Increasing Your eCommerce Customers Lifetime Value With Retention Campaign

Ever seen that one person in your company constantly saying “why should we do ‘x’?” or “that’s too expensive.”

But when you explain the actions and reasoning behind it, they are finally on board?

That’s retention.

Retention campaigns can help increase your customers lifetime value to your brand by incentivizing them to return to spend with you.

In this post, we’ll walk through how many companies use these strategies and the results they’ve achieved.

Whether increasing customer lifetime value is a priority for you or not, this article will give a few valuable insights into what getting more out of your customer touchpoints looks like.

Lifetime value is a big term which I like to think of as the “calculator money” that your customers will spend over the course of their entire relationship with you.

It’s a metric that most businesses look at, but some are more dedicated than others.

The 10% Rule

Before describing retention campaigns, let’s talk about the famous “10% rule”.

This was popularized by Leslie Deutsch (founder of angel investor group Stanford Angels) in her book No B.S. Business Advice for Smart Entrepreneurs.

From her experience as an angel investor she noticed that typically businesses had one or two investors who believed in them enough to invest and bring them to market.

Then there were some that had enough faith and money to get the business started.

Then there were the fringe cases, those businesses that were startup failures or those “whales” that thought they could be a whale.

The following is her description of the behavior of each group:

The 10% rule says that companies should aim for 10% of their customers to become repeat customers.

When you reward them with a loyalty program, the thought is that these are customers who won’t need to use your product or service again but would come back to you if they had problems with your competitor’s offering.

This can boost lifetime value because it gives your business another point of retention from which they will be loyal for years to come.

The 10% rule is often used to define the minimum threshold for creating a loyalty program.

Since it’s a minimum value, it doesn’t take into account things like churn and some other metrics that may not directly increase your lifetime value.

Retention Strategies

There is an entire new branch of marketing dedicated to retention strategies.

Retention campaigns can be as simple as sending out an email campaign to your customers on their one year anniversary with your business or as complex as offering different levels of rewards for a customer who purchases from you but does not redeem any reward.

The following are examples of some retention strategies that are used by many companies in order to increase their customer lifetime value.

Advocates: Give customers a reason to return to interact with your brand outside of purchasing.

This can be done in a variety of ways such as informational email campaigns, an updated blog, social media interaction or customer success stories.

Giving customers a reason to return to interact with your brand outside of purchasing.

This can be done in a variety of ways such as informational email campaigns, an updated blog, social media interaction or customer success stories.

Loyalty programs: These are one type of retention strategy that increases the chances of customers coming back to purchase or otherwise interact with your business.

The two main types are product-based loyalty programs and point-based loyalty programs.

The main thing we want to avoid with loyalty programs is having a bunch of customers who are racking up points with you and then redeeming those points years down the road.

Content: These customers want more than just your product.

Provide additional information to help them explore the possibilities that your products and services open up for them.

This can be as simple as giving them an email newsletter or perhaps they’d like a video tutorial series on Youtube.

Discounts: Provide customers with a reason to return while also increasing their lifetime value.

Imagine someone who bought from you for $100 and then you send out an email offering 20% off their next purchase on your site.

If they buy again, the calculator money is now $80 instead of $100, thus increasing their lifetime value by 20%.

Partnerships: Send out special offers to customers if they have the partner’s app or use their service.

This can work particularly well if you have a loyalty program in place and they are willing to add on value to it.

Referral: Generate word of mouth and increase your customer lifetime value by launching and running a referral campaign.

This can be done in a variety of ways but is most popular through email campaigns which offer rewards to the customer when they refer you.

One-time offer: Send out a special offer or discount if they spend $100.

This can work particularly well if you have a loyal customer base who has consistently been spending with you for a long time.

Content & Advocates: If your content is compelling enough that people want to share it with others, then create a way for them to share it on social media and other channels.

By turning your customers into advocates for your brand, you are building up your brands trust and reputation which will eventually turn into customers.

Conclusion

These are just some examples of loyalty programs that you can create and implement within your eCommerce business.

As mentioned earlier, they can be as simple as adding in a 20% discount on a purchase for your existing customers or as complex as offering 14% to your advocate customers and 15% to partner customers if they share an exclusive offer with their friends.

Regardless of what strategy you decide to use, remember that in order to make it successful you first need a base of loyal customers.

These are the foundation from which you will build upon when implementing any type of loyalty program.

It’s worth noting that many businesses will create retention strategies by simply surveying their most loyal customers and asking them what they’d like added onto their loyalty program.

This is an easy way to gain direct insight into what exactly your most valuable customer segment desires from your business.

Originally posted on our blog here:https://spraguemedia.com/blog/increasing-your-ecommerce-customers-lifetime-value-with-retention-campaign/