Metrics You Should Care About

Raise your hand if you’re using metrics being shared group chatter as a way to gauge your success. 🫣 Babes it’s time to dig deeper into your OWN business! Obviously as a boutique owner, the amount you’re personally selling is the number you’re focused on day in and day out - we get that.

While this metric is great for determining the short term success of your boutique, it doesn’t tell the whole story. There are actually several other factors that can paint a better picture of your business - both good and bad.

Let’s dive in to the 4 we think every boutique babe needs to keep an eye on.

1. Customer Lifetime Value (CLTV)

2. Average Order Value (AOV)

3. Customer Acquisition Cost (CAC)

4. Returning Customer Rate (RCR)

Customer Lifetime Value helps businesses understand how much value a customer will bring in the long term, which allows them to focus on acquiring the most valuable customers. According to Metrilo, the average LTV for Apparel Direct To Consumer brands is $218.

• Why it’s important: Understanding CLV has three benefits: it drives repeat sales and revenue, boosts loyalty, and reduces the ratio of lifetime value to customer acquisition costs. By improving CLV, businesses can benchmark how marketing affects customer profitability.

  • As a fun side note, because we are in the business of customer acquisition at Elevated E-Commerce, the appropriate LTV to CAC ratio is 3:1. Using the average of $218, that means your CAC should not exceed $72.

• How to calculate: Simply put - it’s complicated. You need to determine the recency, frequency and monetary value of every single customer. If I’ve already lost you, luckily there are Shopify apps available that cut to the chase! (Search LTV and they will pop up).

Average Order Value is the average amount of money that a customer spends every time they place an order.

• Why it’s important: Understanding AOV can provide insights into customer behavior and purchasing patterns, and help identify opportunities to increase revenue and profitability by encouraging customers to spend more per order.

• How to calculate: Divide your total revenue by the total number of orders placed by customers. (Or just view this number in your Shopify dashboard)

• Pro tip: lowering your free shipping threshold to be about 20% more than your current average order value can increase it over time.

Customer Acquisition Cost is the amount you’re spending to acquire new customers.

• Why it’s important: Knowing your CAC determines the amount of money that needs to be spent on marketing and sales to acquire a new customer and how much revenue that customer is expected to generate over their lifetime (LTV). By comparing CAC to LTV, you can accurately determine whether your marketing efforts are profitable and sustainable in the long term.

• How to calculate: This one is easy - amount spent on marketing divided by the amount of purchases made. For example, if we’re running an ad and we spent $5,000 to acquire 75 new customers, our CAC would be $66.

  • Note: typically the CAC calculation does NOT include the wholesale cost of the item, however it should be considered when determining LTV of a customer.

Returning customer rate measures the percentage of customers who make repeat purchases from you over a specific period of time.

• Why it’s important: RCR is important because it indicates customer loyalty and can increase revenue through repeat purchases. Additionally, a low return customer rate can help identify areas for improvement in the business. On a rolling average, your RCR should not drop below 26%.

• How to calculate: Divide the number of customers who made more than one purchase by the total number of unique customers during that same period of time, and multiplying the result by 100 to express it as a percentage. (Or just view this number in your Shopify dashboard)

🥵 WOWZA That is def a lot to consider AND knowing these numbers can make a huge impact in how to run your business as a whole. TBH I’ve had a few people recently come to me looking for customer acquisition costs of $20 or less and I’m like whoa let’s dig in because where is this ambiguous number even coming from? Is it based on hard data from your own boutique?

Remember, the data of your own business tells the full story. 🧡🧡