Using Average Orders per Customer to acquire profitable customers in your Shopify store

When figuring out how to profitably acquire customers, you need to know how long a customer will stick around.

It's a big difference if your customers only order one or two times VS a dozen times.

Customer LTV can be used with this but it looks way in the past and would be like trying to drive while only looking in the rear-view mirror.

One metric I'd look at would be the Average Orders per Customer. It's still backward-looking, but not to the extreme as LTV. This will tell you how many orders you are likely to get from each customer. In Repeat Customer Insights this will be found in the Store Analysis.

That's only an average though. For a better picture you should look at each step of your customer lifecycle and how likely a customer is at buying again. For this you'll want to split out your customer orders into their sequence (e.g. first orders, second orders, third orders). Then you can calculate the Repeat Purchase Rate to find out how likely a customer at each stage would be to order again.

Repeat Purchase Rate will separate out the effects that a handful of really great customers will have on the average.

You'll want to look for a major drop-off in the rate. That'll tell you where your start to lose customers. The Order Sequencing Analysis in Repeat Customer Insights will do this for you.

Armed with either one of those, you can make better decisions about how you acquire customers. Should you spend more, should you cut advertising, should you shift into earning marketing, etc.

Eric Davis