In a recent piece in BusinessWeek, there's an in-depth look at the revamp of eBay's (NASDAQ: EBAY) website. That is, the company is trying to bring back buyers – who have been moving to rivals like Google (NASDAQ: GOOG), Amazon (NASDAQ: AMZN), and Yahoo! (NASDAQ: YHOO).
It's a smart move and I also think it shows the importance of a key concept: the lifetime value (LTV) of customers.
Generally, LTV involves the following: the profit per unit sold times the average units sold minus the costs of customer acquisition. This should be calculated over a period of time – say 24 to 36 months.
"We actually look at bookings just as much as revenue when we look at the LTV equation," said Jason Blessing, who is a general manager at Taleo (NASDAQ: TLEO). "We feel this gives us a clearer picture of what we are spending to get new year bookings. We feel that we are operating at peak performance if we are getting $2+ in new bookings for every $1 we spend on sales and marketing."
So what kind of strategies can help improve LTV? Well, I had a chance to interview Trynka Shineman, the senior vice president at VistaPrint (NASDAQ: VPRT).
According to her, a critical period is the 90 days of getting a new customer. "This is the most important time to establish a strong relationship with the customer," said Shineman. "If you can get a new customer to make a repeat purchase during that time frame, those customers are considerably more valuable over time than those that don't make a repeat purchase until later."
In the case of VistaPrint, about 63% of its bookings – in fiscal year 2007 – came from repeat customers. Shineman maintains:
"We have been successful because we have focused on making our transactional emails, such as order confirmation emails and shipping confirmation emails, into contacts that drive a subsequent purchase on our site. In fact, these emails have the highest open rate of any of the emails we send, which gives us a great opportunity to communicate to customers about other products and services. For example, we'll highlight products that are related to products they've purchased. This has proven to be an extremely successful approach for us. We have also developed other re-marketing efforts tied to the first purchase. These include inserts into our product packaging that showcase the full breadth of products we offer with an incentive to try a new product, and focus on making it easy for customers to reorder their business cards and matching products."
What's more, you should ask customers for feedback. "If you send out a semi-annual survey to customers, you are able to see areas where you can improve," said Shineman. "Customers who participate in these surveys and see the feedback that they give get put into motion will have a greater emotional connection to your company."
Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements
. He also operates DealProfiles.com.











Reader Comments (Page 1 of 3)
9-23-2007 @ 11:54AM
Debora said...
eBay needs to police their sellers. The company should look into sellers who receive multiple incidents of negative feedback. They should also require that sellers respond to email inquiries from buyers. Lack of communication is my biggest gripe.
9-23-2007 @ 4:27PM
limonarbie said...
Ebay's fees are getting higher all the time and they've lost their appeal to sellers--their market has gotten so huge that now they have sellers competing against each other cutting prices on the same item so that nobody can make any money except for Ebay.
9-24-2007 @ 12:00AM
CHARLIE SAMPSON said...
EBAY IS ABOUT EBAY! THEY NICKLE & DIME YOU TO DEATH. LOOK @ THE SALARIES BEING PAID TO THERE 50 TOP EXECUTIVES WITH STOCK OPTIONS,YOU WILL SEE WHERE THE MONEY GOES. AS FOR THE SELLERS, MOST GOOD SELLERS LEFT EBAY FOR THE OTHER SITES BECAUSE THEY WERE TIRED ON THE NON-STOP FEE HIKES,AND NON RESPONSE FROM EBAY. YOU CAN TALK TO GEORGE W. BUSH EASIER THAN YOU CAN SPEAK TO AN EXECUTIVE WITH EBAY. IT IS INTENTIONALY SET UP THAT WAY. I THINK IN THE NEAR FUTURE,WITHOUT EBAY PURCHASING OTHER PROFITABLE COMPANIES,THEY WILL COLLAPSE INTO THEMSELVES. WHATS LEFT ON EBAY TO SELL IS RIP-OFF'S THAT SELL YOU A $1.99 PRODUCT AND CHARGE YOU $21.00 SHIPPING. EBAY STATES THAT IT PATROLS THIS. I DONE A WEEK LONG TEST,REPORTING EVERY LISTING THAT FOLLOWED THIS PRACTICE. I RECEIVED A NICE "FORM" LETTER FROM EBAY FOR EACH ONE. BUT TAKE A GUESS HOW MANY WERE REMOVED? -0-,THATS RIGHT, NOT ONE LISTING! THERE IS NO DOUBT THAT YOU GET MORE SALES PER BUCK ON THE OTHER SITES! EBAY IS PUTTING OUT IT'S "MAKE A GREAT LIVING ON EBAY" PROPAGANDA TO ATTRACT ANOTHER GENERATION OF SUCKERS. AFTER SELLING MORE THAN 5000 ITEM'S ON EBAY,I FINALLY REALIZED THE ONLY ONE MAKING MONEY WAS EBAY! SAVE YOUR SELF A LOT OF GRIEF,GET A JOB! FOR EVERY SUCCESS STORY,THERE ARE 1000 DISASTERS!
