If you're an ecommerce brand, you know that customer lifetime value (LTV) is a critical metric to track. LTV measures how much monetary value a single customer generates for your business over the course of their relationship with your brand. And in today's competitive ecommerce landscape, it's more important than ever to generate a high customer lifetime value in order to stay ahead of the game.
But how do you do that? What strategies can you use to improve your LTV and increase your profits?
In this post, we'll explore some proven strategies that ecommerce brands can use to improve their LTV. So whether you're looking to take your ecommerce brand to the next level or simply want to improve your LTV, this post is for you. Keep reading for some valuable insights and actionable tips that will help you with increasing customer lifetime value and growing your ecommerce store.
1) Create loyalty programs
A loyalty program is a rewards system offered by an ecommerce brand to encourage customers to keep spending money with them. Loyalty programs can take many different forms, but the most common type is a points-based system in which customers earn points for every purchase they make. These points can then be redeemed for rewards such as discounts, free shipping, or exclusive access to special deals and promotions.
Delighting an existing customer by offering rewards or special treatment motivates them to spend more on each order, increase their purchase frequency, and continue doing business with you. Improving average order value (AOV) allows you to increase revenue without spending more on customer acquisition costs which increases your customer profitability. Plus, if customers keep coming back, you extend the average customer lifespan, which, in turn, leads to an increase in customer lifetime value.
2) Offer discounts and promotions
A discount can be a fixed amount off the purchase price, or it could be a percentage discount. Promotions are special deals or offers that ecommerce brands run to drive more sales. These promotions could be a sale on select items, a free shipping promotion, or a coupon code that gives customers a certain percentage off their order.
By offering discounts on select items, you can tempt customers to buy more and increase their average order value. If customers feel you offer good value for money, they're more likely to keep returning to your store. Both of these effects help to bump up your LTV.
3) Use data-driven marketing tactics
Data-driven marketing can be effective for improving customer lifetime value (LTV) because it allows marketers to collect and analyze data about their customers and target audience. This data can be used to understand customer behavior, preferences, and buying patterns and then create personalized marketing campaigns that are tailored to different customer segments or each customer's individual needs and interests.
By delivering personalized and relevant content to customers (like personalized product recommendations), you can increase customer engagement, satisfaction, and loyalty. This will help you get a good customer lifetime value result, as customers are more likely to make repeat purchases.
4) Provide a user-friendly shopping experience
Customer retention is key to increasing LTV, as it allows businesses to keep more of their existing customers rather than lose them to competitors. By making it easy for customers to find, compare, and purchase products online, ecommerce brands can improve the customer experience and increase the likelihood of repeat business.
Make your shopping experience user-friendly by:
streamlining the checkout process and offering a variety of payment options
using intuitive navigation and search functionality to help customers quickly find what they are looking for
providing product reviews, ratings, and customer Q&As to help customers make more informed purchasing decisions
offering live chat or SMS support for customers who need assistance
5) Upsell and cross-sell
Average order value is an important part of customer lifetime value. The more customers spend per order, the greater their overall lifetime spend will be with you.
Upselling is when you offer a customer a product that is more expensive than the one they are looking at but might be something that they would like. For instance, the same product in a larger size or with added features. Cross-selling is when you offer a customer a product that is related to the one they are looking at. When a customer spends more on their order – either by upgrading the products they buy or adding more items to their order – your lifetime customer value goes up.
Offer customers related or complementary products to the items they buy either in pop-ups as they browse or as part of the checkout flow.
6) Invest in customer service
Customer service is one of the most important aspects of any ecommerce business. It can make or break a customer's experience with your brand, and if they have a bad experience, they're more likely to leave and never come back.
Great customer service not only keeps customers happy but also builds trust and loyalty. When customers know that they can rely on your brand to help them out when they need it, they are more likely to become repeat customers. This leads to an increase in customer lifetime value (LTV).
There are many ways ecommerce brands can provide good customer service, such as through phone support, conversational SMS, and social media. All of these channels should be available 24/7 so that customers can get help whenever they need it.
7) Use A/B testing to optimize and improve performance
A/B testing, or split testing, is a method of comparing two versions of a website or marketing campaign to see which performs better. By running A/B tests on ecommerce websites, ecommerce brands can identify areas for improvement and optimize their customer experience for maximum conversions. This can help to increase average order value and boost customer lifetime value.
There are many different ways ecommerce brands can use A/B testing to improve their marketing efforts and drive more revenue. For example, ecommerce brands can test different product designs, landing page layouts, call-to-action buttons, forms and options, pop-ups, and more.
SMS helps you grow customer lifetime value
Ecommerce brands that are able to improve customer experience, increase conversions, and boost average order value will be well-positioned to drive long-term customer loyalty and maximize customer lifetime value. And the good news? SMS messaging can support your business in all of these areas. SMS means you can send personalized marketing messages people will actually open, drive conversions, and support customers 1:1.