How to increase CLV (Customer lifetime value) - Formula simplified

Customer lifetime value (CLV) reflects the value that the customer brings to your company during the relationship, and it is one of the main KPIs that D2C brands should follow - especially if you are selling goods that will be bought again. When you understand how your  CLV is forming and what aspects are behind it you can make better business decisions and gain more value in your business! Examples of those decisions can be more effective customer acquisition or better resource allocation.

To increase CLV you need to analyze your current customers and find different formulas. With the following steps, you can build high CLV audiences and use those audiences in targeted marketing and increase the number of high-value customers in your store. 

The 3-step formula for increased CLV 

1. Identify those who have the highest lifetime value for your business to understand who are your most valuable customers. You can analyze purchase history, purchase frequency, and average order value (AOV) to identify those high CLV customers.

2. Segment your customers. When you have identified your high-value customers you can segment those into different groups. The division into groups can be done based on age, location, or purchase history. Purchase history means orders, products, returns, shipments, payment methods, and also how many orders has customer made in a certain period of time.

3. Use targeted marketing to reach your high-value customers with the help of customer segments you have made. Email tailored marketing campaigns to the right audience, advertise on social media and retarget your ads to drive more high-value customers to your stores.

By following these steps, you can build custom high CLV audiences and use targeted marketing efforts to drive value for your business. Remember to analyze regularly the performance of your marketing efforts and do needed actions to adjust your marketing strategy. Use data to analyze and understand how well your efforts are gaining value to your business!

How Ellis can help you to analyze high CLV audiences

Analysing CLV at a needed level is time-consuming when you have to analyze data from various sources like Google Analytics, Google ads, Meta, Klaviyo, multiple Shopify stores, Shopify POS, etc. to make sure you use and leverage all available data from your business. Also, the right decision and metrics can be hard to evaluate when you are combining and merging data from different sources meaningful way. These things can be done with the help of Ellis - so you can focus on developing business and gain more high-value customers to your store!

With Ellis, you can analyze needed KPIs and Ellis dashboards that combine data from all your D2C sources in one location visualize and support you in building high CLV audiences. Ellis divides your customers automatically into 10 pre-made segments, but you can also make your own segments with the dimensions you wish. With Ellis you have a clearer understanding of your high CLV customer types (also lists in the form you wish!) and you are ready to reach those customers.

Trying to understand who are your most valuable customers? Which customer types are returning or which type will spend the most money in their lifetime? How many of your customers are active or passive? Where should I put my marketing money? Ellis answers those questions - book a demo or ask more about how we can help you to build high CLV audiences and succeed in your business!

Looking to increase CLV in your D2C business? Request a demo of Ellis, and we will show you how. 

Written by Data Expert Tuomas Remes

You might also be interested in: