Customer lifetime value (CLV) is the total revenue a customer generates for a business over their lifetime. It is a key metric for businesses to track, as it can help them to identify their most profitable customers and to allocate resources accordingly.
There are a number of ways to build a CLV strategy for a retail business. Here are some tools, use cases, and tactics that can be used to fuel the overall business strategy:
- Customer relationship management (CRM) software: CRM software can help businesses to track customer interactions and to build a single view of the customer. This information can be used to identify opportunities to increase CLV, such as upselling and cross-selling products and services.
For example, a retail business can use CRM software to track the purchase history of its customers. This information can be used to identify customers who are likely to be interested in upselling or cross-selling. For example, if a customer has purchased a pair of shoes, the business can send them an email offering a discount on a handbag.
- Data analytics: Data analytics can be used to identify patterns in customer behavior and to make predictions about future behavior. This information can be used to target marketing campaigns and to personalize the customer experience.
For example, a retail business can use data analytics to identify customers who are likely to churn. This information can be used to take steps to prevent churn, such as offering loyalty programs or discounts.
- Machine learning: Machine learning can be used to automate tasks, such as customer segmentation and churn prediction. This can free up time for businesses to focus on other activities that can help to increase CLV.
For example, a retail business can use machine learning to automate the process of sending out birthday emails to customers. This can free up the time of customer service representatives so that they can focus on other tasks, such as resolving customer issues.
- Personalization: Personalization is the practice of tailoring the customer experience to the individual. This can be done by using customer data to recommend products and services, to send targeted marketing messages, and to provide a more relevant and engaging experience.
For example, a retail business can use personalization to recommend products to customers based on their past purchases. This can help to increase the chances that customers will make a purchase.
- Loyalty programs: Loyalty programs can be used to reward customers for their purchases and to encourage them to continue shopping with the business. Loyalty programs can also be used to collect data about customer behavior, which can be used to improve the customer experience and to increase CLV.
For example, a retail business can offer a loyalty program that gives customers points for every dollar they spend. These points can then be redeemed for discounts or rewards.
- Upselling and cross-selling: Upselling is the practice of selling a customer a more expensive product or service than they originally intended to buy. Cross-selling is the practice of selling a customer additional products or services that are related to the product or service they have already purchased. Both upselling and cross-selling can be used to increase CLV.
For example, a retail business can upsell a customer by offering them a warranty on the product they are purchasing. This can help to increase the chances that the customer will make a purchase.
- Churn prevention: Churn is the rate at which customers stop doing business with a company. Churn prevention is the practice of reducing the number of customers who churn. This can be done by identifying customers who are at risk of churning and by taking steps to keep them engaged with the business.
Now, to add MarTech soultions and tactics that you can utilize to achieve the above:
marketing technology solutions mentioned above:
- Marketing automation software: Some popular marketing automation software solutions include HubSpot, Marketo, and Salesforce Pardot.
- Customer data platform (CDP): Some popular CDP solutions include Segment, Oracle Responsys, and Adobe Experience Platform.
- Web analytics software: Some popular web analytics software solutions include Google Analytics, Adobe Analytics, and Matomo.
- A/B testing software: Some popular A/B testing software solutions include Optimizely, VWO, and Google Optimize.
- Customer journey mapping software: Some popular customer journey mapping software solutions include UserZoom, Hotjar, and SessionCam.
- Chatbots: Some popular chatbot solutions include Drift, Intercom, and ManyChat.
- Social media marketing software: Some popular social media marketing software solutions include Hootsuite, Buffer, and Sprout Social.
These are just a few examples, and there are many other great solutions available. The best solution for a particular business will depend on its specific needs and goals.
Here are some specific examples of how these marketing technology solutions can be used to aid with a CLV strategy:
- A retail business can use marketing automation software to automate the process of sending out birthday emails to customers. This can free up the time of customer service representatives so that they can focus on other tasks, such as resolving customer issues.
- A restaurant can use a CDP to collect data about its customers, such as their purchase history, their dining preferences, and their social media activity. This data can then be used to personalize the customer experience, such as by sending targeted marketing messages or by recommending dishes that the customer is likely to enjoy.
- An e-commerce business can use web analytics software to track website traffic and to identify trends in customer behavior. This information can be used to improve the website experience, such as by making it easier for customers to find the products they are looking for.
- A software company can use A/B testing software to test different versions of marketing campaigns to see which one performs better. This can help the company to improve the effectiveness of its marketing campaigns and to increase CLV.
- A bank can use customer journey mapping software to understand the customer journey from start to finish. This information can be used to identify opportunities to improve the customer experience and to increase CLV.
- A hotel can use chatbots to provide customer support 24/7. This can help the hotel to improve customer satisfaction and to increase CLV.
- A tech startup can use social media marketing software to manage its social media presence and to engage with customers. This can help the startup to build relationships with customers and to increase CLV.
For example, a retail business can send out surveys to customers to ask them why they are considering churning. This information can be used to take steps to address the customer's concerns and to prevent them from churning.
By using these tools, use cases, and tactics, businesses can build a CLV strategy that can help them to increase customer lifetime value and to improve their overall business performance.
In addition to the above, businesses can also consider the following tips when building a CLV strategy:
- Focus on the long-term: CLV is a long-term metric, so businesses need to be patient and persistent in their efforts to increase it.
- Be data-driven: Businesses need to collect and analyze data about their customers in order to identify opportunities to increase CLV.
- Be creative: There are many different ways to increase CLV, so businesses need to be creative in their approach.
- Be consistent: Businesses need to be consistent in their efforts to increase CLV in order to see results.
By following these tips, businesses can build a CLV strategy that can help them to improve their overall business performance.
