Online sales for the e-commerce market are likely to reach USD$1.82 trillion by the end of 2024. This allows merchants to access a wide range of products and services with just a few clicks. By focusing on customer lifetime value (CLTV), Shopify stores can shift their strategy from short-term revenue to long-term growth fostering customer loyalty and repeat purchases.
Let's dive into some strategies to increase performance, maximize CLTV, and take your store to the next level.
Why Does CLTV Matter?
Understanding CLTV, you'll know how much revenue a customer can bring to you over time. It will also help you focus on building stronger relationships with your customers, encouraging them to make repeat purchases and stay loyal to your store. This will not only reduce the cost of constantly acquiring new customers but also increase organic growth through word-of-mouth referrals. High-CLTV customers will bring in more predictable revenue that can increase your revenue by 25% to 95%, which will make managing cash flow easier and ensure financial stability.
Strategies to Maximize CLTV
Now that we’ve understood what CLTV is and why it matters, here are some practical strategies you can implement to maximize your store’s CLTV:
1.Implement Personalized Marketing
When customers are presented with information that feels relevant and personalized, they’re more likely to stay engaged with your brand.In some cases, what makes a customer return to a store is the positive shopping experience. This is because when we provide a relevant and personalized experience, customers will feel that they are remembered and valued. Merchants can use CRM software to analyze customer behavior and offer targeted promotions to create this effect. One way to provide a personalized experience is by sending your customers a birthday email, or a Thank You email with their name on it.
Ako Marketing Tip: Use your customer’s name in your headline to grab their attention.
Tools like Klaviyo, which integrates with Shopify, help stores gather customer data and send personalized email and SMS campaigns. Klaviyo also automates follow-up emails for abandoned carts and identifies loyal customers for custom offers. When combined with Ako Marketing’s Loyalty Program, it can trigger personalized emails based on VIP tiers, further enhancing retention and encouraging repeat purchases.
2.Enhance Loyalty Program and Rewards
The key to a successful CLTV strategy is to keep your existing customers engaged and encourage them to spend more. But how can we do this without overwhelming them? A well-designed loyalty program can help. It’s an effective way to keep customers coming back and increase their lifetime value. You can reward customers for actions like making purchases, referring friends, or engaging on social media. Keep in mind that customers love instant rewards! This means that rewards should be easy to claim and immediate. For example, China Airlines offers a “Welcome Offer” to customers who just signed up, which is a great way to provide instant rewards.
Apps like Ako Marketing can simplify the management of these loyalty programs. For example, Ako Marketing automatically tracks customer activity, awards points, and sends personalized offers based on behavior, making it easier for stores to engage customers and drive repeat purchases. These programs not only reward customers but also provide valuable data that helps stores personalize their marketing efforts and maximize CLTV.
A great example of this is the Taiwanese lifestyle brand LHS, which saw impressive results after introducing a loyalty program. Here’s what they achieved:
- 11% increase in returning customers
- 18% rise in average order value (AOV)
- 70% growth in loyalty program sign-ups
3. Optimize Customer Support
A customer’s shopping experience isn’t always perfect and smooth. There are times when customers feel dissatisfied. To address this, it’s crucial for merchants to have fast and effective customer support. In fact, when done correctly, it could be an opportunity for merchants to showcase their prompt and helpful assistance in resolving issues. This can eventually lead to a higher satisfaction rate and shopping experience.
For example, Costco is known for its excellent customer service both online and offline. Their support includes handling questions, processing returns, and assisting with both in-store and online purchases. Clearly, this results in strong member loyalty and CLTV
Apps like MooseDesk, offer an intuitive live chat feature to empower your team to deliver exceptional service and drive sales. MooseDesk's live chat feature ensures you never miss a message and enables swift resolutions across multiple channels.
4. Leverage Cross-Selling and Upselling
Cross-selling and upselling are everywhere in our life. For example, when you're about to complete a purchase on UberEats, they often offer you a bundle deal at a discounted price. That’s Crosselling and Upselling!
Cross-selling is when you offer extra products that go well with what a customer is already buying (suggesting french fries when on a burger). Upselling is when you offer a more advanced version of what they're interested in (upgrading a hotel room).
So how does it increase your CLTV? Let’s take a look at this graph:
We’ve found that it’s more likely to sell products to existing customers than to new ones. For merchants, this means you can focus on offering new products to your current customers instead of spending time acquiring new ones. Plus, who doesn’t love a bundle deal? Customers can save more money, and they will feel like they are getting more value out of their purchase! Merchants can use apps like Upsell and Cross-Sell to do this. Assigning Cross-Sells, Upsells, and Frequently Bought Together bundles boosts sales and enhances the customer experience.
Conclusion
In summary, it’s important to take a look at a store’s CLTV metric to help you in your marketing strategy. Some strategies you can include to boost your CLTV includes personalized marketing, a loyalty program and a great customer service. These methods not only help keep your current customers but also promote long-term growth and higher revenue. Try these strategies now to elevate your store’s success!