One of the most important metrics in ecommerce is Customer Lifetime Value (CLV). This measurement forecasts how much an individual customer will spend with your company over their lifetime. And the higher your CLV, the better the growth and stability of your business in the long term.
The CLV is not necessarily concerned with your next conversion or the results for the next quarter—it teaches you to focus on the long-term strategy of your relationship with your customers. But why is high Customer Lifetime Value so important? And how can you go about increasing it?
Why is Customer Lifetime Value so Important?
Of course, acquiring new customers is vital. You must attract new customers and leads to grow and diversify your business. But it’s your returning customers and your repeat orderers that will help ensure the long-term stability and growth of your business.
And it’s important to remember that on average, attracting new leads costs your company up to six times more than retaining your existing customers. Over time, these deeper relationships will lead to the brand loyalty and customer advocacy that every business wants. Like any good relationship, maintaining great customer relationships requires work, but the long-term payoff of increased CLV will be worth it.
Let’s now dive into some actionable ways you can increase Customer Lifetime Value today.
Arguably your most valuable form of customer communication, email marketing provides you with direct access to your customer and is imperative in influencing CLV. Your email contacts are a valuable asset, and as such, you need to treat them with the utmost care. Because if you don’t, your customers will be unsubscribing like there’s no tomorrow.
Whether it’s your welcome email to a new customer or a message to a customer who’s been around for a while, the principle remains the same: make your email content relevant, valuable, and appealing. Just think of the number of emails the average person is required to sift through on a regular day. For your emails to even be opened, you must put the necessary thought and craft into them to keep your customers coming back for more.
Let’s look closer at some email marketing strategies to help you increase Customer Lifetime Value:
1. Optimize Your Welcome Email
First impressions last. Your welcome email should entice, delight, reassure, and wow all at the same time. After all, according to Experian, welcome emails (in comparison to standard promotional emails) saw 5 times higher click rates, 9 times higher transaction rates, and a whopping 8 times higher revenue rates. Part of improving your CLV lies in developing a fruitful, two-way relationship right from the start.
2. Reach out Immediately Post-purchase
Post-purchase is an ideal time to engage with your customer. They’ve just bought from you, and now it’s time to make sure that they’ll want to buy from you again. Whether it’s offering extra product information, aftercare, special discounts on the next purchase, or relevant complementary products, this email campaign is the perfect opportunity to keep up the dialogue with your customer, build trust, and nurture your developing relationship.
3. Improve the Onboarding Process
Onboarding is a crucial element in customer success, and it has a direct impact on retention and CLV. It’s a good idea to make onboarding one of your top priorities, considering poor onboarding is one of the leading causes of churn.
It’s during onboarding that your customer really starts engaging with your product, and a strategic onboarding process will entice your new customers to come back for more. You want to keep the onboarding as simple, quick, and enjoyable as possible so that the customers start experiencing the value of their purchase as soon as possible.
4. Audit Checkout Processes to Reduce Cart Abandonment
The average online cart abandonment rate is almost 70%, which presents a challenge for most ecommerce businesses. However, abandoned cart emails have a relatively high open rate of 44%, according to SaleCycle.
This means there is an opportunity here for you to remind your customers of what they almost purchased, let them know that you’re thinking about them and that you’re there to help. It’s a chance to re-engage with your customer and show them why they should purchase from your brand. And if you succeed in directing them back to that abandoned cart, then you’ll see your CLV rise in the process.
5. Surprise Your Customers with a Free Upgrade
Give your customers an unexpected upgrade. If you’re blessed with customers who are actively and regularly engaging with your brand, reward them for it!
Those are the people you want to give your whole brand experience to, so why not send them an irresistible offer for something they have not yet tried in your product line. Or, if you’re selling a service, give them an upgrade for free. The actual cost of things like this is minimal, but its impact on brand affinity and brand loyalty is priceless.
Loyalty programs are a great way to keep your customers engaged and to encourage them to buy from you repeatedly. Receiving a reward for each purchase is something many consumers appreciate and will make them more likely to return to your store.
Loyalty programs also provide an opportunity to differentiate your brand from your competitors. Increasing Customer Lifetime Value is all about nurturing your customer relationships, and a loyalty scheme is a powerful strategy for doing this. When it comes to implementing your loyalty program, here are a few key points to keep in mind:
6. Simplify the Enrollment Process
Make it easy to enroll and make the rewards easy to understand. Provide your customers with relevant information so that they can visualize the types of bonuses and rewards that they can receive.
7. Ask for Reviews and Engage with Your Customers
Don’t just reward spending. Also, consider in what other ways your customers can positively influence the image of your business. Whether it’s subscribing to your newsletter, writing reviews, sharing your content, or sharing your brand with their friends, there are many actions that you can reward. And doing so will show your customers that you appreciate and value them.
