Increasing Customer Lifetime Value in eCommerce (+Free CLV Template)
Allegedly, 97% of ecommerce stores make 0 profit in the first three years of their business. Nevertheless, this disheartening fact hasn’t discouraged more than 110,000 active ecommerce websites which are generating meaningful revenue.
According to RJ Metrics, approximately 12% of websites on the internet are working in retail. However, this vast number still accounts for about 7% of the revenue that is generated in retail annually.
The conclusion – ecommerce business is everything but easy. But, there is a lot of potential for profit, and this market is, indeed, very lucrative.
Here, at Alternative Payments, we are doing everything that is in our power to educate ecommerce owners about the possibilities on the global market. We are helping you improve your websites, find new leads and generate more profit. If you read our blog, you will find a lot of actionable tips about how you can expand your ecommerce business.
This article is no different. We want to enable you to reach more customers and generate more profit. Therefore, we will stick right to the point and give you X advices that will help your store optimize your customer lifetime value, quadruple profit and reach that 3% of successful ecommerce stores.
Drip Campaigns x Customer Retention Program
The Pareto principle, globally known as the 80/20 rule or the regulation of the vital few, is a theory which states that most of your profits will come from your most loyal customers. But this is not just a theory. Italian economist, Vilfredo Pareto, determined that 80% of effects come from 20% of causes. This is a general rule of thumb used in business and economy.
But how can you utilize this law and benefit from it? The answer is quite simple. By implementing drip campaigns and executing them through a customer evaluation program.
Here is a quick clarification of how this strategy works.
The moment a prospect contacts your establishment you need to rate that contact and address it in accordance with the point of entry. For example, let’s say that your sales funnel works in three different stages and you have three separate strategies assigned to each step of your funnel – awareness, consideration and purchase.
In the awareness phase, you are probably utilizing strategies such as social media posts, YouTube videos, paid advertisement etc. Ideally, you will have a remarketing strategy implemented to keep you in front of your target audience. Remember, once your prospects reach your consideration phase and subscribe to your blog or download a whitepaper, this is when you want to focus your attention on reeling them in.
You should start nurturing that lead through drip campaigns automatically. Here is a simplified explanation of how drip campaigns work.
The moment your contact reaches out to you, you should have an autoresponder email sequence setup. This is a simple strategy that is present in every onboarding process. People sign up and receive a welcome email as a form of conformation. However, in this step, you should already outline and present your most sold product to your prospects.
After that initial contact, we wait. If the contact doesn’t respond to our offer, we push them down a drip, or a stage, and we offer them more of our educational content, informing them about the lesser known benefits of the product or service we are offering, as well.
Drip campaigns should distribute valuable content to your prospects and lure them in with your best performing offers, or even discounts.
Drip by drip, your strategy should be focused on closing the deal through a series of automatized emails. Bear in mind that your drip campaign doesn’t stop after a successful sale. Another drip campaign and onboarding process starts, and your customer retention program begins.
Customer Retention Program x Customer Lifetime Value
Customer retention program is a mandatory strategy for B2C ecommerce stores. Believe it or not, having a blog on your website and educating customers about the industry, niche, or products they are interested in is already a customer retention program.
Sending special offers to your most loyal customers is also a mandatory customer retention strategy. A loyalty program altogether should add actual value and usefulness to your customers and potential prospects. This process should also be automated via drip campaigns.
In this case, our drip campaign should be focused on upselling. By offering your premium products to your most loyal customers through discounts, you are not just gaining more profit from a single lead – you are also inciting brand trust and you are developing brand ambassadors.
But this is only the beginning of your customer lifetime value optimization.
Customer Lifetime Value x Sales Funnel Optimization
By optimizing your sales funnel, you are automatically optimizing your customer lifetime value as well. Determine your sales funnel leaks and invest your time in fixing them. When your sales funnel starts showing an increase in conversion rates, this is where you should start boosting your average order value through a simple process.
Here is a simple explanation. Once you are positive that you’ve determined the best marketing channel for your product and prospects start filling up the top of your funnel, you will naturally offer a lead magnet.
After your prospects turn to leads by signing up, you should start distributing tripwire solutions via your (aforementioned) drip campaigns. Tripwire solutions are offers that are targeting special problems and worries your leads might have.
Ideally, your lead will click to find out more about your core product. Upon purchasing it, they should be presented with a profit maximizer. Profit maximizers should help your leads understand what they are gaining if they choose to invest in your premium offer. Or, if you are working in retail, you will offer similar products to the same customers (this is a strategy which is heavily utilized by services like Amazon).
The Return Path
At the very end, remember to provide your leads with “No” as an option. It can happen that your leads are simply not interested in your profit maximizers, nor your premium offers, and that is why you should include a navigation option that will bring them back to the page they are interested in, and/or to your homepage.
By implementing drip campaigns and intertwining that strategy with a customer retention program, you will maximize the profit you are gaining from your most loyal customers. Get the best out of your most satisfied customers and always ask them to share their positive experience about your store.
We’re confident that you will be able to increase your customer lifetime value in no time, and if you need any help in determining your CLV, here is a useful template that can help you with that: Alternative Payments Customer Lifetime Value Calculator