Many marketers focus all of their energy on bringing new customers in the door. What if some of that energy were spent in improving customer lifetime value instead? Increasing CLV is one of the most effective ways to juice your entire customer acquisition funnel.
If you don’t know where to start, try these five steps and measure the impact they have on your customer lifetime value.
1. Improve Conversions
The ROI on your marketing campaigns is one of the most important things to measure. If you’ve been running a successful campaign for a while, you could think about doubling the spend of that campaign to increase purchases. However, if you spend the same amount of money, but get more people to click through and pull out their credit cards, you’ll notice a larger impact.
2. Spend Wisely
Know where your best customers come from and spend the most money there. It sounds simple, but companies can waste thousands of dollars when they see high click-through rates. If you can't tie those clicks to purchases, you may very well be dumping money down the drain. Frank & Oak improved their ROI by 16x by looking at which campaigns were more likely to generate new customers.
3. Give High Value Customers Plenty of Love
Once people become regular customers, don’t forget about them! Your most loyal customers are likely a huge source of recurring revenue. By looking at Repeat Purchase Rates, you can run campaigns to encourage repeat customers to keep coming back. Conversely, send them a “we miss you” note if they haven’t purchased something in a while.
4. Nurture Lower Value Customers
Everyone has the opportunity to become your best customer.
If you've ever looked at something on Amazon or Zappos without buying it, you've probably noticed that item following you around the Internet. Retargeting ads are a great way to remind people of purchases they might be interested in. Highly personalized, automated emails encouraging purchases is another great way to ramp up repeat purchases to less frequent customers.
5. Be Known for Rewarding Loyalty
After a deep dive analysis, Chubbies Shorts found that customers acquired through discounts had lower lifetime values than the average Chubbies customer. As a result, they redirected the marketing dollars away from discounts towards giving gifts and rewarding customers. The more you are known for rewarding loyalty, the more you will engender it.Want to learn more about how to Calculate the ROI of your marketing campaigns using Customer Lifetime Value?