There are crucial eCommerce marketing KPIs to track for every Shopify business: number of orders, revenue, profits, and so on. However, there is one metric you may be overlooking that can significantly impact your bottom line and help you make smarter decisions.
Customer lifetime value is the measure in question, and you’re going to look at how to use it and enhance it today.
You’ll be well on your way to a more profitable eCommerce business after you master these methods and truly understand your client’s lifetime value! Let’s get started.
What Does a Customer’s Lifetime Value (LTV) Look Like?
Customer lifetime value is the total amount of money generated by a typical customer throughout their association with your company. Purchase frequency, average order value, and an average number of orders are all factors considered. CLTV marketing is then employed to boost each customer’s lifetime value.
LTV- The metrics you need to measure and improve to grow your online store
The amount of money each client is projected to spend on your products and services is the customer lifetime value (LTV).
Knowing your client’s lifetime value will help you make several crucial business decisions. Consider the following scenario:
- If you know your client LTV, you’ll be able to figure out how much you can spend to attract a new customer. (This also implies that if you can raise your CLV, you can raise your CAC.)
- You’ll also know how much you can spend on customer service and retention. And so on.
Why Is Customer Lifetime Value The Most Important Shopify Metric?
If your top KPIs are monthly or annual sales, you might be surprised to find that customer lifetime value should be one of the most significant indicators to track your eCommerce marketing success. It should be just as crucial, if not more, to your definition of success as income. This is why:
- Obtain a more accurate picture of your future: Customer lifetime value is the best way to anticipate your future success. Sales and revenue are fantastic indicators for analyzing the here and now, but customer lifetime value is the best method to estimate your future success. Every lead and client acquired becomes a useful piece of forecasting data once you know how much you’ll make from your average customer during a given period.
- Create strategies to reduce the cost of acquiring new customers: As you may be aware, acquiring new consumers is costly. One of the most difficult difficulties eCommerce businesses have is minimizing the cost of acquiring new consumers to increase profitability and expand their business. This is where increasing the lifetime value of your customers can help you reach your aim.
- Get Real-Life Insights Into Customer Retention Techniques: The ultimate KPI for client retention programs is your customer lifetime value. Your CLTV will rise if your retention strategies are effective.
- Over Time, Track Gross Profit And Success: You can better handle profitability in your store when you understand your customer lifetime value. For example, a customer’s first purchase may not be profitable, especially when marketing costs are factored in. Still, if you know they’ll return, you may begin to analyze profitability for that customer.
- Customer Satisfaction Is Monitored And Improved: You can immediately spot patterns in customer satisfaction if you keep a careful eye on customer lifetime value. Having a metric gives you a clear picture of where your firm is in terms of meeting your customers’ needs. If you see that your customer lifetime value is lower than you expected, you can go further into the analytics to figure out what’s wrong and how to repair it.
Here we go for the 7 key strategies for increasing customer LTV
Here are seven consumer retention strategies you can use to boost your client’s lifetime value and business revenue.
1. Prove to your customer that you always care about them
In this context, customer information refers to data that may be used to create personalized campaigns. Now, personalized efforts go beyond behavioral triggers and utilizing their first name in communications; they go above and beyond using their data.
Before you go any further, keep in mind that there is such a thing as too much personalization. As a result, you shouldn’t go looking for information that will make your brand appear strange.
Customers’ areas for regional campaigns, or something as simple as their first purchase date for customer milestone campaigns, are examples of the type of information I am talking about here. These kinds of promotions demonstrate that you are concerned about your clients’ achievements. Additionally, attempt to provide value in your milestone marketing.
2. Make shopping experiences truly memorable
Your user experience increases when you optimize your website’s touchpoints. Your clients will be eager to return to your store if they have a positive user/shopping experience. What evidence do we have for this? After a negative user experience, 88 percent of online customers stated they would not return to a website.
