Lifetime Value Online?Written by David Bell
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Many online businesses find themselves in serious trouble when they acquire customers based on a lifetime value calculation that simply never materializes as their customers click away to latest deal of day. In "Big Time Banner Advertising," it is recommended that a cost-per-order target be used instead of lifetime value. A cost-per-order or CPO target simply allows you to treat each order as a one-time event. By setting a CPO target, there is no guesswork as to what a customer may be worth to you in future - you know exactly what customers are worth on a per-order basis. For example, based on your product margins and average order size, you may determine that $5 is most you can pay for each order while still meeting your business objectives. This number becomes CPO target for your marketing efforts. Marketing efforts that achieve this target CPO or better are "keepers" while those that don't get killed. A banner ad that costs $1000 and drives 250 orders is a keeper. A newsletter ad that costs $100 and drives 5 orders doesn't get renewed. By using CPO targets, you are relying less on "what may be" and relying more on "what is" to make your marketing and advertising efforts more efficient, effective, and profitable. I hope this helps in your future marketing decisions.
David Bell is Manager, Online Marketing, at http://www.wspromotion.com/ , a leading Search Engine Optimization services firm and Advertising Agency.
| | About Your Work Written by Nan S. Russell
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When I was a freshman at Stanford, I got a D in biology. Stanford graded on a bell-curve, so an 84% that might traditionally put me in a B category, was near class bottom. Accustomed to A’s, first quarter grades woke me up. At first, I rationalized a D at Stanford was an A or a B at most any other school. But, reality prevailed. I wasn’t at another school. If I was going to compete at school I was at, it was time to use more than high school skills to bring results. Are you applying yourself? Are you as good as you could be to get raise, promotion, or more interesting work? If these are things you want, don’t suffer from AIS. Give yourself some Simon-esk feedback. Ego aside. A Simon-esk answer to questions, "how good are you?” and "are you in right field?” offers you a chance at becoming happier and more successful at working. The answers give you choices: you can stay course; find a playing field at your skill level; improve your skills to compete where you are; or change directions. (c) 2004 Nan S. Russell. All rights reserved.
Sign up to receive Nan’s free eColumn,, Winning at Working, at http://www.winningatworking.com. Nan Russell has spent over twenty years in management, most recently with QVC as a Vice President. Currently working on her first book, Nan is a writer, columnist, small business owner, and instructor.
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