTE The table this metric is constructed on (probably customer_entity
orsales_order
depending on your store’s ability to accept guest checkout.).-
Click Create New Metric and select the table from above.
-
This metric performs a Median on the
Customer's lifetime revenue
column, ordered bycreated_at
.- Filters:
- Add the
Customers we count (Saved Filter Set)
(orRegistered accounts we count
)
- Add the
- Filters:
-
Give the metric a name, such as
Median lifetime revenue
.
Creating your Dashboard
Once the metric has been created, you can create a dashboard by doing this:
-
Navigate to Dashboards > Dashboard Options > Create New Dashboard.
-
Give the dashboard a name such as
Expected LTV
. -
This is where you create and add all the reports.
Building Reports
All-time
. Feel free to alter this to suit your analysis needs. Adobe recommends all reports on this dashboard cover the same time period, such as All time
, Year-to-date
, or Last 365 days
.-
Average LTV (all)
- Metric:
Avg lifetime revenue
- Time period:
All time
- Interval:
None
- Chart Type:
Number (scalar)
- Metric:
-
Average LTV (customers / non-guest checkout)
-
Metric:
Avg lifetime revenue
-
Add filters:
- [
A
]Customer's group code
Not Equal ToNot Logged In
- [
B
]Customer's lifetime number of orders
Greater Than0
- [
-
-
Time period:
All time
-
Interval:
None
-
Chart Type:
Number (scalar)
-
-
Average and Median LTV
- Metric
1
:Avg lifetime revenue
- Metric
2
:Median lifetime revenue
- Time period:
All time
- Interval:
By Month
- Chart Type:
Line
- Uncheck
Multiple Y-Axes
- Metric
-
LTV by lifetime number of orders
- Metric
1
:Avg lifetime revenue
- Metric
2
:New customers
- Time period:
All time
- Interval:
None
- Group by:
Customer's lifetime number of orders
- Chart Type:
Line
note note NOTE Do not add all of the values for Customer's lifetime number of orders
. Instead, look at a point where the number of New Customers reaches a small number and manually add each Customer’s lifetime number of order value to that point. For instance, if there are 200 customers at one order, 75 at two, 15 at three, and 3 at four, add 1, 2, and 3. - Metric
-
Add the existing Avg customer lifetime revenue by cohort report.
After building the reports, refer to the image at the top of this topic for how you can organize the reports on your dashboard.