Fab & Custora Calculate The Lifetime Value of an iPad (customer)

More than 40% of Fab’s daily visits now come from our mobile apps on iPhone, iPad, and Android.

Since the beginning of 2012 we noticed that “has mobile app” is a big indicator of customer engagement. We saw that Fab’s mobile users purchased more then 2x faster, 3x more often, and in much larger basket sizes than web-only customers.

A few weeks back we started to notice that iPad users behaved exceptionally differently from all other mobile users and web users.

To dig in deeper, we engaged Custora to analyze and project out the lifetime value of an iPad customer. Custora is a software-as-a-service that analyzes historical user and order data and then develops bayesian probability models to forecast customer lifetime value.

The predictions regarding the value of a Fab iPad customer are striking.

First, the Custora model shows that iPad customers convert to making their first purchase exponentially greater than non-iPad users, to the tune of >40% making a purchase by month 3 and >70% making a purchase with 7 months of joining.

A lot of really good businesses build their business model around getting to 10% conversion rate to purchasers within 6 to 12 months. It’s simply amazing that we’re seeing 10% conversion to purchase within the first week for iPad users.

Second, the Custora model forecasts that iPad users are worth twice as much 2-year revenue vs. non-iPad customers.

Third, while 15% of Fab’s purchasers currently use our iPad app, those 15% are forecasted to generate 25% of our revenue over the next 2 years. 

What does all this mean?

Here are some possible explanations:

The Fab iPad shopping experience is just more conducive to purchasing. The Fab iPad experience focuses in on browsing one product at a time while the Fab web experience allows the user to more easily browse across multiple sales and products. 
The tactile touch experience of the iPad more closely resembles being able to physically “touch” a product like physical-world shopping vs. the web which can feel more distant when browsing with a mouse or track-pad. 
iPad users are just more likely to be design lovers. 
iPad users have more disposable income.

Our hunch is the answer is some combination of all of the above. We’ll be digging in even deeper to learn more.

Or, maybe we should just buy all of our users an iPad? ;-)

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About

Betashop is the website of Jason Goldberg,
Founder & Chief Executive Officer at Fab.

Jason founded Fab in 2011 with Bradford Shellhammer (Chief Design Officer) and Nishith Shah (Chief Technology Officer).

Fab is everyday design.

Fab’s mission is to help people better their lives with design. Millions of people around the world use Fab to discover everyday design products at great prices, to connect with the world’s most exciting designers, and to share their favorite design inspirations. Smile, you're designed to.

Some have called Fab "the fastest growing E-commerce company on the planet." We like to say we're just doing our best to serve up great design that makes people smile.

Fab now serves more than 11 million members across 26 countries. Fab grew sales by more than 500% in 2012, one-third of which comes from users of the Fab mobile apps for iPad, iPhone, and Android devices. In February 2013 Fab was named the #5 most innovative company in the World by Fast Company. Fab won the award for Best E-Commerce Company of The Year at The Crunchies in both 2012 and 2011. It's all very humbling and inspiring. The truth is we celebrate our challenges more than our successes at Fab and we're really still just getting started.

Fab is the fourth company Jason founded. Jason previously founded fabulis, socialmedian, and Jobster. In 2009, following the sale of socialmedian to XING AG, Jason was Chief Product Officer at XING, based in Hamburg, Germany. Before starting Jobster in 2004, Jason led product and business initiatives at both T-Mobile USA and AOL Time Warner. In a prior life, Jason spent 6 years working 100 hours a week for Bill Clinton in the White House.

Jason is also an investor in and Board Member at RJ Metrics. He is also an investor in BlackJet and Twitter. Notable prior investments: TweetDeck.

Jason is a product guy. He loves to blog, loves transparency, and loves trying to make people smile. Jason shares everything about Fab on his blog, betashop, at http://betashop.com.

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