eCommerce

Yes, it's time to STOP focusing on sales. Here's why…

February 25, 2021
 by 
Richard Emanuel
 • 
4
 min to read

Whenever we hear about a large, growing company on the news, one number that’s often thrown around is the total sales that the company made that year.

Which makes sense. It’s a quick way to immediately get people to pay attention. If you heard that company X made over $3bn dollars in sales last year — and during a pandemic, too! — wouldn’t you want to figure out how they pulled it off?

Of course you would!

However, the problem with measuring your success primarily in sales, is you’re taking a very short-term view of your company’s growth. Over time, you may also find yourself focusing on the wrong things, working with a kind of tunnel vision where your sole focus is getting new customers to buy what you’re selling.

We’d like to encourage you to break that habit.

Instead, start thinking more about selling to the same customer, a second time. That is, taking a strategic approach to increasing repeat purchases versus simply reaching more customers overall. You’ll find that in the long run, this by far the better strategy. Here’s why…

Think beyond the first purchase

It’s easy to feel like the only way you’ll sell more product, is if you can reach more customers. 

This is often the motivation behind all kinds of business moves— selling in a new market, relaunching a product, increasing ad spend, etc.

What’s hard, is thinking beyond the first purchase.

This means putting yourself in your customer’s shoes, understanding what their needs are, and working hard to consistently provide more value over time. The key word there being “consistently”.

If you can make this shift in thinking, if you can start prioritizing value over time versus at point-of-purchase, you’ll find the entire direction of your growth efforts changing. You’ll work harder to improve post-purchase support, encourage repeat purchases, or come up with new, complementary products for your existing customers. Your marketing will shift from large, untested audiences, to retargeting campaigns.

But more importantly, your entire company will suddenly be on track to quickly improving your Customer Lifetime Value (CLTV). Which, when you get right down to it, is perhaps the single most important metric to focus on in your company.

Start tracking the right metrics

What’s the number one thing your company tracks, focuses on, and seeks to improve year over year? Is it total sales? Net profit after tax?

Or, have you read our blog before and now seek to actively track and improve your Customer Lifetime Value (CLTV) as much as possible? We really hope it’s the latter.

CLTV is a metric that you hear about a lot in eCommerce. And for good reason. In a nutshell, CLTV is a measurement of how much you sell, how many times you continue to sell it, and for how long. Or, as it’s often put:

Lifetime Value equals Average Value of Sales Times Number of Transactions Times Retention Period


It’s a famous formula because it’s simple. What’s more, it’s one of the few metrics that takes retention into account. And that’s also why focusing on your CLTV can be so much more powerful than fixating on total sales.

In fact, we might go so far as to say, if you had to pick one place to focus your time and efforts, work on retention. For most eCommerce brands, it’s easily the most profitable place to invest energy. Let us explain…

When in doubt, work on retention

New customers are expensive. That’s a lot of marketing, a lot of education, a lot of gentle prodding and pushing until they finally add something to their cart. It’s hard to get a single number, but if you look around you’ll find that selling to new customers costs more than five to twenty-five times the cost of selling to an existing customer.

Even at the low end of that figure, it’s still a huge, expensive difference.

With a repeat customer, that money has already been invested. They’re already a part of your world. They already trusted you enough to make a purchase. You’re already providing value to them in some way.

Your next challenge is, how can you continue to do all of that… for as long as possible?

The, “for as long as possible” part is where retention comes in. It’s the key to increasing your customer Lifetime Value, growing your company, and making the absolute most of every dollar you spend acquiring new customers.

Retention is why Uber refunds disgruntled customers immediately, with no questions asked, instead of dragging them through a difficult return process. It’s why IKEA will give you free replacements if you lose any nuts and bolts in your furniture. It’s why so many SaaS businesses work hard to provide an outstanding onboarding experience well after they’ve already signed a customer.

They’re not trying to make the first sale, they’re trying to make a lifetime of sales. They’ve stopped focusing on point-of-purchase, and started focusing on what truly matters—Customer Lifetime Value.

Where could you change your eCommerce business and quickly improve your Customer Lifetime Value?

We’d be happy to help you find out.


Richard Emanuel
Rich, the CEO of Parkfield, is a direct marketing pro with a decade of experience helping companies build, grow, and re-imagine their businesses. Rich focuses on using data and technology to create marketing solutions that capitalize on business opportunities and drive growth.
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