What is Customer Lifetime Value (CLV)?
Customer lifetime value (CLV) is one of the key stats likely to be tracked as part of a customer experience program. CLV is a measurement of how valuable a customer is to your company with an unlimited time span as opposed to just the first purchase. This metric helps you understand a reasonable cost per acquisition.
When data from all areas of an organization is integrated however, it becomes easier to calculate CLV. At its simplest, the formula for measuring CLV is: Customer revenue minus the costs of acquiring and serving the customer = CLV. Functions can be added to this simple formula to reflect multiple purchases, behavior patterns, and engagement to predict CLV.
Why Focus on Increasing CLV?
Ultimately, you don’t need to get bogged down in complex calculations – you just need to be mindful of the value that a customer provides over their lifetime relationship with you. By understanding the customer experience and measuring feedback at all key touchpoints, you can start to understand the key drivers of CLV.
It’s a great metric when you have a multi-year relationship with a customer – say for a herbal or vitamin subscription. And it’s good for spotting the early signs of attrition – say, for example, you see spend dropping off after the first year as they use the subscription less and less.
Identify the touchpoints where the customer creates the value. Measure revenue at each touchpoint.
Integrate records to create the customer journey. Add together over the lifetime of that customer.
What are Some of the Ways We Increase Your Repeat Purchases?
Our management process can be divided into 5 steps described below and almost all are fully managed by us so you can focus on the other aspects of your business.
Communicate With Your Customers
To increase sales over time and build customer lifetime value, you must communicate with your customers on an ongoing basis. The secret to building a powerful brand is developing a relationship with customers that leads to brand loyalty and brand advocacy over time. That starts with consistently delivering on your brand promise, meeting customer expectations for your brand, and communicating with them to build brand trust.
Personalize & Segment Your Audience
Leverage dynamic content on your website and in your email marketing, so customers always see the most relevant offers to them. For example, show related products that customers might be interested in when they view specific products on your website or when they add certain products to their online shopping carts. This is a great way to increase sales per order!
Exclusivity & Special Discounts
It’s important to recognize and reward your customers by creating exclusive offers and programs for them, particularly for your most loyal customers. Create frequent shopper programs and other loyalty perks that make your best customers feel special.
Furthermore, make sure it’s extremely easy for customers to make repeat purchases from your business. For example, ensure your ecommerce store offers easy password and username retrieval, and offer to save shipping and payment information in customers’ accounts so repeat customers don’t have to type that information all over again. Every step that you can remove in the purchase process will increase sales.
What do you do to re-engage prior customers who haven’t purchased anything from your business or opened one of your email messages recently? You can’t expect them to become repeat customers if you’re not trying to re-engage them. You can do this through email remarketing. Send messages to customers who haven’t purchased anything from you in three months or who haven’t opened your email newsletter or promotional emails in six months. Offer them something special to come back and buy again.
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