April 24, 2023

Many Items or Fewer Items: The $100 Question

Yesterday I illustrated an example of a newly acquired customer in August - the customer spent $100 on three items.

The customer is valuable - worth $81.18 in the next year.

Let's experiment a bit ... instead of the customer buying three items at $33.33 each, how about we see what happens if the customer bought one item at $100.00.

This customer is worth less ... $76.96 in the next year. The difference happens within rebuy rates ... 43.9% for the customer buying three items in a first order, 41.6% for the customer buying just one item at $100. Remember - the AOV is the same, but the presence of multiple items in the order yield a customer with better future value.

In most of my projects, it is better to encourage a customer to buy more items in a first order, given a comparable AOV.

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