9-24-2007 @ 12:17AM
Recyclebabe said...
I am an Ebay seller with an Ebay store. I also own a brick and mortar store. I work hard on both! Lots of sellers complain about Ebay but where else can you work at home and run a store for less than 20% overhead. Sometimes the sell through isn't great but it's like anything else..if you sell a product that someone wants..take good pictures and give good customer service..you will be successful....Ebay has been good to me...I love it!
The buyers need to realize that it costs money to ship something...and time...It's business!!!
Recyclebabe
http://stores.ebay.com/RecycleBabes-Tempting-Treasures
9-24-2007 @ 6:57AM
cougartoys said...
What exactly did this article have to do with eBay?? NOTHING. It mentions their site revamp? But doesn't discuss it. THEN you get the trolls -
Deborah and Charlies comments are typical of the current online environment (for the last 10 years) THEY posted critcal comments and accusations.
Proof of the axiom that a dissatisfied customer will tell 10 people and a satisfied one will tell 4, maybe.
People who were satisfied or happy with ebay rarely post - we just keep on selling and buying.
And as the RecycleBabes pointed out, where else can you work from home, with the consequent comfort, income, and convenience for that margin?? NO WHERE!
Ebay has it's problems - so did AOL - so does Google so does Yahoo -AMAZON?? OMG! And probably the Blogginstocks website too. I wonder if all their employees, posters, shills are thrilled with them??? I doubt it.
9-24-2007 @ 8:33AM
myshow said...
Ebay needs a great COMPETITOR, someone who care about the seller
9-24-2007 @ 7:32AM
Gail Gillespie said...
After selling on Ebay for 4 years, I have learned several things. 1. I love it! 2. It's helped me stay alive in Michigan...where businesses are closing everyday! 3. IF a buyer files against you.....Ebay & Paypal will NOT aid you, the seller....it's ALWAYS about the buyer. They will freeze your account (the amount in question) so that you cannot get your money out to use for shipping to your other customers. 4. The buyer is ALWAYS right. I've had just 1 big problem....but it was an expensive one. I was honestly in the right...with proof...and lost. NOW I transfer every penny ASAP when it goes into my account. EBAY's Seller Protection plan needs revamping! They think w/o buyers they are out of business, but from a sellers point of view....w/o US & OUR PRODUCT...what would they have?!
STILL all in all.........I love Ebay.
9-24-2007 @ 7:48AM
mrg747 said...
I buy and sell for a living, I also own a brick and mortar store. If it wasn't for ebay I would not be in this business. I've been selling on ebay for 11 years and have a 99.9 percent feedback rating, I do my best to describe everything correctly and take good photos which cuts down on a lot of email and hassles. Ebay has recently started catering a little more to the buyers in regards to there feedback system which has amounted to near nothing in improvements. I believe they need to do 2 things, 1. Work on educating the buyers more to avoid fraud, scammers, and lousy sellers you charge crazy fees for shipping. 2. Do everything they can to keep costs down for all us hard working and honest sellers, after all we are the ones that make ebay what it is bringing goods that people want to there site. Sellers need to research their items prior to listing them to avoid putting the stuff on that doesn't sell and racking up listing fees for nothing.
