hannamyluv - 6:03 pm on Nov 15, 2005 (gmt 0)

It's impossible to discern "lifetime value" on the web.

I have to respectfully disagree. I was successfully doing so for the last company I worked for. LTV is easy to calculate if you keep good records and tracking. It is not so hard to keep track of what a customer bought and from what source (even search engines) if you program things correctly and thouroughly. A clever programmer can do it on the cheap if they know enough about cloaking and cookies. (For those of you interesed, look up how catalog companies use media or source codes to track then think creativly in terms of your site.) Even without those, a good customer database that can track returning customers, rather than treating each purchase as a new customer, can provide a wealth of LTV information.

And I disagree on the email as well. Done properly, email lists are still very profitable. Again, at the last company I worked for, the list was about 120K names and netted $40K over the year. Careful testing and product offerings plus value in your newsletter does wonders for a list.

I think one of the best things that ever happened to me was to get an internet education at a catalog company. Tracking was drilled into my head and data was touted as the all knowing god.

The sites that failed in the dot com bust failed to calculate LTV. They guessed at it, and guessed very badly. Some survived by making money now, and that is fine, but to grow, you do need to figure out how to get more. If you can calculate that if you spend $2 per name, you will be able to make $5 per name over the liftime of the customer, you grow. If you guess that you can spend $40 per name and only make $5, you don't grow.

Frankly, the concept is no different than PPC bid tracking, which I think has proven itself quite successfully.