Customer Lifetime Value (CLV) calculates the potential earnings of your business across the lifetime of your customers. Underutilized in marketing, CLV can help you retain and grow your customer base, rather than find new customers. This will allow you to increase revenue in the long run. There are many ways CLV can help you raise your
Set a Benchmark for Your Efforts
Track CLV to evaluate the long-term profitability and sustainability of your ecommerce store. Make efforts to improve CLV, but at the same time, you should know whether you are producing the desired results. This is where benchmarking helps. Calculate your CLV once per month, and then record where you are to measure whether your initiatives are working. Know where you are, to know how much you have improved.
Know How to Invest in CLV Growth
Use your knowledge of CLV to determine the areas that are the most impactful for your business and then try to improve them. CLV is basically a combination of purchase frequency, average order value, on-demand delivery, and customer lifespan. Consider your CLV from this perspective and you’ll be able to work on areas that require assistance. Invest heavily in that area. Looking at CLV as three distinct parts makes it easier to influence.
Understand the Best Acquisition Channel
Use CLV calculations to segment your buyers based on acquisition channel. This provides you with information on which channel creates the most profitable buyers. You also come to know how much each customer from a particular channel is worth. Implement social media marketing strategies to draw greater customers to lower acquisition channels. Determine the price you are willing to pay for each customer in each channel.
Discover the Most Profitable Buyer
Know what the perfect buyer looks like. Do this by conducting CLV calculations on various demographic segments: location, gender, age, or interests. Knowing what your most profitable buyer looks like will help you tailor your offerings so that they meet their requirements. Target your CPC ads in a better way using this information to draw the most profitable customers. Tailor your website, blog articles, and products so that your demographics are drawn to your store.
Taking Care of Customer Complaints
Pay close attention to customer complaints. Determine what they are by looking at the sales information for specific customers, and analyzing their purchase frequency and order value. Deal with customer complaints in a timely manner. Know how much customers in your store are worth so that you can justify spending money to retain them. This might be in the form of free returns, coupons, or products. Rely on the knowledge of your customer service agents. Knowing the individual CLV allows your customer service executives to take decisions at a quicker rate.
You can easily calculate your CLV and then use this to improve your ecommerce store revenue. Your competitors may have no idea how to use this information; knowing so will give you the edge.