8. Personalize Rewards
Keep it relevant—make sure that the reward matches the customer. Because if it doesn’t, they’ll become disengaged and lose the desire to contribute to their loyalty scheme. In this sense, it’s vital to offer various options, be it gift cards, cashback, event tickets, or charity donations. Let the customer choose how they use their well-earned loyalty points!
Want more advice on this topic?
A big part of growing the bond between you and your customers involves getting personal. In our increasingly digitized and competitive world, customers don’t want to feel that they are just another name on a database with many thousands more. They want and even demand something a little more personalized. People like to know that they matter, and it’s your job to give them this feeling. Customized services will help you achieve this and increase each customer’s profitability and longevity.
Personalization is quickly becoming the norm across industries, so it’s essential that you find at least some small ways to tailor your message on an individual basis. Here are some examples of how businesses are using personalization to increase Customer Lifetime Value:
Related reading: Ecommerce Personalization: Benefits, Tactics, and Best Practices
9. Start Small and Level up Over Time
You don’t have to dive right into the deep end of machine-learning algorithms to predict customer demand—start small with your most basic customer data. If you have a name, a birthday, or a location, then you can use these little snippets of information in emails to show customers that you know who they are.
Instead of a one-size-fits-all email to millions, including some basic personalized details will make your customer feel special and will reinforce the relationship they have with you!
10. Create Tailored Offers
Use a customer’s purchasing history and current needs to create tailored offers. Delivering a relevant offer directly to your customer’s lap shows great thoughtfulness indeed. Not only does it show your customer that you’re empathetic towards their needs, but they’ll also now have a directly relevant offer that they can make the most of.
11. Personalize Your Website.
You can also use personalization on your website itself for a more streamlined and efficient purchasing experience. Your homepage, product pages, and checkout can all be used to provide relevant information based on browsing and buying habits. No longer will customers need to sift through thousands of irrelevant products. What they want will be right there. Many Vaimo clients have used this type of personalization to significant effect.
12. Ask Your Customers for Advice (and Give Credit Where Credit is Due)
When it comes to customer experience, the real experts are your customers. Make space for your customers to make suggestions, and offer incentives for customers participating in polls or emailing your feedback.
If you do end up making a change based on customer feedback, give them credit for helping you improve. For example, you can give them a shoutout in your marketing and send them a gift card or something similar to show your appreciation.
13. Feature Customers in Your Marketing and Social Media
User-generated content is truly a gift that keeps on giving from a marketing perspective. Encouraging your followers and customers to share their experiences with your brand on social media will not only give your brand greater reach and credibility and your content team more authentic content to work with. It will also help you tie your advocates closer to you and build deeper relationships.
Put your fans in the spotlight, make them the hero, and show them how much you appreciate them. This is a very efficient way to build long-lasting customer relationships.
14. Provide Valuable Content that Keeps Your Customers Engaged
While content marketing can be a very efficient tactic to retain customers, many businesses go about this the wrong way. Instead of creating valuable and personalized blog articles and newsletters, they run automated email drip campaigns that offer no value and that don’t feel relevant to anyone. If, however, you succeed in building an engaging content strategy, that will help you keep your customer engaged and loyal over time.
15. Customer Experience is the Key to Increasing CLV
Optimizing CLV and continuously improving customer experiences is key to growing your ecommerce business. All the way from the first interaction to delivery and then post-sales follow-up.
You need to think about ways to ensure that your customers receive a first-class, frictionless experience with your brand. From simple, seamless ordering to speedy customer service, and from reliable delivery experiences to providing relevant and valuable content via your website and social channels. Commitment to delivering outstanding end-to-end customer experiences is what will make your CLV skyrocket.
Related reading: Seamless Customer Experience: Why it Matters and How to Deliver
How Vaimo can Help
There’s one very important word to remember when it comes to increasing Customer Lifetime Value. And that’s lifetime. It can often be easy to focus on quick wins and the latest statistics. But think about it–if a customer orders from you once, never to return, how much value have you gained?
Just consider the cost of losing one of your longest-serving loyal customers against the gain of acquiring one new customer. It’s probably safe to assume that one eclipses the other in terms of its importance to your business. The CLV approach aims to increase the value of each customer in your funnel. So the real value will come from those who stick around, who are there through the lean times, and who you can depend on time and time again for repeat orders.
At Vaimo, we’re experts at all things ecommerce, and we’re happy to help you design the customer experiences that will turn customers into loyal fans who keep coming back. We would be happy to help you explore the opportunities and build an outstanding customer journey. Get in touch with our team of experts to learn how we can help you grow your brand.