6 Steps to Increased Customer Lifetime Value (Part 2)
Yesterday we delved into the depths of customer lifetime value and how it impacts a company’s return on ad spend, customer loyalty and retention, and ultimately its bottom line.
Part 1 of this article covered the first 3 steps to higher CLV, from different formulas to calculate customer acquisition costs to segmentation and customization of formulas for CLV. The key takeaway so far is to consider the different values of one-time customers, repeat customers and loyal customers. It’s also important to act upon this segmentation and optimize campaigns accordingly. Let’s take a step (or 3) forward and see how a business can move from increasing ROAS to expanding its loyal base.
4. Retarget and Loyalize One-Time & Repeat Customers
Remarketing campaign options
The best part about retargeting is that you’re not limited in options. You can place cookies on thank you pages, abandoned carts, and even product pages and then target users who hit those pages several times, a clear sign of intent. However, remarketing campaigns are not your only options when it comes to turning customers into loyals. Nurturing campaigns are also a great avenue to explore. You can engage and encourage users to sign up for your newsletter or updates. A next steep would be loyalty or rewards programs, followed by membership and subscriptions.
Benefits of drip campaigns
Nurturing leads this way is best done through email drip campaigns. Regardless of the type you choose, you’ll get a lot of results out of a well-thought, well-executed campaign. It is a great opportunity to encourage new visits, upsell products and create a stronger relationship with your customers.
Drip campaigns come with the added benefit of allowing you to track the customer journey. You’ll be able to see and track the customers who have entered the upsell process. Because the methodology needs to support the nurturing, it’s best if the campaigns are geared towards one goal and the steps maintain the same focus.
If you’ve reached the point where you customer acquisition costs are low, ROAS is high and you’ve managed to turn most of your one-time and repeat customers into loyal customers, then the only thing left to do is maximize their use. Loyalty programs, or rewards programs, are a great way to do so, as they impact every stage, from lowering CAC to improving CLV and increasing ROAS.
Loyalty programs take many forms and you need to create one that actually adds value to your business. If you don’t know where to start, here’s a few ideas on what to look for. For ecommerce platforms, the classic model, with points for dollars, might just be the best solution, but keep in mind the long-term value you’re after. There are certain best practices that will help you ensure your customers will easily understand and engage with your program:
- Easy entry-point: make the first level of your loyalty or rewards program easy to achieve
- Level up: from time to time, use double points or bonus points to keep customers motivated and incentivized
- No complications: no matter how up they go within the program, your customers should always enjoy a simple, easy to understand system
Look Down the Long Road
Increasing your customer lifetime value will take time. Like any other digital marketing strategy, it is more of a marathon than a sprint. But that’s ok. You’re playing for the long run here and you want sustainable results. It’s important to develop a well-guided brand experience and connect with your customers before you ask them for loyalty.
Slow and steady is what will win you the race when it comes to gaining customers with greater lifetime value because it comes down to trust. And consumers don’t give away trust too easily. However, this does not mean inaction. It means you need to take your time and build upon this relationship in a streamlined and continuous manner.
Topics: Pro tips