Key Club Member & Customer Performance Metrics

bobbys TOD
Wednesday, February 19th, 2014
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In today’s business environment it is more important than ever to gain an understanding of what the lifetime value of your customer is and how much predictable revenue can be generated from them next quarter/year.

As an eCommerce, wine club, or direct sales manager for a winery or online business, I am sure one of your top goals this year is to increase the recurring revenue generated from your online sales channel.

Where to begin? There are two options: spend $$$ trying to find and acquire the right new customers and turn them into brand advocates, or focus on driving repeat revenue from your existing customers who probably already love your product/brand.

The following performance metrics will help managers gain a baseline for how much revenue a wine club contributes to a winery’s online sales channel on a recurring basis:

  1.  Customer Attrition Rate:   # of new club members that placed an order month \ # of members at beginning of month
  2. Average Membership Tenure:  average # of shipments a club member receives while being a member
  3. Revenue not generated by club shipments:  total revenue per customer – revenue generated from club shipments
  4.  Total Lifetime Value:  Average Order Value x Number of Repeat Sales Per Year x Average Retention Time (# years the customer has been buying from you)

Once you have these metrics in hand compare them to your peers. See how they stack up and then set some goals for improving them. One great way to reduce club member churn is by charging a small club sign up fee to weed out customers who are not serious about receiving your wine on a recurring basis.

These metrics can be used for other businesses and industries as well. The key here is to get a baseline of how much revenue is being generated by specific customers. Remember you can’t start predicting revenue without knowing where it comes from.

 

Bobby Cintolo is a Senior Account Executive at Nexternal. Bobby is passionate about wine and he specializes in helping merchants increase their brand awareness using social media and mobile marketing tools.

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