A recent article published by Theta shows that Wayfair’s equity valuation is lower than its previous Wayfair analysis in 2018. Despite the high consumer demand generated during the pandemic, it looks like the sales boost of 2020 wasn’t enough for the home retailer, which keeps struggling with fixed costs and a high cash burn rate, and is now in a worse position than it was pre-pandemic. Read on to learn more about why are many ecommerce companies struggling with similar issues and how predictive CLV can help brands navigate those struggles.

The current eCommerce landscape

Since 2010, most eCommerce platforms have put their emphasis on acquisition marketing, and we’ve seen a huge growth in acquisition marketing overall. For most companies, the main priority has been to get new customers, and that was where the focus was for marketing teams: user growth. However, the pandemic has caused a lot of changes, one of them being the abrupt stop in growth due to its unsustainable nature as a long-term marketing practice. With the effects of the pandemic slowly fading off, it is now time for brands to get back on the profit game and do what will bring them the most value: future customer profitability.

Wayfair’s example is just one among many others, and it proves to us how the topic of customer equity and CLV is a metric that should be on the table for everyone in top management positions, not only CMOs and marketing teams.

What are companies like Wayfair missing out?

Every eCommerce company out there is suffering from similar issues: high costs for paid social, endless legislative changes in the online space, and skyrocketing customer acquisition costs – being the last one of the main reasons why companies can’t stay profitable. By focusing more on predictive customer lifetime value, brands can make accurate predictions and determine which customer groups will be the most profitable in the future and therefore have a precise overview of which customers are worth investing in.

We believe that the value of any brand is just a reflection of its customer’s behavior. To strategically manage the customer base, brands need to understand their customer’s future behavior and value, and that’s why CLV is an important topic for top management of any company – otherwise, companies will most likely go down the same road as Wayfair.

At CrossEngage, we help companies manage their customer base and accurately predict their customer’s future behavior. Thanks to our AI-based predictive model engine, we help brands identify the most profitable customer groups, reduce their acquisition costs, and build strong relationships with their customers – all without writing a single line of code.

As one of Germany’s leaders in Marketing Tech, we want to ensure that marketing teams in the online space have access to our tool and can use CLV metrics strategically and tactically. For that reason, in addition to our Customer Data and Predictive SaaS Platform, we also extend our portfolio to consulting services, where our in-house experts will show you how to make the most out of our tool when you’re getting started.

Do you want to learn more about our no-code predictive model builder? Book a demo now and learn how to make accurate customer predictions with our tool.