Are you putting all your focus on bringing in customers and not understanding why your profits aren’t improving or why customers aren’t returning?
You’re not alone. It’s not uncommon for many digital marketers to unintentionally only focus on their first sale — successful businesses aren’t built off of once-and-done sales.
Maybe you already understand that repeat customers are the answer to creating a successful business, but you aren’t sure how to increase customer lifetime value and boost profits.
This guide can help you find the answers you’re searching for.
Keep reading to learn our top tips for understanding, calculating, and maximizing customer lifetime value.
How Do You Maximize Customer Lifetime Value?
Similar to average order value and cost per conversion, lifetime value is one of several important metrics for e-commerce businesses to track.
By tracking and learning how to maximize customer lifetime value, you could be increasing your revenue through repeat customers alone — new customers will become an added bonus to your business.
But how exactly do you increase CLV (customer lifetime value)? Businesses can do this in a multitude of ways, including:
- Up-selling/cross-selling
- Brand alignment
- Excellent customer service
- Automation
- Hearing client needs/wants
- Rewarding loyalty
- Creating engaging email marketing campaigns; and
- More.
Keep reading to learn how each of these methods can maximize customer lifetime value and build a loyal customer base.
Inspire and Engage
At Pretty-Impressive, each client is unique. Which is why we create strategies tailored to the needs of each company. Reach out and we’ll help you get your brand exactly where it needs to be — ahead of the rest.
How to Increase Customer Lifetime Value: 8 Methods
1. Up-Sell and Cross-Sell (Personalization Is Key)
You’ve already gotten your customers to buy from you once; now, the goal is to keep them coming back for more.
Increasing customer lifetime value by introducing upselling and cross-selling into your marketing plan is one of the easiest ways to boost your sales, revenue, and customer loyalty.
Up-selling requires you to be influencing your customers to update their purchase to a more expensive or improved service or product.
Cross-selling involves selling a similar complementary product/service to a customer when they purchase another product/service.
Cross-selling and up-selling aren’t as simple as offering an additional product or better service; it involves learning what your customers want or need — even before they know they want it.
Analyze your current customer base and see where they could benefit from purchasing more and offer them deals on those products/services when they need it most.
How can you do this? Consider:
- Bundling relevant products together. When you group products and services together and sell them at a lower price than what you would have separately, customers feel as though they are valued and receiving more for their money — making them want to return for more.
- Offering complimentary products before check-out. What do your customers need based on the items they already have in their cart? Guide your customers to purchase additional products that make the current product/service easier or more beneficial to them.
2. Align Your Brand With Your Target Customer
As a brand, if you want to increase lifetime value, it’s vital that you build a relationship and emotional connection with your customers.
To do this, you must ensure that your brand’s beliefs, values, and messaging all reflect those of your ideal client.
As a company that shares the viewpoints and can capture the attention of their ideal client, you’re more likely to see returning customers and increase your CLV.
Unsure of if your brand is aligning with your target customers?
Take the time to get to know them — consider surveying your customers to get better insights into what they expect from your business and how you can provide them with more.
3. Offer Excellent (and Innovative) Customer Service
Customers want to feel like they are receiving the best possible service from your business. 47% of consumers say they’ll give their business to a competitor if they are experiencing poor customer service.
What e-commerce businesses often forget is that this means providing a positive experience from the first interaction on your website to the last — before, during, and after the customers make a purchase.
Some of the easiest ways to boost the quality of your customer service and increase customer lifetime value involve:
- Offering multi-channel support. Become active on multiple channels, specifically channels your customers use the most. Learn which channels your customers use and provide your team with the training to utilize these channels properly.
- Providing quality 24/7 support. Customers don’t just want solutions to their problems. They want solutions now. Providing your customers with around-the-clock support is a great way to gain the trust of your customers.
Make sure your support team is not only there to answer questions and handle concerns but that they are equipped with the tools to do so.
By providing customers with an enhanced experience, your business can overcome hurdles and increase the lifetime value of customers by creating a trusting relationship with your ideal clients.
