How To Increase Customer Lifetime Value Online
- Category: Blog
It’s a lot of work to get customers to come to your website and take a look at what you’re offering, nevermind trying to convince them to convert.
It’s a lot cheaper (and less stressful) to keep current customers coming back for more.
Getting a new customer to spend the same amount as one of your current customers can cost up to 16 times more. This means that repeat customers give you a significantly higher ROI than new customers.
If you want to grow your business, you should start focusing on creating loyal, repeat customers with a high lifetime value. This will help increase your sales exponentially without you having to spend a whole lot of money on new acquisitions.
So, forget focusing all of your time and spending a load of money on getting new customers - nurture your current ones instead.
Here’s how you can increase your customer lifetime value quickly and drive more revenue through your eCommerce business.
1. What is a customer lifetime value?
Customer lifetime value is fairly simple to understand:
It’s the total amount of profit that you generate over the lifespan of your relationship with one individual customer.
Essentially it’s how much money you made from interacting and selling to one customer.
For example, a customer who buys from you all year round will have a higher lifetime value than somebody who only buys from you during your Christmas sale.
Increasing the lifetime value of a customer is all about focusing on the customers you already have instead of trying to reach out and get new customers on board.
Why is customer lifetime value important?
Simple: it costs 5 times more to get a new customer to your business then it does sell more to your current customers.
Plus it’s a lot easier to convince somebody who’s already bought from you to buy again. A potential customer might need more of a push to make the final leap into becoming a fully-fledged customer.
By focusing on a smaller group of customers you’ll be able to boost their loyalty to your brand and save money in the process.
Advertising to new customers costs a whole lot of dough, and besides it’s a lot of effort to try out different tactics just to see which ones convince them to convert.
2. How to increase your customer lifetime values
Lifetime value should be your main focus if you want to increase the profit of your company.
Here’s how you can increase your customer lifetime value and start making more revenue for your eCommerce business.
Upsell with an email marketing campaign
When customers convert for the first time you get a great piece of information.
Their email address.
With this, you can unlock a whole new way of targeting your current clients and improving the chances that they’ll convert again.
You can use this to increase your customer lifetime values.
Email is one of the best ways to leverage existing customers for more sales.
On Shopify, you can find out who your most loyal customers are by going to the ‘Reports’ section and scrolling down to the bottom. This will show you your most frequent repeat customers.
You can also do this with returning customers which are customers that might not have bought from you as frequently but they’ve still shopped on your site a couple of times.
Take a little look at the data to see how much each client has spent with you. From here you can compile a list of all the customers who are more likely to return once again to buy from you.
Now that you’ve got your list all you have to do is to start a new email campaign that will encourage your customers to return and make a purchase on your store.
To get the best results, remember to segment, segment, segment. Target your email campaigns into specific audiences with highly customised, super specific products and offers.
Build up a strong relationship using email marketing
Promotional and sales emails aren’t the only thing you should send to your email list of loyal customers!
Consumers usually follow companies online to take advantage of sales and special offers but they’ll also appreciate any brand who can entertain them.
This will improve not only trust and respect but it’ll also improve their customer lifetime value because they’ll feel more connected to you as a company.
All you have to do to build up this relationship with your customers is to provide them with value. Don’t concentrate on selling and promoting, show them why your company is unique and valuable to them. Show them why when it comes to buying products that you’re the right choice over your competitors.
Building a relationship and nurturing your leads can help you generate more sales at little cost.
Give rewards for customer loyalty
Loyalty programs are a great way to encourage your customers to return to buy from your eCommerce store. Just think about it. How many times have you gone back for a coffee in a really specific coffee shop just to get your little card stamped?
It’s the same mentality online.
If you offer your customers an incentive to return and buy from you then they’re going to keep buying from you until they’ve got their reward.
75% of customers say that they’re likely to make another purchase if they receive an incentive.
There are many customer loyalty programs you could try.
For example, you can offer a point system. For every euro they spend on your store they get a point. Then when they get to 100 points they get 10% off their next order.
Reward your most valuable customers
Some of your customers are exceptional customers. They buy from you monthly, if not weekly, and they love spending money on your store. These are your golden customers and they have an extremely high customer lifetime value.
You don’t want to lose them.
So, how do you keep hold of these perfect customers?
You reward them for their continuous support.
You can reward these loyal customers by offering them:
- A personal shopping service
- First pick of new products when they launch
- Orders picked up, packaged, and shipped ahead of others
- Offering exclusive discounts
- Freebies with an order
- Exclusive contests or giveaways
- Personalised content
You don’t necessarily need to offer all or any of these but something that shows your appreciation will make your customers feel wanted. They’ll feel closer to you and will more than likely continue to buy from you.
Even popping in a personal, hand-written thank you note into their latest parcel can make a huge difference.
Create a multi-channel customer support program
One thing that stops customers from making a purchase online is the lack of customer support.
Customers want to be able to ask questions about products and get answers immediately so they can go through with making a purchase. The longer they have to wait around for an answer the less likely it is that they’re going to convert.
Make your customers feel more confident about their purchase by offering them a variety of ways to have their questions answered.
- Use customer service with your social media
- Improve response times for email support
- Set up live chat during your operating hours
- Set up a 24/7 support chatbot
- Give them a way to contact you by phone
- Use voice or video chat for more complex issues
- Compile a detailed FAQ section on your website
The easier it is for your customer to have their problems solved the more time and money they’re going to put into your eCommerce business and the more their customer lifetime value will increase.
Getting new customers to your eCommerce store is both difficult and expensive plus it’s a whole lot of hassle.
Your competitors are fighting for the same customers and trying to acquire them takes a lot of time and effort. Implementing SEO strategies and content marketing can be expensive and PPC campaigns can be expensive for popular products.
We hope our blog post has helped you figure out how you can increase your customer lifetime value. If you have any questions or want some help getting more traffic to your store then why not get in contact with our team of marketing experts at Ireland Website Design.