9 Ways to Increase Your Customer Lifetime Value

Follow these nine tips to boost your customer lifetime value and retain more of your customers.

1. Segment Your Email and SMS Lists

Whether you’re marketing to your customers via email or SMS — or both — make sure they get segmented based on where they are in the sales funnel and what their interests are.

Someone who’s interested in your activewear line won’t want the same content as someone who wants to buy your dress socks.

Similarly, if a customer has only recently been introduced to your brand through an educational blog post, he or she probably isn’t ready to buy.

He or she doesn’t need the same content or message as someone who has demonstrated intent to purchase.

You also need a segment for repeat customers. You’ll want to keep in touch with those people and bring them back to your site for future purchases.

Too many marketers focus on bringing in new customers and forget about those who have already spent money on their businesses.

Once you’ve segmented, you can use drip campaigns to nurture both prospective and existing customers. Don’t bombard them with sales messages. Instead, build relationships with them.

2. Build Products or Service That Complement Existing Offerings

The number of products or services you sell will depend on several factors, including whether or not the customer is likely to quickly buy more of what you have.

For instance, someone who sells socks will sell more products than someone who sells washing machines. People need new socks more often than they need new washers.

However, you can build products or services that complement your existing lineup to encourage more purchases.

For instance, maybe you sell washing machines as well as your own brand of detergent. Customers who buy your machine might also want the detergent made specifically for it, and might, therefore, become recurring customers.

Alternatively, maybe you sell one great product that people buy over and over again. Instead of creating something else to sell, focus on recommending your product as a potential gift idea.

3. Take Advantage of the Freemium Model

One of the best examples of the freemium model increasing customer lifetime value is in-app purchases. You can play Candy Crush without spending a dime, but if you want to purchase extra lives or other boosts to the game, you need to pull out your wallet.

This model increases customer lifetime value because customers get to try out your product, become enamored of it, and decide to spend money.

In just one year, Candy Crush managed to rake in nearly $1 billion. That’s pretty impressive for a company that makes games people can play for free.

If your business doesn’t lend itself to the freemium model, you could offer different levels of flexibility and features. For instance, you might manufacture three different blenders that increase in efficiency and price point. That way, your customers not only have more choices, but they can upgrade to the better model, thus spending more money.

4. Consistently Send Out Coupon Codes and Other Special Offers

Coupon codes are vastly underrated. People love getting a deal, and even if your 10-percent-off coupon still leaves you a healthy profit margin, consumers will take advantage of it.

The question is when to send out your coupon codes or other special offers.

If you’re interested in increasing customer lifetime value, consider sending a coupon code a couple of weeks after a customer makes a purchase.

The transaction is still fresh in the customer’s mind, so he or she will be more willing to return to your site and check out other products or services.

Try offering a discount on the purchase of two or more items. You’re encouraging the customer to spend more money, but it still feels like a deal. Product and service packages work well for a reason. If you can save money by bundling your Internet, television, and phone service, why wouldn’t you?

5. Make Use of Thank-You Emails

Gratitude goes a long way in business. It’s also a great way to keep in touch with your customers.

A thank-you email is a message you send customers right after they purchase something from you. It doesn’t ask for anything — it just lets the customer know you appreciate their patronage. And, as a free gift, you might include a coupon code to boot.

The point is to make contact with the customer right away. Keep your brand top-of-mind to encourage repeat visits to your website — and, with any luck, repeat purchases.

Thank-you emails can also be the starting point for a new drip campaign. A few days after the thank-you email, you might send a quick survey to ask about the customer’s opinion of the transaction. This constant contact can increase customer lifetime value exponentially.

6. Funnel Traffic From Social

If someone buys from you, they might also follow you on social at the same time. Don’t squander that opportunity.

Keep in touch with your regular customers via social and target them with offers to come back to your site, such as to a landing page. Send out lots of gratitude when people buy your products and services so they know how much you appreciate them.

At one time, your online presence might have existed solely on your website. That’s not true any longer. You’ll want to take advantage of all contact with current and prospective customers to keep the traffic flowing from one online presence to another.

You’ll increase brand awareness, which can have a direct impact on customer lifetime value.

7. Create a Seamless Buying Experience

People often fail to purchase products from a company more than once because of problems with the buying experience.

Customers get irritated if they’re timed out during the purchase process or if you ask for too much information.

Conversely, customers who enjoy a seamless buying experience often share that fact with their friends. They let others know that you not only sell a great product or service but that it’s easy to buy from you.

Consider offering more payment options, reducing form fields, and estimating shipping costs from the beginning. Don’t put any roadblocks in the way that might discourage first-time buyers or cause existing customers to boycott your business for good.

8. Use Checking-In Emails

Another great way to boost customer lifetime value is to get in touch with dormant customers.

These are people who have bought from you in the past but have been inactive for a long period of time, such as six months.

Send an email that casually asks how they are and whether they’re interested in returning to your site. You can also give them the option to opt-out of your emails if they’re no longer interested.

This might seem like a bad thing, but scrubbing your email list of dormant or inactive subscribers can have a positive impact on your business.

If people aren’t interested in hearing from you, don’t give them a reason to send your emails to spam.

Those who do still want to hear from you might remember how much they liked your products and services and return. That will increase your customer lifetime value.

9. Offer a Loyalty Program

Want your customer lifetime value to shoot through the roof? Start a loyalty program. Customers can earn points toward future purchases and save money at a later date.

There’s a reason so many brick-and-mortar stores, from Walgreens to Best Buy, have loyalty programs. They work. Even if you’re online-only, give your customers the chance to save money on a future purchase by continuing to buy from you.

Conclusion

Customer lifetime value matters more than you think. It impacts customer retention rates, reveals the level of brand loyalty you command, and helps your business stay in the black.

If you’re not actively trying to improve CLV, now’s the time to start.

Focus on retaining customers as much as you work to acquire them in the first place. Use Crazy Egg’s heatmap tools to figure out where people are clicking, how far they scroll down your sales pages, and more so you can optimize your site for the optimal shopping experience.

The more effort you put into customer lifetime value, the more revenue your business will generate