How To Improve Your CLTV
Optimising your marketing strategy to improve your CLTV (customer lifetime value) is a winning way to improve the profitability of your business. The more you can improve the LTV of a customer, the more flexibility this can give you when you are looking to scale your marketing activity (if you know a standalone customer can bring you a large amount of value in the long term, then you know that you have some additional leeway to pay more to acquire said customer).
We know CLTV means customer lifetime value, but how do we calculate it?
This is worked out when you take the customer’s value and times that value over the average customer lifetime.
“Customer Value X Avg Customer Lifetime”
Do your customers stay with you for a long time? Do they convert with you multiple times or do they convert with you on the singular occasion and never come back.
There are a number of factors that contribute towards CLTV and an endless list of opportunities when it comes to improving it. That’s why we’ve listed off some of the key areas you can optimise to improve your customers lifetime value and ultimately scale your business whilst retaining profit.
Work On Retention
If LTV is the door, retention is the key. Retention is how many times a customer will continue using your services or buying your products. If you know they will use your services or products on repeat, then you know that acquiring a customer has the potential to bring your business a lot of value.
But how do you improve your retention?
Retention comes with loyalty and building on that customer loyalty.
- Ensure you are incorporating strong loyalty offers within your retention strategy-
It’s important that your customers/clients are appreciated. Show your appreciation with gifts that thank them for their loyalty. Whether that’s anniversary discounts, birthday gift cards, exclusive product releases or sneak peaks.
- Listen to their feedback-
Acting on feedback is not only going to be the way you improve your product(s)/service, it’s also going to help your customer base feel heard. Show them that you genuinely appreciate their custom and in exchange care about the quality they receive in return.
- Build a community-
Building a community shows that you’re more than just a brand trying to sell a product and that you want to give them a good experience. It brings your customer base together and keeps them engaged with your business.
- Give them next level customer service-
Next level customer service can take a one off customer and turn them into a lifetime customer. If they have an issue or need an answer to their question, make sure you’re there for them. A common pain point for customers in their journey is lack of support, so it’s important to cater to that pain point.
Increase Your AOV (Average Order Value)
Your AOV is your average order value. This is calculated by dividing your total revenue earned by the number of orders/conversions you have had. (revenue/conversions).
Let’s say you own a shoe shop and in one month you made £50,000 in revenue and had 2000 orders, this would mean your AOV is £25.
Sum: 50,000/2000=25
When assessing your CLTV strategy, take a look at what your customers order and the value that brings. If you find AOV is your weak spot, here are a couple of ways you can boost it.
- Improve the quality of your product-
Improving product quality not only helps in the brand loyalty department, it can also contribute towards higher conversion rates and AOV. This is because users will be enticed to buy more if they know what they’re buying is worth the money.
- Make killer bundle or add-on deals-
Giving your audience what is essentially more for less is an incredibly effective way of increasing your AOV and getting to opt into buying a larger quantity of items.
Improve The Frequency Of Your Customers
Improving your frequency is improving the rate in which your customers come back to your store to purchase again.
Whilst this can go hand-in-hand with retention, you can also increase the speed in which your customers keep coming back by increasing your frequency of offers (even if they’re only available to existing customers). Increasing new product/service variants, whether it’s new package add-ons or new design releases for your t-shirt company!
When trying to improve your customer frequency in efforts to boost your CLTV, it’s important to ensure your have an incredibly strong marketing presence to your existing customers.
-Keep them up-to date with engaging email campaigns
-Run really strong retention ad campaigns that are frequently updated with new creative
-Have a consistent social media presence
-Continuously work on your sites UX to improve your conversion rate
