So many ecommerce brands wonder, “How can I increase my customer lifetime value (LTV)?” And with good reason; LTV is the measure of the total income a business can expect to bring in from a customer for the duration of that customer’s relationship with the business.
A lot of times, the assumption is that if you throw discounts at the customer, they’ll return without fail. Aggressive discount strategies may work for short bursts of Average Order Value (AOV), but modern ecommerce has proven that strategy needs to be much more nuanced and informed by data to be successful. In other words, real, long-term wins for LTV are coming from personalizing the customer experience.
Who is Your Customer?
This is such an important place to start when it comes to finding ways to increase your LTV. And we don’t just mean your ideal customer. Sure, it’s important to have that ideal archetype of person in mind when you start your business and when you decide what demographics you’re creating products for. But, we actually mean the question verbatim: who is your customer?
In addition to that, these are the questions you should be asking about your individual customers when they land on your website:
- Who is this person?
- How do you treat them when they enter your site?
- What are they looking for/what do they need?
- How do you think you’re going to get more value out of them?
- What are you going to offer them to earn that value?
It’s all about shifting away from the constructs of what you assume your customers need/want and leaning into creating a personalized experience based on their behavior. And you can achieve that by equipping yourself with deep segmentation of your post-purchase data.
Solving Your Customer Behavior with Segmentation
Curating the customer experience on your site and in your marketing content starts with segmenting your customers based on what they buy and how they interact with your content. Depending on certain ads that acquired customers or discount codes they used, or products or bundles they’re purchasing, or tags you’ve used to identify particular customers, they should have a personalized experience with your content from that first purchase onward.
When retargeting them, they should see specific content based on the segmentation you performed. And when they see that specific ad and click, they should land on a page that is optimized for what they need to see next in their personalized buyer’s journey. After that, the upsell or cross sell they get via email or SMS should be influenced by that same segmented post-purchase data. It should all be a very curated experience.
Personalizing always wins. In fact, data suggests that companies who effectively personalize their customer experience can see up to 25% higher revenue overall.
That’s one of the biggest things that Peel brings to the table for ecommerce brands; we make segmentation easy. We take their post-purchase data directly from Shopify, analyze it, and make it available in over 100 easy-to-use metrics and reports. From there, users can segment their data in just a couple of clicks by dozens of filter options.
We also have the Audiences tool, which allows users to get even deeper on segmentation, build customer Audiences, send those lists to their marketing platforms for more personalized messaging.
Increase LTV Through Personalized Messaging
When you ask your customer to come back, it’s not about coming back to buy something random. If you’re simply pushing products that don’t match up to the customer’s needs, you may get some quick conversions, but at some point (likely sooner than later) your customer will fall off and not come back to repurchase.
You want to invite your customers to come back and try your new launch that’s related to the product they liked, or maybe the call to action is “try this product variation because you liked X.” It’s about connecting the value of your products with the needs and behaviors that your customer has already displayed.
And that’s how you can craft your outreach messaging. When you’ve done the work to segment your customers, you’ll have better fuel for reaching out with the right message. But you should also consider this: if you think about all the stuff you’re expecting from them (namely to purchase and continue coming back) then you have to also give a lot. You have to offer value in more than just one way. This is a huge part of the puzzle.
If you can personalize your messaging and get into their email or SMS inbox, or even their physical mailbox (not a dead art by any means!), then the next step is about how you can talk to your customers to educate them and provide them value in a way that aligns with their needs.
Sometimes it’s not about just getting the customer to come back and buy. Sometimes the ask should be to come back and check out recipes or an advice video on how to use the product or some other elevating piece of content. Maybe you want them to read a specific blog or guide to warm them up for their next purchase. Or maybe they’d get value at that stage by simply interacting with your community on your site, or app, or social media.
These are all valid ways of delivering value to your customer without just asking them to make a purchase. So many brands forget that when it comes to increasing their LTV, it’s not a strictly transactional pursuit. Oftentimes you can get more value out of a relationship with a customer by finding an effective way of getting them more affiliated to your brand.
That value will be seen and felt monetarily down the line. Building that personalization pathway is really a long-run strategy that will pay off as your customer’s loyalty grows through deep communication. This is all in service of building a relationship with your customers and giving them a reason to buy.
Building Customer Loyalty and Increasing LTV Go Hand-in-Hand
This all leads into the conversation of how you can increase both customer loyalty and LTV by creating an overall custom and valuable experience for your customers. There are so many ways we can think of increasing customer loyalty - points and rewards programs, discounts, other subscription-based programs that we’re used to. But a lot of times the basis for building customer loyalty can begin at a much more basic level of your strategy; this can start with strategic product offerings based on what they need.
You should also build your product strategy with retention in mind while delivering on that value for the customer. For example, last time they heard from you and you suggested a top based on a similar shirt they bought from you, next maybe you hit them with a new pant release that complements the last product they bought.
It sounds simple, but that logical connection between the value you’re offering and what they may need next is a whole lot better than just pushing the next product without any data to support why that may be valuable to the customer.
Another easy way of developing customer loyalty and long-term LTV is taking feedback from your customers. With post-purchase surveys, you can get feedback from the customers on the products and their experiences. Asking for this is always a win for credibility and listening to your customers and delivering upon the things they ask for (as much as you can), shows them that you’re listening. This is a great way to win their loyalty.
Finally, understanding your customer base and their needs even outside of your products can be huge for winning their long-term business and loyalty. In terms of the bigger picture, so much has changed in recent years with how consumers spend. The uncertainty of the economy, the lasting effects of the pandemic. None of this makes it easier on them.
If you understand that your customers can use options and ways of making their purchases easier, it’s another avenue to increasing loyalty and LTV. Things like offering a buy now, pay later (BNPL) option seem simple, but informing your customers that this is an option to help lighten the load, can go such a long way in building that relationship.
Start Growing Your LTV Through Personalization and Purpose
To recap, you really just need to focus on 3 things to extend your customer’s LTV with you. You need to give them:
- A reason to buy
- Ability to buy
- A personalized overall experience
If you want to get started with personalizing your customer experience and making your brand LTV ready, you can try Peel free for 7 days and have full access to our segmentation tools and Audiences.