Originally published on February 4, 2021, updated May 24, 2023
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Do you know how to calculate your customer lifetime value on Amazon? Or, what Amazon programs can help increase your average order frequency (AOF) and average order value (AOV)?
Ryan Flannagan, Founder and CEO of Nuanced Media, explains several ways to increase your customer lifetime value on Amazon in this educational webinar.
Watch the webinar and learn how to:
You can watch the webinar above or check out the show notes below for the recap and a full transcript.
Do you know how to calculate your customer lifetime value on Amazon? Ryan Flannagan, Founder and CEO of Nuanced Media, explains strategies to increase your Amazon customer lifetime value in this webinar.
Before you get started, be sure to check out (and bookmark!) Nuanced Media's customer lifetime value calculator. At the bottom of the page, you can even request to have the Nuanced Media team provide you with a more advanced and precise calculation. Now, let’s recap some of the highlights from this fantastic webinar!
According to Flannagan, “Lifetime value (LTV or CLTV) is the amount of money a customer will spend with you until they die, or you go out of business.” It can be measured for one person or a group and is found by multiplying the Average Order Value (AOV) and the Average Purchase Frequency (APF).
Every company will use LTV differently depending on where they place their emphasis. Some will focus more on Average Order Value, while others will place a greater importance on Average Purchase Frequency. Ultimately, as a business owner, you’ll have to figure out what’s best for you.
Need some examples? If you’re basing your LTV on Average Order Value, you’ll be looking at typical one-time purchases. Amazon is filled with small catalog brands that would focus on this metric! If you’re basing your LTV on Average Purchase Frequency, you’d look at typical customer purchases that are made more than once. These orders would include things like supplements, razors, and food items.
Whether you’re new to the marketplace or have years of experience, you should always be looking for ways to increase your Amazon customer lifetime value. Your strategy, of course, will depend on a few key factors.
Flannagan encourages Amazon sellers to understand their product catalog. “Are you the type of brand that has the high frequency purchase rate? Or are you the type of brand that has a larger catalog and maybe people are doing a lot of one-offs, so there's more of a cross-sell and upsell opportunity? Maybe you're a hybrid of the two.”
In the webinar, Flannagan dives into multiple ways to increase your LTV, including the Amazon Storefront (which can convert at 13% or even higher) and Amazon A+ content (otherwise known as Enhanced Brand Content). Through these options, the opportunities to upsell and cross-sell are much higher, giving you more opportunities to attract and retain loyal customers.
He also discussed the benefits that come from Brand Registry. “Amazon really unlocks a lot of additional capabilities… so getting your trademark is really important. If you don’t have a trademark, I highly recommend IP Accelerator. The key to these strategies is having Brand Registry, or you will not be able to attempt the Storefront or the A+ content.”
Are you an Average Order Frequency brand? If you haven’t already, you might want to sign up for Subscribe & Save! This Amazon program allows customers to set up automatically recurring purchases, so that they don’t forget or run out of the things they use in their everyday lives.
“The razor blades, the supplements, the vitamins, the food products, all these other elements... this is a great way to get repeat purchases,” Ryan explains. Through a separate dashboard on the back end, sellers can track these metrics, create goals, and make targeted efforts to increase the number of people signing up for Subscribe & Save.
In recent years, Amazon has rolled out a demand-side platform, or DSP. While it’s relatively new, sellers can work with select agencies, such as Nuanced Media, that can serve DSP to their clients, or they can work directly with Amazon. In the webinar, Flannagan provides a great overview of how everything works.
Overall, DSP allows sellers to retarget customers who have advanced targeting, attribution, and cross-sell capabilities both on and off-platform. As Flannagan said, “So you're not just restricted to advertising on Amazon, but you get the 250 top publishers and then you get a full, larger exchange too...That's really the capability with Amazon DSP for increasing your lifetime value on Amazon.”
Amazon is evolving and growing more sophisticated every day. Are you actively finding ways to remain competitive and profitable? If you’re ready to take the steps to secure your place on the marketplace and build your brand, you don’t want to miss this webinar!
Originally published on February 4, 2021, updated May 24, 2023
This post is accurate as of the date of publication. Some features and information may have changed due to product updates or Amazon policy changes.
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