Incremental Value

Let's say I want to move 13-24 month 1x buyers to a second purchase.

How much might I be able to spend to make this happen?

In our table, the average 13-24 month 1x buyer is worth about $13.50.

In our table, the average 0-12 month 2x buyer is worth about $71.65.

Intuitively, you might say that you gain $58 of value, so you can spend a fortune.


There are two things we need to know.
  • Actual repurchase rate of 13-24 month 1x buyers.
  • Incremental percentage that we will convert with incremental marketing activities.
  • Percentage of demand that flows-through to profit.
Let's pretend that the annual repurchase rate of 13-24 month 1x buyers is 10%. Let's also pretend that we can increase the 10% annual repurchase rate to 12% by performing various marketing activities. Finally, let's assume that 35% of demand flows-through to profit. We now have the pieces necessary to determine how much we can invest.

Look at the "Marketing Cost" line ... you could invest an additional $0.77 per customer, and if you can achieve a 20% increase in repurchase rate, the math yields more profit.

This is how a modern marketer can leverage lifetime value style metrics to improve business performance. In our example (assuming that we can truly get a 20% increase in repurchase rates by marketing more to a customer), we are able to grow the active 2x buyer file - and that's a good thing, right? These customers will spend a ton of demand next year.

Have your analytics team run this analysis for you today. If they cannot run the analysis for you, contact me (, and I'll gladly do it for you.