What are the two most important KPIs in B2C e-commerce business? Here is the answer.

1. ©DanielAttallah
Perhaps the 2 most
important KPIs in e-
commerce.

2. ©DanielAttallah
are
Customer Aquisition Costs
CAC
and
Customer Lifetime Value
CLV

3. ©DanielAttallah
CAC & CLV are key to any business model
● CAC are the total cost of acquiring a new
customer.
● CLV is the margin or value (rev-cog) you
make with this customer within its lifetime.
● If CLV is bigger than CAC within an
acceptable time period, you’re fine, if CAC
is bigger than CLV you are in trouble.

4. ©DanielAttallah
There are literally 3 CAC varieties.
● CAC 1 (most common one to calculate ROMI > Return of Marketing Investment)
○ Total cost of marketing & sales divided by total
number of new customers for given period.
● CAC 2 (good choice if you have high HR costs, e.g. sales devision)
○ Total cost of marketing, sales & corresponding HR
cost divided by total number of new customers.
● CAC 3 (good to know)
○ Total cost (marketing, HR, IT and all other costs)
divided by total number of new customers.

5. ©DanielAttallah
More CAC varieties.
● If you dig deeper or if your CA-Sources become more
and more complex you might want to know your CAC
for all your customer sources (e.g. CAC4SEO, CAC4
SEA, CAC4Display, CAC4all online, CAC4offline
activities if traceable, etc.).
● If you can also calculate the corresponding lifetime
value for those specific customer groups you will reach
an unbeatable USP to those who do not know where to
find the most valuable/profitable customers.

6. ©DanielAttallah
Customer Lifetime Value (CLV).
sometimes also Livetime Value (LTV)
○ is typically total gross margin you generate in the
entire lifetime of your average customer
○ you may also deduct SG&A (sale, general &
administrative expenses) what brings you even
closer to the question if you can make real profits
from your average customer.

7. ©DanielAttallah
How to calculate the lifetime?
The lifetime of a customer may be difficult to
calculate, the most common one is based on
churn rate in consumer businesses
○ Churn rate is the percentage of customers leaving
your company in a given time period.
○ If your churn rate is 20% your average customer life
time is 5 years. If it is 25% its 4 years, etc.

8. ©DanielAttallah
CLV
Customer Lifetime Value
○ Example 1
■ 35$ monthly spent
■ 50% gross margin
■ 4% monthly churn
■ 35 x 50% / 4% = 437,50$
○ Example 2
■ 33$ average basket value, 1,75 average orders per customer per year
■ 50% gross margin
■ 50% yearly churn
■ 33 x 2,3 x 50% / 40% = 94,88 €

9. ©DanielAttallah
CAC to CLV
Some StartUps may be to optimistic...
Cost to acquire
a customer.
(CAC)
Money you
earn with this
customer
(CLV)

10. ©DanielAttallah
CAC to CLV
What you need is the opposite
Cost to acquire
a customer.
(CAC)
Money you
earn with this
customer
(CLV)

11. ©DanielAttallah
This drives CAC & CLV
long sales cycle
field sales
bad conversion
expensive adwords
outbound marketing
repeat orders
broad product offers
cross & up selling
strong brand (higher price)
customer involvement
customer satisfaction
loyalty programs
high churn rates
poor service
high discounts & promotions
bad UX
inbound marketing
viral effects
easy conversions
partnerships
positive communication / PR
long tail, low cost adwords
good UX
CAC (cost) CLV (value)
Up
Down

12. ©DanielAttallah
You can’t manage what you don’t measure
Most important metrics
○ Traffic and cost of traffic
○ conversion in customer journey on your site
○ repeat customers / churn rate
○ average basket size
○ # orders per month / year per customer
○ return-rates & complaints

13. ©DanielAttallah
Optimize CAC
Traffic
○ continuously look for alternative and cheaper traffic sources
Conversion Rates
○ dig into all details of your customers journey on your site and eliminate pain points
○ make it as easy as possible and answer the questions your customers have
Basket Size
○ find ways to up & cross sell without bothering your customers
Returns
○ find ways to reduce returns and increase customer satisfaction

14. ©DanielAttallah
Most common mistakes for poor conversion
● Wrong expectation for visit (wrong
keyword)
● No clear call for (next) action
● Poor usability / design
● Too much / too little information
● No trust / no benefits
● No support
● To pushy (hard selling)

15. ©DanielAttallah
Optimize CLV
Understand your Customers
○ get into the heads of your customers and understand their motivation & needs (personas)
Broaden your product line
○ find additional products your customers might also buy from you
Communicate & Drive Involvement
○ talk to your customers, find ways to reach them without bothering them
○ segment your customers and talk to them differently (personas)
○ provide additional services/content to drive brand involvement
○ launch and maintain a good loyalty program

16. ©DanielAttallah
Personas help to understand Customers
Segment your customers and name them
○ Mother Cindy, Creative Mary, Professional George, Business Jane...
Characterize your Personas
○ Age, kids, income, family status, surrounding…
○ Hobbies, likes, dislikes...
○ Motivation / Concerns to buy your products.
○ How do they use the internet / your products?
○ Which product do they prefer?
○ Why do they buy your product?
○ What do the expect from your brand?
○ ...

17. ©DanielAttallah
Most common mistakes for poor response in
email marketing
● Too much / too little communication
● No value in communication
● Wrong approach to customer need
● Bad subject line / head line
● To long, to short or irrelevant content
● No clear action
● Wrong timing

18. ©DanielAttallah
Quote from Aristotle
We are what we repeatedly do.
Therefore
Excellence
is not an act
but a habit.

19. ©DanielAttallah
Q & A
Daniel Attallah
Founder & CEO Pixum
da@pixum.com
fb.com/attallah.de
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