Hi! I'm Jason Goldberg,
Founder & Chief Executive Officer at Fab. I write here periodically.

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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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