9-24-2007 @ 8:15AM
David Houston said...
Ebay has lost millions of buyers because it offers no protection against fraudulent sellers, and buyers like myself are tired of being ripped off. When my losses via Ebay and PayPal exceeded $300, I moved to Amazon, which offers real buyer protection and much lower prices on average than Ebay. Ebay needs much more than a new web site to police its fraudulent sellers (over 81.3 percent of sellers on Ebay are fraudulent according to recent polls and studies on customer outrage and dissatisfaction with Ebay, and I suggest that number is low). I still remain an Ebay member (davidh1225), but I do almost all my buying now on Amazon given that Amazon has lower prices and protects me against fraudulent sellers. And of course I cancelled my PayPal account and now use nothing but credit cards to make purchases for added protection. More than a new web site is needed to bring the millions of people like me back.
9-24-2007 @ 8:17AM
Sandra said...
I've been an Ebay seller & buyer for over 10 years. One of the early customers. They might remember that sellers are THEIR customers to. They pay prices that keep going up over time, nickel & dime you to death. Have the customer believe that PAYPAL is the only way, that is because they own it & get paid for the third time on the same item. To list$$$,sell compensation$$$ Paypal$$$ The execs are lining their pockets. Not the little guy who has hung in their with them for over a decade.
9-24-2007 @ 8:59AM
thepatchdog said...
The writer of this article must be on eBay's payroll or reading eBay's press release and calling it a day. If you really want to know what eBay is about go to www.powersellersunite.com and read those forums. eBay is in trouble. You know the barbarians are at the gate when they cut their listing fees in half in Germany, offer free listings with gallery for one month in the US because the listings were down by almost 20 percent at the same time as last year, and they are ready to ditch the Chinese eBay because sellers over there were going to pay out the yin yang when there were sites which offered the same services for free.
Their fees are off the wall and sellers are going to other venues. eBay is still King of the Hill on the auction world in the west (over 13 million items for sale at the time of this post) but more and more sellers are finding nice niches in other sites. Sometimes because they are forced by eBay's unfair rules and have been suspended. They try to state their case but get canned responses from eBay which has NO customer service at all. Sometimes the prices and the Gestapo policies drive sellers away or force them to list most of their goods in other places.
eBay has forgotten who their real customers are. the sellers who pay the fees. The sellers who listed the items which brought the buyers in. Lifetime value of customers? It's a joke. eBay even doesn't recognize who their customers really are.
eBay's VERO program which started out with the best of intentions but some "savvy" sellers learned that you can use VERO to knock off the competition at eBay, get them suspended with no questions asked. So legitimate sellers have been forced to go to other venues to sell.
Before shopping at ebay I suggest buyers check out these other sites and more which can be found at powersellersunite.com.
www.bidville.com has over 1 million items listed, mostly sports cards.
www.ecrater.com has over 750,000 items listed.
www.ebid.net has over 500,000 items listed.
www.bluejay.com has over 220,000 items listed.
www.tazbar.com has over 150,000 items listed.
www.ePier.com has over 145,000 items listed.
www.AuctionQuests.com has over 120,000 items listed.
www.wagglepoop.com has over 90,000 items listed and there are another 6 with about 200,000 items listed total.
I suggest the author of this article do more research before recommending anyone buy ebay's stock. Even Meg Whitman, the CEO of eBay excercised her options this year and sold 65 million dollars worth of stock this year.
9-24-2007 @ 9:28AM
BILL said...
