It’s no secret that the eCommerce landscape is becoming more and more competitive. To stay ahead of the curve, it’s essential to focus on strategies that won't only acquire new customers but also increase the lifetime value of your existing ones.
Customer Lifetime value (LTV) is a metric that estimates the total value of a customer relationship, from initial purchase to repeat business. It takes into account not only the revenue from a single transaction but also the potential value of future purchases.
A number of factors contribute to LTV, including customer satisfaction, engagement, and loyalty. By improving these elements of the customer experience, you can increase lifetime value. So what can you do exactly to achieve that? That's precisely what we'll be exploring in this post.
6 Powerful Ways Increase Customer Lifetime Value (LTV)
1. Stay Top of Mind Through Email Marketing
For starters, it's important to keep in mind that the goal of email marketing isn't only to acquire new customers but also to nurture existing ones.
Make sure you segment your email list so you can send targeted content that’s relevant to where your prospects are in their customer journey. If someone just made their first purchase, for example, you wouldn't want to send them the same email as someone who's been a customer for six months.
The goal is to create a relationship with your customers and keep your brand top of mind, so they think of you first when they're ready to make their next purchase.
You can do this by sending regular emails with valuable content, such as helpful resources, product recommendations, or exclusive deals and discounts.
2. Develop a Loyalty Program
Another great way to increase LTV is to develop a loyalty program. This is a program that rewards customers for their repeat business.
There are many different types of loyalty programs, but the most important thing is to make sure it’s designed in a way that motivates your customers to keep coming back.
For example, you could offer tiered rewards based on the number of purchases made, give points for every dollar spent, or provide exclusive discounts and deals to loyal members.
That way, your customers have an incentive to stay loyal to your brand and make repeat purchases.
3. Improve Customer Service
Customer service is another important factor that contributes to LTV. If your customers are unhappy with your product or service, they're less likely to do business with you again in the future.
On the other hand, if you provide exceptional customer service, you can create a positive customer experience that will keep them coming back. In fact, 89% of shoppers are more likely to make a repeat purchase when they’ve had a stellar customer experience.
There are a few key things you can do to improve customer service, such as offering 24/7 support, being responsive to customer inquiries, and resolving complaints quickly and efficiently.
4. Increase AOV with Upselling and Cross-Selling
One of the easiest ways to increase customer lifetime value is by increasing your average order value (AOV). This is the “average amount of money each customer spends per transaction”, according to Shopify. There are different ways to do this, but two of the most effective ones are upselling and cross-selling.
Upselling is when you offer a more expensive version of the product your customer is already interested in. For example, if someone is looking at a pair of shoes on your website, you could upsell them by offering a more expensive pair of shoes with better features.
Cross-selling is when you recommend complementary products to your customer. For example, if someone is buying a dress, you could cross-sell them by recommending a matching purse or necklace.
Both of these strategies can be used to increase AOV and, as a result, customer lifetime value.
5. Offer Subscriptions
One of the best ways to increase customer lifetime value is by offering subscriptions. This could be anything from a monthly subscription box to a subscription-based product or service.
The key with subscriptions is to offer something of value that your customers will want to keep coming back for.
For example, suppose you sell products that need to be replaced regularly, such as coffee or razor blades. In that case, you could offer a subscription service that delivers those products to your customers on a regular basis.
This provides convenience for your customers, guarantees repeat business, and helps you increase LTV by locking in customers for the long term.
6. Encourage Referrals
Referral programs are another great way to increase customer lifetime value. This is when you offer incentives for customers to refer your business to their friends and family.
For example, you could offer a discount or freebie for every successful referral. Or, you could set up a points-based system where customers earn points for every referral they make and can redeem those points for rewards.
Referral programs are a great way to increase LTV because they not only bring in new customers but also encourage existing customers to keep doing business with you.
In doing so, you create brand advocates who are more likely to stick around for the long haul. And what’s more, referrals tend to be high-quality leads who are more likely to convert into paying customers.
Discover 4 Customer Lifetime Value Mistakes in eCommerce You Should Avoid
Ready to Increase Your LTV?
There you have it! These are just a few of the many ways you can increase customer lifetime value for your eCommerce business. Remember that acquiring new customers can be costly (5x more so than retaining existing ones), so it's important to focus on retaining those you already have to build a successful and sustainable business.
By using the strategies mentioned above, you can increase customer loyalty, boost customer retention rates, and ultimately increase your bottom line. So get started today and see the difference it makes for your business!
