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How to Improve Your Average Customer Lifetime Value


If you’re like many small business owners and marketers, you want to improve your customer lifetime value. Understanding the amount of money a consumer will spend on your website over time can help you make smarter marketing decisions and improve brand loyalty.

You’ll have plenty of opportunities to extend your customer lifetime value (CLV) using social media, email, and your website. Today we are going to explore several actionable tips you can start using today that will help you build rapport with your audience while improving your marketing for maximum ROI.

How to Calculate CLV

Before we tell you how to improve CLV, let’s talk about how you can figure this number out for yourself. It’s important to note that your industry, business size, and costs all play a role in determining lifetime value.

You need to know three crucial details for your calculation.

  • Median purchase value
  • Items ordered each week, month, or year
  • Median customer lifespan

Here’s an example.

Let’s say you own online storefront that sells pet supplies, and your average purchase value is $50, you have the first piece of the puzzle. Next, you’ll want to figure out how often customers come back to your website. Typically, pet owners need new supplies once a month, so 12 times per year. Finally, assume you know that most customers keep buying products from your website for about 2 years.

Your CLV value would work out like this:
$50 Purchase X 12 months = $600 per year
$600 X 2 years = CLV of $1,200

Now that you know how to calculate your brand lifetime value, let’s look at several ways you can increase your CLV, regardless of your industry.

Use Customer Loyalty Programs

Customer loyalty programs were around long before smartphone apps could easily track points. If you think back, you probably remember the punchcards they gave out at places like McDonald’s and Starbucks. The process was simple; you buy a drink, the cashier punches a slot. Punch enough slots, get a free drink.

Then companies discovered that they could make apps that could not only track loyalty points but actively offer promotions to their customers through push notifications, and another segment of marketing was born.

A points-based or cashback system can yield significant results for your company. Consumers love going to businesses that reward them for their loyalty. Not only do they feel like they are connected with the brand, but they are also getting a good deal.

You can design your loyalty program at your discretion because many industries have slight differences in the way they operate. For example, a business with high-ticket items would likely offer a cashback percentage, instead of a point a system.

If you want to try another customer loyalty tactic, you could use RafflePress to create a contest on your blog. When someone lands on your website, they will have the opportunity to sign up for your email list, follow you on social media, or otherwise engage with your brand for a chance to win a prize. This technique helps generate new leads to your website as well as improving the lifetime value of existing customers.

Simplify Your Checkout Page

Your checkout page is another significant factor you should consider when attempting to improve your CLV. Check your analytics and see how many people are leaving mid-purchase. Knowing the percentage of people leaving your site can help you determine your next move.

If you see an overwhelmingly large percentage of consumers leaving and never coming back, it might be time to revisit the design of your checkout page. Make sure your page speed is optimized, security seals are in place, and you’re including options like guest checkout.

Accessibility is important to everyone, and a lack of accessible features could result in a significant portion of your audience bouncing from your website.

With that in mind, your checkout form design can have an impact on how long a person engages with your business. If you create a form that is long, complicated, or unclear, you’ll see a significant conversion drop off on-site. Make sure your checkout form is clear, concise, and user-friendly.

You could also implement retargeting ads to capture customers who abandon their carts. Retargeting ads are cookies that get dropped on your visitors’ browsers when they land on your website. The ads are designed to show the users that they left items in their cart. They will see the advertisements on social media, and in the ad space of other websites.

A gentle reminder could encourage them to come back and complete their order, thus, improving their CLV.

Upsell at Point of Sale

Upselling is an excellent way to increase your CLV during every order. You’re likely familiar with the upsell tactic. A customer buys a product, and you offer them something else that compliments what they’re getting ready to buy.

You can offer a variety of items during the upsell. Some business owners like offering discounts at the door if they spend a certain amount. Other people like bundling together items that are frequently purchased together, like Amazon.

When you upsell to a customer, make sure you let them know that it’s optional and not mandatory. You can even personalize the offer by gathering information about the various segments of people that come to your website. As you get to know your target audience, you’ll begin to understand which products are bought together.

Once you see the pattern emerge, you can create personalized campaigns that reach out to customers based on their behavior on your website. The more people that visit your site, the more actionable data you’ll gain for future upsells.

Back to You

Understanding CLV will help make you a better marketer and business owner. Our goal is to help as many people as possible for as long as we can, and if you’re like us, you have similar aspirations.

As your business grows, you’ll start to find new ways to keep your customers engaged, which means they will keep coming back and reading your blog, commenting on posts, and buying products from your online store.

Syed Balkhi is an award-winning entrepreneur and online marketing expert. He is the co-founder of OptinMonster, WPBeginner, MonsterInsights, and WPForms.


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