Customer lifetime value (CLV) estimates the value that the customer brings to your company during the relationship. Typically this can be the entire customer lifetime, but during uncertain times we can also look at lifetime value estimations for a month, quarter or a year. Shorter time window estimations are typically more accurate.
By converting your mid range CLV customers into high CLV customers you are able to maximize the value of your customer relationships. Sometimes it’s even possible to convert some of your low CLV customers to more prominent ones. Altogether breeding customer segments with personalized marketing is a very effective way to increase the quality of your customer mass. When you start working on a better customer convert strategy, you should use the data to know which are the best tactics with your customer base.
Here are 6 practical tips to increase your high CLV customer base and tips how you can utilize Ellis in the process:
1. Offer value based and personalized content
Identifying potential customers who still have a lower CLV helps you to target them with valuable and personalized marketing messages. Valuable content explains and shows your value to the customer and engages this to the business. In Ellis you can filter potential customers to target. Then you can analyze these segments and think about segment specific marketing & email strategies.
2. Increase AOV to increase CLV
One significant factor which goes hand-in-hand with CLV is the customer's average order value (AOV). The higher the amount the customers buy each time, the more profitable they are especially if this can be replicated in the long run. AOV can be increased by improved product recommendations, but also in most cases with customer communication. You can use the Ellis’ Product Associations view from the "Inventory" menu to form bundles and cross-selling entities. This view shows common product pairs that the customers have bought during the last 365 days.
3. Increase purchase frequency to increase CLV
Another significant factor affecting a customer's CLV is the frequency of purchases. The more the customers buy during the year, the more profitable they initially are. By promoting new products and services you can try to increase purchase frequency. From Ellis you can go to the “Customer Segmentation Tool” and filter there customers who need attention. After that you can load a list of these customers and utilize it in retargeting. Increasing purchase frequency can be also done by clever reminders and taking momentum into account such as public holidays or a sudden snowstorm.
4. Build customer relationships with a loyalty program such as Yotpo
A well-designed loyalty program engages customers to your business which often means a higher CLV especially when looking at a longer timespan. By rewarding good customers, they commit to the program and end up spending more. So in the best cases you manage to automatically increase AOV and purchase frequency. However, the loyalty programs require attention from the brand. Quite many loyalty programs feel boring and lack up-to-date content. Ellis has a standardized data connector to e.g. Yotpo and LoyaltyLion so you get all the data in a single place, which gives you a 360 degree view of your loyalty program and in most cases we can see their impact on the business. If required our skilled Ellis team has created lots of customer specific views on loyalty and its full value.
5. Make checking-out easy
By clarifying and making the check-out process easy, you can reduce the cart abandonment rate considerably. Ensure that the desired payment- and delivery options can be found in your Shopify Plus store. This is on a good level in the average Shopify store, but as an example checkout can be further modified within its visual side. Checkout should have the same look and feel as the actual store has. From Ellis you can see from the "Customer segmentation" section which payment and delivery methods are most used and also analyze in depth how these decisions affect key KPIs such as average order value, purchase frequency or the amount of returns.
6. Do product case studies
One key task to get started is to look at your mid range customers and deep dive on what they have been purchasing in the past? And also if one can spot reasons why they haven’t returned to purchase from us with the same intensity than others. We also recommend doing questionnaires or other studies to such key segments, which could increase your future cash flow. As a practical tip one can look if customers buying a specific product critically affect their probability of buying soon again. For example, did the item taste bad or was the quality of the item sent out too low? Ellis provides an easy to approach backbone for CLV segment specific product case studies. We can also support these with our advanced data consultation services.
Creating high CLV customers means understanding their behaviour
Converting your mid range CLV customers to high CLV customers can only be done by understanding their behaviour, which requires analyzing data. With these 6 data based actions, you can react to your customers behaviour and create a more profitable customer base to establish a foundation for long-term success.
Are you ready to make the most out of your customer relationships? Request a demo of Ellis, and we will show you how.
Written by Junior Insight Consultant Viivi Varjus