What journey does a person pass to become your customer? Visitors go to your online store and get acquainted with your products. Sometimes they add items to the cart and turn into leads.

Then they make a purchase and become your customers. And is that all? No, the interaction with the customer goes beyond one sale.

What do you do next, you ask? You need to build a long-term relationship with the client and do it with the maximum benefit to the business.

You need to build a long-term relationship with the client, spanning many communication and commerce channels, and you need do it in a way that drives maximum benefit to the business. You know their preferences, habits, and data. Therefore, you save your budget and make profit easier.



What LTV Metrics Show

How do you know how much you earn per customer? That’s where the customer lifetime value comes into play. LTV, or CLV, is the predicted amount a customer will spend on your product or service while they’re your customer.

The logic behind this metric is simple. The higher the customer value, the more money you make.

But how do you improve these numbers? In this article, I will talk about six ways how an e-commerce business can improve LTV.


Why You Need to Measure LTV

This metric is one of the critical performance criteria for the entire enterprise, especially in B2B sales or e-commerce. Is long-term cooperation effective? What types of customers respond best to your message?

The lifetime value of your customers can assist in the following spheres:

  • Optimizing marketing costs

  • Forecasting income

  • Identifying effective and ineffective acquisition channels

  • Segmenting your customer base by LTV for a more personalized experience

  • Specifying the most loyal segment of customers with high LTV to optimize advertising campaigns and attract a similar target audience


How You Can Measure LTV

Companies calculate LTV in different ways. But all the formulas entail assessing how long each customer is expected to stay with your firm and how much money they will contribute. Before we start, let’s clear up some other connected metrics.

One of them is ARPU. ARPU is the average profit from one client for some time period (for example, a month or quarter).

How can you calculate it? You need to divide your regular income by the number of clients.


Let’s say your income was $ 21,000 last month. And you had 15 clients. So, ARPU will be equal to 1400.

Another term you need to understand is the churn rate. Suppose a person subscribed to your service. But they decide to undo it after some time.

So, the number of customers or subscribers who stop using your service during a given time period is the churn rate.



Now we can proceed to the LTV formula. One of the ways to estimate LTV is:


Baremetrics makes your LTV measurement task easier. You can see this indicator on a graph to compare growth or decline trends and take action to improve them. You can also analyze plans and periods when your marketing efforts led to LTV alterations.

Screenshot taken on the official Baremetrics website

Screenshot taken on the official Baremetrics website


6 Ways to Increase LTV for Online Stores

You can utilize several marketing practices and tools to ensure long-term and fruitful cooperation between the company and customers. Most of them increase the following indicators:

  • Customer lifetime

  • Repeat purchase frequency

  • Average check

By increasing even one of them, lifetime value can also grow. Let’s look at six compelling cases.


1. Connect Push Notifications

Push notifications are pop-ups on the device screen about important events. They are of two types:

  • Browser

  • Mobile

Here are some benefits of push notifications:

  • This tool is similar to email marketing because you also deliver your messages to subscribers. But an Internet user doesn’t need to give contact information to receive a web push. Instead, you need to confirm your consent. 

  • The second significant benefit is that such notifications automatically appear in the recipient’s browser window or mobile screen. As a result, there’s a far better chance they’ll read them.

To receive mobile push notifications, a person needs to install the brand’s mobile app. However, modern technologies take the next step and bring opportunities to get notifications without installing an application. Such solutions are, for instance, progressive web apps (or PWAs for short).

How are PWAs similar to native apps? They both have frictionless UX, support push notifications, and can work offline.

But at the same time, the user doesn’t need to overload the phone memory and download the app from the marketplace. Instead, you add the PWA’s shortcut to your home screen from the browser. 

One of them is the Bloomique online store. To add a bookmark, you need to tap the “Add to Home Screen” button in the browser settings, as in the screenshot below.

After that, you can use the progressive web app and subscribe to notifications.

Screenshot taken on the official Bloomique website

Screenshot taken on the official Bloomique website


If you want to see what more progressive web apps are like, here are well-built Magento PWA examples


2. Employ Email Marketing

A newsletter is the leading marketing communication channel between a company and its customers. The main reason for this is that it’s profitable. 

According to some figures, email marketing brings a $42 return on investment for every $1 you spend. And it outperforms any other type of marketing, digital or not.

Many online stores offer to subscribe to the newsletter even before the visitor buys something. And usually, they get a discount for this.