I HAVE READ THE NEGATIVE AND POSITIVE COMMENTS FROM YOUR READERS. IT IS APPARENT THAT THE PEOPLE WHO ARE SHOWING NEGATIVE COMMENTS HAVE NOT RUN A BUSINESS FOR PROFIT. A BRICK AND MORTAR STORE HAS EXPENSES THAT WOULD FRY THE LIMITED BRAINS OF THESE SO CALLED PEOPLE IN BUSINESS. CREDIT CARDS, ADVERTISING, YELLOW PAGES, RENT OR BUILDING PAYMENTS, PAYROLL, INSURANCE AND ON AND ON. AND IF YOU USE A LOCAL AUCTION HOUSE YOU CAN EXPECT TO SEE 40-45% FEE AFTER ALL THE ALA CART EXPENSES ARE ADDED IN. SO FOLKS GET REAL, ALL THE BEST SELLERS IN THE AREA OF ANTIQUES AND COLLECTIBLES, HAVE STAYED WITH THE BEST AND THE BEST IS EBAY. ANY SELLER WITH A LARGE FEEDBACK PERCENTAGE AROUND 99% WILL TELL YOU WHO YOU SHOULD BE BUYING FROM AND NOT SOME UNPROVEN SELLER... THIS IS COMMON SENSE IN ANY SELLER CLIENT RELATIONSHIP. SO DO THE MATH AND SEE THE SIZE OF THE AUDIENCE OF THESE OTHER CHEEP SITES AND YOU WILL COME BACK TO EBAY. BILL
9-24-2007 @ 9:54AM
David Cruise said...
The concept of lifetime value of customers discounts the probability that customers get disillusioned and stop or reduce their buying. It further assumes that the act of acquiring a customer is causitive of further sales success.
A more realistic model of long term value creation at EBay focuses on the cost and success of creating continued customer satisfaction, the requirements of which change with time, competition, and the maturation of expectations regarding the internet. I think investors are in love with what EBay could become, not what it is (and not what it is likely to be).
9-24-2007 @ 9:54AM
Victor said...
Ebay is ripping off its customers. As soon as you list an item, the countdown clock begins, yet it takes sometimes over 12 hours for your listing to appear in the search engine. You are paying for 7 days listing, you should have it SEEN for 7 days. Multiply that by the number of items sold, and I think a good lawyer could present a case that Ebay is jipping all of us BIG TIME.
9-24-2007 @ 9:55AM
Holly said...
I am a business owner. And yes, I sell on eBay. There are more problems with eBay buyers than with all other venues combined. eBay has given them the power to curse, belittle, call you on the phone and scream...whatever their fancy. The buyer is always right on eBay...or so they think. I don't care how many negative feedback comments I get from some of these insane individuals, I run my business like a business, and NO I don't fall for the "give me my money back or I'll leave you negative feedback." Do it. I'll leave it for you in kind. eBay needs to rope in these BUYERS who know they are more than likely going to get the product and their money back too. I think eBay should stop playing games as they do. If they are a selling venue then they should remain as such and leave the business of selling to sellers. And when a buyer is out of control, there should be a way to report THEM and get them suspended instead of hurting good businesspeople who are trying to make a living. There are many lawsuits against Paypal at the moment. This is not surprising in any way. I think if eBay is serious about continuing to do business PROPERLY they should give the buyer a bit more control over their own business, and stop giving away OUR stores just to keep their own reputation sterling. I'm tired of people who don't like the fact that it costs money to ship a package..since when does a seller dictate what USPS, UPS or Fed Ex charges? eBay buyers are by far the worst...outta be a law, yanno?
9-24-2007 @ 10:21AM
jj said...
I was just scammed on E-bay and they don't care! I am telling everyone I know !! Don't buy on ebay!
9-24-2007 @ 10:23AM
Mill said...
eBay is very expensive in fees but it is the top search engine in my opinion with the largest worldwide audience. So in terms of hits for your merchandise you are getting more views for your sales than any other sites. We have listed on others such as eBid and ePier and haven't seen any success. Though we don't sell a lot of items and aren't a power seller we strive to maintain a high feedback rating, ship immediately once payment is received and communicate in under 2 hours to all customer questions. This is what we believe leads to repeat customers and building a solid reputation in the eBay marketplace. Having said this, we have also experienced no assistance from eBay during issues since we are not a Power Seller and this we believe is an unfair practice since all sellers make money for eBay. They would do themselves a huge service if they helped even the little guy move their sales thru.
http://myworld.ebay.com/millnsue
9-24-2007 @ 10:34AM
George Suggs said...