While every store owner claims to provide a wonderful user experience, it’s crucial to keep an open mind and continue to look for methods to improve your site’s customer experience. Start by looking at your website analytics to see where your store’s conversions drop off the most. This will assist you in identifying places where you need to improve conversion and pick up the slack.
Conversion rate optimization is vital because it allows you to gain more value from your existing consumers while lowering acquisition expenditures.
Customer touchpoints to focus on for an eCommerce store include adding to cart, shopping completion rate, number of email signups, and so on.
3. Remarketing strategies can help you re-engage customers
Implementing remarketing methods is one of the most effective ways to increase CLTV. Remember that remarketing strategies is not the same as retargeting. Remarketing is used to re-engage existing customers, whereas retargeting is used to reach out to individuals who have visited your site but have not yet purchased. Unlike new visitors, who must rely on sponsored retargeting, current customers can receive automated remarketing mailings.
You can use abandoned cart emails and re-engagement emails as remarketing methods. These will assist you in recovering orders from clients who would have otherwise been lost, hence increasing their lifetime value.
4. Provide high-quality, omnichannel customer service
Customer happiness and customer lifetime value are closely related, as previously stated. Invest time and effort into developing an excellent customer service program to increase your CLV. You don’t need a large crew to provide omnichannel customer service, but you should. This can include things like:
- Email assistance
- Support over the phone
- Support via social media
Always keep in mind that every assistance channel you provide must be of excellent quality. Creating several support lines and leaving them unmanned is one of the worst things you can do. Instead, figure out what your prospective customer’s preferred method of communication is and start there.
If you work with elders, you may find that they are more comfortable calling for customer service. If you’re trying to reach College Age customers, social media might be the way to go.
5. Seek review, but please don’t annoy the customers
Receiving consumer comments on their experience with your website or product may be engaging. But, especially if you’re looking forward to hearing what they have to say, avoid unwanted feedback requests to maximize their lifetime value.
This entails knowing when to ask for input. One example is sending a review pop-up after a customer has completed a successful purchase and received their order. It could be the next day after you assist them with a pending issue or inquiry. This is a terrific method to stay in touch without becoming overbearing.
It’s also easier to include a rating question or a one-question survey in your follow-up. As a result, your clients will spend less time answering your survey and find it less exhausting. However, structure it in such a way that you still obtain a lot of information.
There is a review collection app, which collects reviews through WhatsApp. This app provides a completely hassle-free procedure to collect reviews from customers via WhatsApp. You can also get photo/video reviews since it is through WhatsApp, which can also build social proof.
6. Launch email campaigns for upsells and cross-sells
This is where integration plays a critical role. For example, purchase data can be automatically recorded against the contact record when your eCommerce site and CRM are fully integrated, enabling automated nurture campaigns to cross-sell and upsell to your existing customers.
Cross-sell efforts entail recommending more products to a buyer who has just purchased one. You can cross-sell essential oils to a consumer who just bought a diffuser, for example. On the other hand, upselling is convincing a consumer to purchase a more expensive and premium form of the same product.
7. Promote loyalty programs
Customer loyalty programs come in many forms and sizes, so there’s bound to be one that fits your needs. The points-based loyalty program, in which customers receive points depending on the number or value of their orders, is one of the most common examples.
Loyalty programs ensure that your clients continue to buy from you rather than your competitors, which is especially important if your company faces a lot of rivalry in the sector. This is a simple and enjoyable technique to ensure that your consumers keep buying from you, improving client lifetime value.
Customer lifetime value is a crucial metric to track since it represents customer happiness and may be used to forecast future performance.
You may illustrate chances for improvement and growth now that you understand the various components and KPIs that influence your client lifetime value. As you can see, there are numerous techniques for increasing client lifetime value, but now is the time to put them into practice.
Here you can visit the Best Ecommerce Blog.
Best of luck!
Safeeda.M.S, the content marketer of reviewbit. Reviewbit helps eCommerce merchants to offer post purchase customer engagements using social messaging platforms like WhatsApp. By sending an automated review request through instant messaging platforms, that helps merchants to collect reviews from each order.