4. Automate Repeat Purchases With Annual Billing and Subscription Services
One of the most important factors impacting your business’ customer lifetime value is the amount of time that customers pay for your services.
Customers who are consistently purchasing from you drive your predictable revenue.
Encourage your customers to switch to annual billing cycles or subscription services. Not only will this produce a higher CLV, but it gives your business the ability to forecast and predict revenue.
If you’re looking for a way to encourage customers to commit to a subscription or annual billing cycle, consider offering a free product or lower rates for purchasing a longer subscription.
5. Listen to (and Implement) Advice From Your Customers
You’ve heard the saying, “happy wife, happy life,” well, the expression is true for your customer base, too. Happy customers will be your most loyal customers
When you understand your customers — what fuels their purchases and learn what tactics aren’t working for them — you can prioritize aspects of your business based on what benefits your customer and your revenue.
6. Give Your Most Loyal Customers a Reward
Provide your most loyal customers with the ultimate customer service experience. Although it may feel like you’re losing money by offering things like…
- A free upgrade to a premium service; or
- Sending out a free gift from your product line
… the cost will be insignificant compared to the impact the gesture will leave on your customer who is now more likely to recommend your business to their family, friends, or colleagues.
Can your business offer a loyalty program to your customers? What kind of reward can you offer to faithful clients that keep them coming back to your website again and again?
7. Deploy Engaging and Personalized Email Marketing Campaigns
One of the easiest ways to increase your CLV and keep customers engaged is through a value-packed email marketing campaign.
Make yourself known as a reliable source of knowledge, get to know your customers, and send out targeted, personalized email campaigns that give them the chance to re-engage with your business.
Do your email marketing campaigns draw your customers back in and make them see the value in your product or services? Maybe you need assistance conducting an email campaign that is tailored to your customers and your industry?
Pretty-Impressive marketing consultants are here to help. We offer data-driven email marketing campaign services that will drive sales and increase customer lifetime value.
8. Offer Your Customers Something That Your Competition Isn’t
As a business, you can’t afford to become complacent.
You don’t want to be equal to your competition, you want to be ahead of them.
By offering your customers something that your competition can’t, such as unique…
- Features
- Services
- Resources, or
- Products
… you can increase your customer lifetime value and brand loyalty.
Inspire and Engage
At Pretty-Impressive, each client is unique. Which is why we create strategies tailored to the needs of each company. Reach out and we’ll help you get your brand exactly where it needs to be — ahead of the rest.
Important Customer Lifetime Value Questions Answered
What’s a Good Customer Lifetime Value?
Although a “good” customer lifetime value will vary depending on the industry you’re working in, it is considered ideal if your customer lifetime value is at least three times greater than the cost to acquire a customer.
Let’s say you’re spending $300 a month in ad spend to bring in one new customer. That customer should have a lifetime value of a minimum of $300.
While there are several multi-channel attribution models, they generally work in the same manner where the model provides data on how different channels impact conversions through the journey.
Credit for the purchase is divided across various touchpoints and different values may be assigned to different engagement points.
This holistic overview of your marketing campaigns helps you understand the shape of individual buyer journeys based on real customer data. Understanding how that contributes to conversions will enable you to focus your marketing spending and effort.
How Do You Calculate Lifetime Value?
The formula for calculating customer lifetime value looks like this:
Average transaction size (the average order total) x # of transactions (in a year) x Retention period (in years).
What Affects Customer Lifetime Value?
Some factors that affect your customer lifetime value include:
- Churn rate
- Customer loyalty
- Marketing strategy
- Etc.
Need Some Expertise on How to Achieve a CLV Boost for Your Company? Pretty-Impressive Can Help
Are you still unsure of how to achieve a CLV boost?
Our marketing agency prides itself on helping e-commerce companies build customer bases, promote business growth, build brand awareness, and increase repeat sales.
The Pretty-Impressive team uses a data-driven strategy to generate more repeat sales. We help our clients identify and source new products and services that appeal to previous customers, leading to increased:
- Revenue
- Return on ad spend, and
- Customer lifetime value.
