5 Steps to Increase Customer Lifetime Value

5 Steps to Increase Customer Lifetime Value

Customer lifetime value helps generate profit

Your most profitable customers are the ones with the highest customer lifetime value or CLV. Why? Because they generate reliable, recurring revenue. This article will give you 5 Steps to Increase Customer Lifetime Value. One of the best ways an eCommerce business can protect itself, especially in turbulent times like now, is to enhance that customer lifetime value among your loyal fans.

Essentially, CLV is how much profit you’ll make from one customer from their first through final purchase. The better the relationship you build with them, the more they shop, and the easier it is for you to predict income and expand.

Many guides you’ll find online focus on squeezing every cent out of a customer to improve their CLV. Unfortunately, that process can lead to customer turnover in many cases. In other words, customers will leave especially if they feel tricked, highly targeted, or like you’re constantly increasing prices. We want to avoid that trap here. Above all, the tips and steps you’ll find below focus on maximizing your value to customers to keep them happy and returning for the long term.

1. Look for behavior changes

One important aspect of predicting and trying to optimize CLV is understanding the behaviors that drive your customers. You likely have some historical data around initial sales, landing pages, which products people buy together, and more. What companies should do each year — or perhaps each quarter for eCommerce after the COVID-related shakeup — is stepping back and look at those behavior patterns.

A few good questions to drive these reviews are:

  • What’s changed about purchase habits?
  • Where are new customers coming from, and is that different?
  • Are repeat purchase time increments growing larger or shorter?
  • What can you tie to changes in product offers?
  • Are today’s CLV projections enough to meet predicted future costs?

Maximizing CLV requires a strong knowledge of current customers, their habits, and how those habits have changed in response to your offers. For example, you might realize that customers treat you like a staple and expect a consistent product. On the other hand, you might discover you do better with shoppers that want to see something new and exciting every quarter.

2. Improve your onboarding

Service providers get most of the attention when it comes to customer onboarding. But, those steps are just as crucial for product sales. At its core, onboarding messaging is how you create a relationship with your customers, especially if you’re an eCommerce brand.

Onboarding gives you a chance to introduce your company and to start providing help or inspiration. The process should give the customers an easy way to revisit your site. Pair that with discounts or deals, and you create a strong incentive for a repeat purchase. A/B test the timing of this deal to see if it works best immediately after a purchase or if it needs to arrive a short time after the product.

Some companies have complex steps to use products, register warranties, or to onboard. When you can, simplify these elements so as many are automated as possible. If you can’t streamline much, consider mixing in educational elements. A long registration form can be made less annoying when it’s followed by targeted support. For example, if you sell lighting for YouTubers and streamers, ask if their space is light or dark and then deliver a short video on how to light someone’s face in either case.

In its handy onboarding guide, HubSpot notes that improving onboarding can reduce churn and increase CLV. Beyond simplification, it recommends you keep onboarding related to buyer groups, make customer support easy to access and acknowledge the customer as they finish the process.

3. Help them plan ahead

Loyalty and CLV are going to be difficult for many eCommerce companies this year. Your audience is shifting spending habits, employment is still uncertain, and most people who’ve tried new brands plan to stick with them. So, businesses need to step up with their value-added services. You can do this and prioritize CLV by targeting that value to the next sale.

Offer support for people who may want to buy from you for a specific purpose in the future. The most straightforward example is the year-end holiday season. Not only is it when most eCommerce companies make large portions of their annual sales, but it’s also when people tend to need to browse and hunt for ideas. You want to provide that support with content, from ads and blog posts to curated selections and categories.

For this year, there’s one specific part of this you must provide help around. That’s getting gifts and packages delivered on time. There are countless stories about the 2020 holiday season being a bust due to shipping. Many households were still getting December’s packages in February because of carrier delays. Help your customers plan for this potential shipping problem repeat by explaining the issue and pushing up the date you suggest they purchase.

Make it easier for them to accomplish not only their product goals but their purchase goals.

4. Give complimentary benefits

Turn that assistance we were just discussing into direct benefits for loyal customers. Again, these don’t necessarily need to be focused on your products themselves if you’ve identified other ways to be helpful.

Building on that holiday fulfillment example, consider rewarding loyal customers with help in their shopping and shipping. These rewards might mean you also start your holiday sales sooner for loyal customers so they can ship things to family sooner. For example, you could give subscribers access to faster delivery. Similarly, don’t charge extra for expedited shipping. Explain your reason for the early sales, changed dates, and more. Position it all as your desire to help them plan for an important event or purchase. Subsequently, you’ll be in good shape to improve these customers’ CLV.

Price isn’t the only pain point your customers have. Look for opportunities to address other concerns. Being proactive around these areas can be a big win for CLV.

5. Adjust your feedback requests

There are two vital pieces of feedback you want from every customer. Product reviews that other shoppers can see and satisfaction surveys for your internal team. Usually, when marketers and business owners talk about reviews, they focus on the first. These tend to help boost sales, and most shoppers will leave a review when asked. These are great elements to focus on as you build your customer base but may or may not significantly impact CLV.

The stat that could be the most important for linking reviews and CLV comes from BrightLocal’s 2020 update to its consumer review survey. The data shows 20% of people expect a business to respond to their reviews within one day. However, this leaps to 76% when you extend that to getting a response within one week. That’s huge for two big reasons:

  • We can realize that the reviews people leave for your products cover both information for shoppers and your business by expecting a response. One review includes the two types of feedback every business wants.
  • Expecting a response also makes this a customer service opportunity. They’re a chance for you to solve issues, thank customers, and much more. Use your answer to build up your existing relationship.

If you’ve got the time and staff, mine these reviews for useful information. See where you can find advice on what to adjust or improve for your products and sales pages. It’s now possible to track product reviews within many CRMs by sending custom links in post-purchase emails. If you get a great insight or review, consider sending a direct “thank you” to that customer. In addition, tell them the steps you plan to take. It’ll make them feel like a part of your business and keep them coming back for more.

Know what you can afford and deliver to increase Customer Lifetime Value

We will end with an insight that many companies consider after most of the work above is done. Bring these efforts back to what you can afford now and in the future. Actions that boost CLV — and hopefully other conversion rates in the process — need to make sense for your budget, even if it takes a while to see the benefits.

Sometimes, CLV improvements may take six months to realize. Therefore, ECommerce companies should be focusing on their next quarter planning right now, especially with how uncertain inbound and outbound shipping has been since 2020. If revenue is still uncertain, look for customer service tactics that you can deliver while you work up to better discounts or special offers. Hopefully, these 5 Steps to Increase Customer Lifetime Value will help you achieve a higher CLV.

Your connection with a customer and their CLV is about more than just a single sale. Prioritize the values and promises that you can meet consistently. Above all, you’ll be building that trust required for a long, healthy relationship.


Consider learning about more about ways to improve your eCommerce business.