5 Tips for Increasing the Customer Lifetime Value in Ecommerce
Used to track revenue generated from a single customer over a period of time, customer lifetime value (CLV) is one of the most important metrics for ecommerce businesses. While constantly attracting new customers is a must for e-stores, it’s incredibly valuable to hold onto the shoppers who have already patronized your online shop.
Here are a few tips for increasing customer lifetime value in ecommerce.
Encourage Loyalty with Subscriptions or a Rewards Programs
Businesses need to keep patrons coming back for more. While the shopper may return time and time again simply because they like your products, it’s not exactly a foregone conclusion.
For this reason, many ecommerce stores have shifted away from focusing on one-off sales toward repetitious sales models. Subscription services are one such example.
Also known as box services, this model charges customers on a monthly basis in exchange for merchandise. They currently exist for razors, underwear, clothing, groceries – you name it. And, because it’s cyclical, you can more readily forecast revenue generated from your customers.
If subscription services don’t tickle your fancy, consider instead loyalty or rewards programs. This method encourages repeat business through exclusive deals. For example, if you sell ebooks on your own Shopify website, consider rewarding your most avid readers with freebies and discounts to which only they have access. This strategy is more effective than general coupon codes because it is tied to a single user’s account, thus increasing their CLV.
Incentivize Minimum Order Totals
Yes, every customer is important – but some orders are more important than others.
Let’s say a shopper selects one $15 T-shirt and hits checkout. It’s a piddling order with revenues hardly worth the trouble of mailing it out. For this reason, many e-stores incentivize minimum order totals.
The most common method for upselling online shoppers is to offer free shipping after a specific pricing threshold. Alert the shopper of the policy using a notification or banner on your checkout page: “Enjoy free shipping for all orders over $60.” This can nudge consumers to buy more than they originally intended because they feel they are getting something extra out of it.
Bundle Similar Products
Let’s say a shopper wants to buy a classic video game system from your ecommerce website. While you could sell the console alone for $60, you know It’s worthless without game cartridges.
So, rather than selling a Nintendo 64 for 60 bucks, you offer a Nintendo 64, complete with four controllers, an additional memory pack and two Mario Party video games for $200. This boosts your minimum order and gives you an edge on the competition since you’re selling everything retro gamers want in one nifty package.
Allow for Easy Returns
Returns are costly and time consuming. However, allowing for easy returns has been proven to improve CLV. Over 90 percent of online consumers say they’re willing to buy from the same e-store again if the product returns process is simple and trouble-free.
Depending upon your capabilities, do everything you can to make the returns process quick and easy; including providing free return shipping labels in your fulfillment packages.
Strategize Your Fulfillment Processes
Speaking of fulfillments, you can also increase CLV by turning your shipping process into a marketing process.
Think about it.
A customer eagerly awaits a pair of running shoes purchased from your website. When they arrive at her doorstep, she readily tears into the box to find her new athletic sneakers, whereupon she also finds a time-sensitive coupon code for 50-percent off of her next order. Knowing her husband is in the market for running shoes too; this is just the trigger she needs to buy him a pair for his birthday next month.
Strategizing the fulfillment process reinserts the buyer into the sales funnel the instant they receive their order. And, since the discount has an expiration date, the shopper is forced to use it or lose it.
Hopefully this article opened your eyes to a few strategies for increasing ecommerce CLV. If you have more suggestions or tips, tell us in the comments below.