I was a "loyal" EBay customer...I got ripped off for $184.50, and they would do nothing about it. Later on, when I had recorded 14 purchases, someone stole my identity and I tried repeatedly to contact them, but they cut off my ability to even write to them, and I had no way to let them know someone was continuing to use my account. They are a den of theives...avoid Ebay at ALL COSTS!!! I would NEVER use them AGAIN!!!
9-24-2007 @ 3:36PM
CHRIS said...
NO. 1 SOUNDS LIKE THEY WORK FOR EBAY!
EBAY NEEDS TO HOLD SOME VALUE TO THEIR TERMS OF SERVICE AND FOLLOW THEIR OWN GUIDELINES THEY SET OUT TO DO BUSINESS WITH OTHERS. DROP THE "PROTECTION RACKET"
LIKE MENTALITY AND BULLY MIND FRAME OF THEIR EXECUTIVES.
LITIGATION ATTORNEY NEEDED. IF ANY ONE KNOWS ANY I WOULD APPRECIATE THE INFORMATION.
9-29-2007 @ 7:42PM
MzGlitzz4u said...
We have been Ebay sellers with a Featured Store for almost 4 years now. Many people's comments were that the buyer has no protection against fraudulent "sellers". Well, really there is if the "buyer" is made aware of what to look for BEFORE bidding or "Buying it Now". First is look at the seller's Feedback Rating...Even we won't even purchase from a seller who has less than a 97 to 98% POSITIVE feedback rating. Second look at the comments themselves, that will tell you a lot about the seller's customer service skills and if they have any NEGATIVE feedback, you can see why. (It may not be their fault). Third, check out thoroughly the Ebay Seller's Shipping charges policies. Postage just took a good hike, which doesn't help, but still if a Seller offers "Combined Item Shipping Discounts" and/or "Free Shipping" take advantage of it, but first again check out just what these discounts are. Some "combined item discounts" (ran into this ourselves) end up costing the "buyer" almost as much as the items that you have purchased! They may sell items cheap, like starting all items at .99 cents, but they make their actual profit off of the $99. shipping charges plus Insurance of course, when you receive your items it cost them $4.95 USPS Flat Rate Envelope plus insurance, which is very inexpensive, but still a must. This is one of the areas that Ebay needs to crack down on, excessive shipping charges, but "Buyer Beware also" and use common sense...read the whole listing, what are the seller's return policies? Our first Priority is of course Customer Service at our store. Because we offer not just one type of item, but a very wide variety of items and are constantly changing. Our motto is " We sell only high quality items! If we wouldn't own it, we won't sell it!!" and it is true. As far as Ebay's & PayPal's fees go, if you have a "brick and mortar" store you know what kind of over head that you have, rent, insurance, employees and/or you have to be there everyday morning til night and you are limited to the area (city) basically that you are selling in where selling on the internet, esp. Ebay you are catering to the world!! Ebay's fees may seem "Unreasonable" to many Sellers, but remember, they Advertise a lot on TV and everywhere you look there they are, popping up!! Anytime you look for something on a search engine, Ebay always comes up in the top 3. If a Seller had to do their own Television Advertising and become "affiliated" with all the major search engines you are talking big bucks. We know some sellers that have left Ebay for other "auction sites" and we have checked on them about a month later and when on Ebay they were selling many items daily and on the "new" site after a month and not one sale...weigh out the costs! Selling on Ebay also gives you the freedom of setting your own hours, relating to your clients, putting up extra pages that you can use for just about anything that relates to your items or site. Ebay in our opinion is too restrictive on letting Sellers customize their Newsletters to their subscribers the way that they want. (Can't run wild with it, but loosen up!!) We have made many great relationships with quite a few vendors on Ebay over the years that we have worked with and have never had any "real" problems to speak of and when we needed to get ahold of customer service, we always get either a phone call or a personal email within 24 to 48 hours at the most to resolve an issue or answer a question. So to sum it all up, we are overall very happy with Ebay and PayPal services (yes, a few quirks and problems here and there, but to be expected of ANY site or business) and have been to most of the auction sites listed above and as of right now will stay put!! Scott & Diane