December 06, 2023

Life Stages of an Item

You'll constantly hear about Customer Lifetime Value (CLV or LTV or whatever third parties want to call it). Customers go through different life stages ... from new to loyal to disinterested. Lifetime Value measures the future potential of a customer based on life stage.

Your merchandise goes through the exact same process. When you have a winning item, one customers love, the item has future value, just like a customer has future value.  Call it Merchandise Lifetime Value ... MLV!

Here are winning items from a brand from five years ago. Look at the sales from these items in subsequent years.

• Year 5 = \$5.4 million.
• Year 4 = \$5.8 million.
• Year 3 = \$4.9 million.
• Year 2 = \$3.7 million.
• Year 1 = \$2.3 million.

You can argue that in the next four years winning items have a MLV of \$16.4 million.

Each winning item has it's own trajectory. Own life stages. Here's an item that is dying. It was a winner five years ago. In the information below, I measure demand per thousand annual customers.
• Year 5 = \$382.
• Year 4 = \$248.
• Year 3 = \$72.
• Year 2 = \$43.
• Year 1 = \$20.

Four years ago your merchandising team should have seen the writing on the wall, searching for a replacement item.

Other winning items have different trajectories. Again, I'm reporting demand per thousand annual customers.

• Year 5 = \$398.
• Year 4 = \$405.
• Year 3 = \$336.
• Year 2 = \$332.
• Year 1 = \$462.

You'd craft entire merchandising stories around this item ... it is showing no signs of weakness. This item is in the prime of it's life. This item is printing profit for your brand.

Know the life stage of each item you sell. This style of marketing is the complete opposite of HURRY TODAY, 70% OFF EVERYTHING! This is hard work, but it protects the future health of your business.

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