08/04/2022
This is the OG formula we use when thinking about ad strategy for e-commerce brands.
Quick breakdown:
-Visitors: essentially, you need real people to visit your website to make purchases. This part of the equation helps to understand what channels to run ads on, what type of creative to utilize, what type of messaging to use e.t.c - in order to drive quality traffic to your website.
Conversion Rate: this is the percentage of people who you are able to successfully convert into customers on your website. This is largely dependent on your website structure, how products are shown and at what prices, how product descriptions are written, how you are removing purchase objections people have, how your checkout process looks like e.t.c. Essentially, the easier it is to make a purchase, the higher your conversion rate.
-Lifetime Value: simply means the total value of a customer to your brand after acquiring them. However, you can’t wait for a “lifetime” to find out the total value of a customer to you, so we replace that part of the equation with 60-day LTV, because that’s more feasible.
Also, the higher the LTV, the more revenue you can bring in over time.
Of course, this is a very basic breakdown as there are nuances to this entire equation based on different situations.
