Now we’re getting down to the nitty-gritty of customer lifetime value. First up, we’re going to tackle purchase frequently. The more frequently someone purchases your product, the more likely they are to increase their overall spending (assuming they continue to spend the same amount each time).
For many products and services, the purchase frequency is relatively fixed. You’re not going to buy toothpaste more frequently than you need to. You’re probably not going to buy a new blender before the last one breaks, either. However, you can go on vacation more frequently, you can buy more fashion accessories, you can buy more food, etc.
Sometimes, you might use a product more often as a result of the community (e.g. joining a metal detecting community is going to increase wear and tear on your metal detector) and then need to replace the product more frequently.
For many products/services, purchase frequency is fairly fixed. You don't buy toothpaste more frequently than needed
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There are several ways to measure purchase frequency on its own. However, we need to measure whether purchase frequency has increased as a result of the community. For this, we can reuse much of the same process to measure changes in spending.
Frequency of purchase is the number of orders placed by a customer over a defined period of time (typically one month or one year). Greater purchase frequently typically implies higher profitability. An online community might encourage people to use the product more and thus purchase more frequently, or use the product more often and have to replace it most often.
Community ROI Template
You can simply drop in the numbers on this sheet here or follow the process below.