Any business spends a lot of time focusing on retaining the top 20% of its customers. This is because their contribution to revenue is significantly higher than the remaining 80%. The longer they stay with your brand, the more profit you can expect to make.
However, with the pandemic altering customer buying decisions, it is important for e-commerce businesses to also pay attention to the remaining 80%. The advantages are clear: new customers cost more to acquire than the revenues they generate, at least in the short-term.
You could get better returns by engaging your existing customers in the post-pandemic era through greater personalization and offering loyalty programs. Let’s first take a look at what customer lifetime value is and why it matters.
What is Customer Lifetime Value?
Simply speaking, Customer Lifetime Value (CLV) is the estimated revenue potential of a customer across their journey with your brand. This highlights that customers must be viewed as ‘relationships’ and not as ‘transactions’. As a metric, CLV tells you how much a customer is likely to spend on your products so that you can decide how much to spend on retaining them.
For customers to come back again, your products should be of good quality, and your customer service should measure up to their expectations. Research shows that customers buy more from brands they trust. So, the perception of your brand in the customer’s eyes should be the driving force behind the strategies you follow to boost sales and engagement.
Secondly, your customer segmentation should be sharp. This can help you create targeted campaigns to retain them.
Increasing Customer Lifetime Value Beyond the Pandemic
Your business’s profitability directly depends on how well you know your customers and how you personalize their brand experience. In the post-pandemic era, increased customer loyalty can be a competitive advantage for e-commerce businesses.
Here are five tried-and-tested strategies for improving customer lifetime value in the post-pandemic environment:
1. Leverage customer data
According to Criteo, 81% of marketers believe that quality customer data helps boost customer lifetime value. Ecommerce companies collect a huge amount of customer data across multiple touchpoints. This data can be used to segment customers into high spenders, mid-level, or low-value buyers.
Using data analytics, you can realistically predict customer value over a period of time and identify the right cross-sell and up-sell strategies.
For example, creating customer profiles based on the last purchased item, purchase frequency, average order value, and length of the customer journey can be used to create targeted promotions and offers. However, it is critical that all this data is collected in a single location to make it easier for your team to access it without restrictions.
2. Checkout page optimization
To increase the odds of customers making multiple purchases per session, you need to focus on streamlining the checkout page. Give special attention to the Add to Cart and Proceed to Checkout sections. This is because the majority of instances of cart abandonment occur at these touchpoints. In fact, the e-commerce industry has one of the highest average cart abandonment rates at 68.81%.
One possible reason for this is that many sites do not optimize their checkout pages for mobile devices. Since free shipping is a top deciding factor for customers, one easy way to boost average order value is to display ‘FREE 2 Day Shipping’ prominently on your website.
Many e-commerce sites also display a progress bar at the top of the page to encourage customers to complete their purchases. Experts also recommend creating personalized product categories through search term filtering so that customers can easily find things they like.
3. Focus on low-value customers
While you are justified in giving discounts and bonus points to your most loyal customers, don’t forget the rest of them. In the post-COVID scenario, customer preferences have substantially changed. This is the right time to re-engage customers who may have only made one or two purchases with you. Launch an email campaign to ask how they have been.
Offer a discount to attract them back to your store. Remember to specially target high-potential customers who no longer click on your email links on social media. Update the content on your landing pages and create a series of blogs to bring them back into your marketing funnel.
4. Empower your employees
Survey data like CSAT and NPS can provide key insights into current and future customer behavior in repeat purchases and retention. Leverage this data to educate your customer support team about the importance of Customer Lifetime Value (CLV). For example, training your agents to identify upsell opportunities during customer interactions can increase average order size.
In turn, you will eventually be able to drive customer lifetime value. Keep a close watch on escalations as upset customers are most likely to switch to other brands, if you do not follow-up on time. This will prevent customer lifetime.
5. Offer loyalty programs
To encourage repeat sales, you need to create incentives for customers. Discounts and free shipping are increasingly losing their appeal in the post-pandemic environment. You need to adopt a value-based approach to increase customer lifetime value. A loyalty program can help you differentiate yourself from the competition and bring in referrals and positive word-of-mouth publicity.
Leverage the customer data you have collected to develop a judicious mix of rewards that creates better value for customers.
Good customer service can extend the length of the average customer journey significantly. This directly translates into more purchases and greater customer lifetime value. However, the upfront costs of scaling a customer support team can be high. However, bringing in a strategic partner like Helplama can help you meet your customer service goals while keeping operating costs in check.
As another option, you can also equip your customer service team with Helplama Helpdesk. It can take a workload off of their shoulder with automated workflows, live chat features, etc. Furthermore, they also offer customized pricing plans starting from $99/month.
So, what are you waiting for?