In our January series of blog posts, we’ll be exploring how you can use various data techniques to support you in that work.  

In the first of this series, we’re exploring Customer Lifetime Value (LTV) and why it is critical for businesses aiming to maximise their return on investment (ROI), improve customer retention, and fuel data-driven marketing strategies.  

What is Customer Lifetime Value and why does it matter for your business?

LTV estimates the total revenue a business can expect from a customer over the course of their relationship. It's a forward-looking metric that aims to improve profitability and loyalty from the customer base.  

• Identify high-value customers: Focus your marketing & data activation efforts on the customers who bring the most long-term value to your business.

• Improve retention strategies: Use insights into repeat purchase rates and customer behaviour to create targeted retention campaigns that reduce churn.

• Boost ROI: By aligning marketing spend with high-value customer acquisition, you’ll see higher profit margins and long-term growth.

• Optimise Customer Acquisition: Determine which products, categories or campaigns attract customers with the highest lifetime value.

Calculating and reporting on LTV is often one of the hardest challenges for companies. From managing massive datasets, to aligning acquisition costs with customer spending patterns, most businesses struggle to move beyond basic tools like Excel.  

Why reporting on Customer Lifetime Value is so challenging:

1. Processing large volumes of Customer data

Calculating LTV requires analysing detailed data for every individual customer, including their spending patterns, refunds and lifetime purchases. Handling this volume of data is resource-intensive and demands sophisticated processing capabilities beyond traditional tools like Excel.  

2. Integrating Data from Multiple Sources

To get a complete picture of LTV, businesses must combine data from disparate sources, including:

• Marketing spend to calculate Customer Acquisition Cost (CAC).

• Customer purchase history, including products, tax, shipping and refunds.

• Demographic and behavioural data for customer segmentation.

Without seamless integration, these insights remain fragmented and ineffective

3. Visualising Trends Across Cohorts and Categories

Businesses need actionable insights, not just raw data. This requires tools that can:

• Track LTV trends across customer cohorts (e.g., by the month or year of acquisition).

• Analyse performance across product categories, brands or campaigns.

• Deliver insights across varying timeframes to support long-term strategy.

Without intuitive visualisation, even the best data can feel inaccessible and make it even harder to find the right strategy.

That’s where tools like The Data Refinery really come into their own. Advanced analytics platforms like ours solve these processing and visualisation challenges, enabling users to unlock actionable insights into customer behaviour and optimise their acquisition and retention strategies.

How does The Data Refinery help clients understand their LTV insights?

At The Data Refinery, we’ve built a solution that makes LTV analysis simple, intuitive and impactful. Combining the power of our common data model with advanced analytics – the platform provides businesses with the insights they need to grow.

In our initial release, the LTV dashboard provided:

1. Cohort Analysis: Customers that purchase the same thing do not perform the same over time. The Data Refinery groups customers by the month of their first purchase to track their spending and behaviour over time. We can compare and contrast how each cohort behaves compared to others.

2. Customer Acquisition Cost (CAC): Understanding how much to invest in customer acquisition is crucial. Their first purchase with you may not cover 100% of that investment but seeing when that breakeven point is key. Our product allows users to easily compare how much it cost to bring in those customers and exactly when that breakeven point occurs.

3.First Order Value: Alongside acquisition cost, we can contrast new customers first purchase values along with the subsequent time periods to see whether their purchasing habits change over time.  

Customisable filters allow businesses to isolate insights by product names, categories, tags, and brands, making it easy to identify what drives high-value customer segments.

But we knew we could take it further, and with the input of our clients we’ve just released Phase 2 of the Customer Lifetime Value Model adding more advanced features to answer the complex questions businesses need to ask about their customers.

1. Repurchase Rate: Understanding customer loyalty is essential for improving retention. With Phase 2, you can now track the percentage of customers from each cohort who made repeat purchases. For instance, see how many customers acquired in February 2021 have returned and use that insight to refine your retention strategies.

2. Summary Statistics: For a broader view of customer value, we’ve added summary metrics that show average LTVs over 3-month, 6-month, 12-month, and 24-month periods. These metrics make it easy to identify trends and benchmark performance, whether customers made their first purchase last year or a decade ago.

3. Downloadable Data: As with all our other analytics tools, Phase 2 now allows users to export LTV data into Excel. This feature makes it easy to share insights across teams, perform additional offline analysis and create customised reports for stakeholders.

Our LTV dashboard is ideal for businesses that want to grow smarter, allocate budgets more effectively and build strategies based on data-driven insights.

Transform your business with The Data Refinery

With the release of Customer Lifetime Value Model V2, we’ve made LTV analysis more powerful and accessible than ever. When you combine this with all our other segmentation, insight, KPI reporting and dashboarding tools our platform is designed to help your business succeed and all at the click of a few buttons.

If you’d like to explore how we could have you up and running with all this and more in a matter of days, we’d love to hear from you – email hello@thedatarefinery.co.uk to book in a meeting or click here.