chapter 6 : strategy 2

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2. Optimize for Lifetime Value (LTV)

The shopping cart experience provides a useful window into short-term optimizations vs. lifetime value. Take the customer that adds items to a shopping cart, leaves, then comes back and removes one (but not all) items.

A short-term optimization might be to tinker with some part of the user experience before and while customers interact with their cart to reduce cart abandonment rate, right?

Through the lens of LTV-oriented optimization, on the other hand, a retailer might see this behavior as a customer's commitment to exploring and purchasing the right mix of products – they're curating their cart to maximize customer satisfaction. This commitment might indicate a more valuable customer in the long term signaling an opportunity to offer or prompt the customer with a loyalty program.

A LTV optimization strategy for a successful ecommerce business will focus on what makes the high-value customers so unique. "It's all in the transaction data," says Hoyne. "It's what they're doing on your site and allowing the data to show you the behaviors of your high-value customers."

That's part one. Part two is how to act on these customer behavior insights. How can you promote the right products to an existing repeat customer (high-value) or engage with them differently? On the flip side, what if the entire customer experience is actually detracting from LTV?