For example, take a look at the screenshot of the Coco Reef website below. You can enter your email and buy goods 15% cheaper.

Screenshot taken on the Coco Reef home page

Screenshot taken on the Coco Reef home page


The client interacts with your brand and leaves contact information that you can use for the same purposes as push notifications, such as:

  • Announce about discounts and promotional offers to attract additional sales

  • Keep audience’s attention to the brand by sending news and valuable content

  • Send surveys and track inactive segments of the target audience

  • Encourage repeat purchases.For example, Edible Arrangements does this in their emails. I made an order and didn’t buy for a while. The company sent me an email and offered a discount promotional code for purchases over $69. As they say, it’s how they welcome you back.

Screenshot taken from the newsletter from Edible Arrangements official website

Screenshot taken from the newsletter from Edible Arrangements official website


Why is email marketing so effective? Because you have an audience of subscribers who are interested in your product. And since it’s much easier to buy something from a company you already know or constantly see in newsletters, your subscribers become repeat buyers.


3. Personalize Your Marketing

The idea is straightforward but effective. You define what unites your customers and, at the same time, sets them apart from the rest.

But how can you do it? You need to collect and analyze data to understand your audience better.

First of all, you should divide your customers into groups by common characteristics, such as:

  • Geography and language

  • Gender

  • Age

    •  Some channels even allow you to customize impressions for people who have a birthday on a particular day

  • Interests

  • Income level

  • Behavior

    • This includes what people were looking for, interested in, products or services they viewed, pages they visited, etc.

  • Device or browser

  • Whether or not they’ve previously browsed your site

Using this information, you can compose a customer profile. It will make advertising and any other type of communication more personalized.

How will it help your sales? You’ll create a more effective unique selling proposition.

For example, study this ad from the Vans online store. I visited their website and searched for shoes. When I browse the Internet, the Vans ads chase me on other websites, so I see these recommendations.

How does it work? I’ve expressed interest in some products in one way or another. So I’m more eager to buy them than those who haven’t been to the site.


Screenshot taken on the official CNN website

Screenshot taken on the official CNN website


4. Launch a Loyalty Program

Another way to retain customers is loyalty programs. They encourage people to make orders more often as they’ve already experienced your services. That is you offer additional benefits for every repeat purchase a customer makes. 

Here is how you can achieve it:

  • accumulative bonus systems;

  • discounts for regular customers;

  • unique offers after a certain period of cooperation.

Your audience becomes more loyal to the brand with each new order, being less likely to leave for competitors.

For example, Freshly Picked tells about their rewards program and perks in their email newsletters, as seen in the screenshot below.

Screenshot taken from the newsletter from Freshly Picked official website

Screenshot taken from the newsletter from Freshly Picked official website


5. Work on Cross-SellIng Sections

Cross-selling allows you to increase the average order value. Let’s say a customer buys a product.

Think about what you can offer them to complement the purchase. Will it be a discount? Or a related product? For example, when a person buys a bed, offer them bedding or a bedside table.

Where can you create a cross-sell section? You can recommend products as follows:

  • on the product or service page;

  • on the checkout page;

  • in a newsletter after ordering a product.

A screenshot below is an illustration of the Ulla Johnson product page. Choosing a dress, you see a section with goods complementing the image, as on the model. 

Screenshot taken on the official Ulla Johnson website

Screenshot taken on the official Ulla Johnson website


6. Communicate with Your Audience on Social Media

Don’t let your customers forget about you. How can you draw their attention? Keep them engaged using social media as part of your customer retention strategy.

When people share their positive experiences with your brand, thank them for their kind words. If there's any issues, you need to be the first to address them.

Share your customer reviews. It will improve your image and strengthen your existing and potential clients’ confidence.

You can also improve CLV by showcasing new products, offers, and brand news.

Sharing user-generated content helps too. Here is an example of UGC on the official Ulster Weavers Instagram account. The company asks people to tag their posts with #ulsterweavers to appear on the feed.

Screenshot taken on the official Ulster Weavers Instagram account

Screenshot taken on the official Ulster Weavers Instagram account


Conclusion

How will understanding the lifetime value help you? The LTV metric shows how much money a customer will bring to your company. Your marketing department will know how much it costs to acquire and retain customers, which will help you get your marketing campaigns on track.

As a result, you can make informed decisions leading to increased return on marketing investments. By personalizing your offerings, employing email marketing, and using push notifications you’ll increase repeat sales and expand the loyal audience segment.

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