Learning how to increase customer lifetime value for more sales is a smart win-win situation, as prioritizing your loyal customers to reach advocacy encourages them to buy more from your e-commerce store and recommend your site to their friends to do the same.
We can realize how many companies start investing in customer retention in 2023. So, learn some marketing tactics to increase customer lifetime value for more profits from your existing customers.
Read on to find high-efficiency tips for increasing customer lifetime value (CLV) to guarantee significant revenue and new opportunities for your e-commerce business.
What is customer lifetime value?
Customer lifetime value is the most necessary metric in the e-commerce business and traditional retail, as it depends on making sales from your loyal relationship with customers.
Simultaneously, when you have customers who have made a single purchase of 200 dollars as an example, it is a sign referring to low customer value.
But frequent purchases are a sign of high profits and a recommended audience for your store.
How can you calculate customer lifetime value?
If you have a group of loyal customers who love your products and buy them every three months per year for around the next five years for $200, This refers to the customer lifetime value as $200X4 (which is times per year)X5(years)=$4000.
So, it is more valuable than having customers make one-time purchases!
Why should brand owners focus on customer lifetime value for more sales?
The customer lifetime value (CLV) can guide you in necessary business aspects like marketing strategies, customer service, and more.
Moreover, the customer lifetime value helps business owners predict future revenue, which is a good step in a safe direction due to the fast economic circumstances nowadays.
Based on some reports, more than 60% of brands have started focusing on retention rather than acquisition.
Simultaneously, as a brand owner, you will guarantee customer retention, which leads to more profitability as long-term customers can refer others to your business.
Also, knowing CLV helps focus on targeted marketing campaigns, which leads to attracting higher-value customers.
So, when the company starts focusing on CLV, it will lead to a better customer experience and enhanced performance, which will keep them buying from you again due to a smooth shopping experience that leads to more sales.
How can business owners increase customer lifetime value?
After all these advantages, you will certainly wonder how to maximize your CLV and build positive and long relationships with your customers.
Here are some ways business owners can use to increase customer lifetime value:
Cross-selling and upselling.
Using a cross-selling sales strategy that works on convincing customers to purchase complementary products besides their purchases
For instance, when food restaurants ask if you like tea with your breakfast or when an e-commerce website shows customers suggestions of trendy products.
Upselling encourages customers to upgrade their purchases for a higher rate.
For example, when the e-commerce website sets a minimum order value to activate a free shipping offer or voucher with a discount.
Both strategies increase order total value to boost CLV, total profits, and customer relationships with the brand.
Listen to your customer's feedback.
Are your consumers happy with your products or services?
Ask yourself this question using customer data analytics to understand and monitor your audience.
Customers always appreciate a brand that asks, listens, and understands their concerns.
Simultaneously, neglecting your customer feedback may expose your brand to negative comments on social media and bad reviews on Google.
So, be smart when dealing with consumers, send them surveys to collect their feedback, and send customer complaints to customer support to start working on them.
Establish a loyalty program.
You will not have a professional e-commerce store if you take your loyal customers for granted.
Work on creating a friendly, easy-to-use loyalty program that offers them advantageous points to encourage them to come for more purchases.
For instance, McDonald's rewards customers who use their application with a rewards program.
They can buy and pay through the application, saving time and getting a convenient experience.
Furthermore, the Mac application gives customers cashback points to earn free food and drinks.
Offer a smooth customer experience.
Do you know that more than 80% of customers can pay more to get the best customer experience?
Otherwise, more than 50% of people who have a poor shopping experience stop and decide not to purchase again from this e-commerce store.
So, you should ensure a smooth checkout process, and when people search with keywords, they find their needed products.
Build a community for potent relationships with customers.
Customers tend to feel that they are part of your business and that business owners care about their satisfaction, not only to gain money.
So, to increase customer lifetime value, make efforts to offer a community for your consumers by interacting with them on social media, encouraging them to share reviews and photos, using branded hashtags, offering advice, and more to engage in a community setting.
Referral program and rewards.
You just need to imagine which is better when customers find your business through word-of-mouth referrals or costly advertising marking campaigns.
So, thinking this way helps you accept that attracting customers in the CLV equation is worth marketing expenses.
However, there is no comparison, as setting up a referral program is a low-cost way to increase customer lifetime value and will turn in high profits for your brand, products, and services.
For example, you can reward your customers with gifts, free products, discounts, and specific rewards for new customers.
Successful brand owners calculate and analyze their customers' lifetime value to predict their profits and decide the best marketing strategies with the highest impact.
E-commerce businesses become crowded with competitors, and varieties are available for customers. So, be smart about how to invest money in attracting consumers and having your own loyal customers.
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At be4startup, we guarantee your business success, high profits, and more loyal customers.
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