Building a sustainable and healthy business is not a cake-walk, yet it can be possible by out-leveraging popular competitors like Amazon in terms of growth cost. Growing Customer Life Time Value (LTV) investment should really work.
Intuitively, retailers use the determine ratio values and variables to know how good business is running. In general, people use ROI (Return On Investment) to know how much profits are scored after investing on anything. In e-commerce marketing, PPC ‘Pay Per Click’ is a great way of advertising and promoting brand name with ease. In here, there is no sense if a retailer tries to look at the investment he/ she made to generate sales. Unit economics play a vital role; profit and loss reports will fetch a helping hand for any business owner, in which one can keep lights on healthy flow of business.
Unit economics concept sounds fancy, but it is a simple one and is essential to know how much profit is gained from a single unit. If a seller thinks that his business like a money mechanism source, then unit economics will help him/ her in growing business. This metric will answer the question about, whether more money is to be invested in order to acquire many units.
There are 2 ways to look into unit economics, which include transaction (sale solution) and centric of customer (customer solution).
Unit Economics “Transactional”
In the e-commerce arena, selling across various marketplaces like eBay seems to be an addictive and pleasurable experience to sellers. List the products once and see the flow of transactions, for this reason many online sellers love to invest in multi-channel platform so as to explore more channels.
There is a simple ratio to express economics of transactional units, it is nothing but COTA : AOV (Cost Of Transaction Acquisition : Average Order Value).
Unit Economics “Customer Centric”
Recent marketing report of state bound has revealed an interesting metric, that around 50 percent of marketers are considering themselves as company of customer centric. Such metrics for e-commerce website and marketer is quite common, but what makes them to deserve that quotation is, the customer is economic value unit that they solve for with efforts of marketing.
Therefore, unit economics of customer centric are expressed by a different ratio called,
CoCA : LTV (Cost of Customer Acquisition : Customer Life Time Value)
This type of ‘unit economics’ analysis has a chance to change the marketing approach, above ratio opens new and innovative activities of marketing so as to contribute in growth and health of the business.