Every online store owner wants more and more new customers. But few people think about long-term success metrics. We mean Customer Lifetime Value, which stands for customer lifetime value in running an online business. Customer loyalty, retention, and repeat purchases, as online entrepreneurs know, are essential elements of successful online shopping. Attracting new customers is just the first step. The real work begins by building a strong community. If you want to take your online store to the next level, you need to think carefully about this strategy.
How to Increase Customer Lifetime Value (CLV)?
Here are some specific, proven methods to add customer value to your eCommerce business. Use these tips to encourage your customers to spend more time on your site, come back to your site, and ultimately spend more money on it.
Cash Refunds
The special offer acts as a lure for online shopping lovers. And a well-thought-out special offer will help you get even more profit.
You can use sale techniques, special offers, but cashback is a very effective method. This gives your shoppers an extra incentive to come back to your site and buy even more products.
Multilevel Discounts
Unfortunately, customers will not actively buy products if simply asked to do so. You need to propose to them.
An offer you can’t refuse.
One of the best practices is a special discount that will be based on their total purchases. This way, buyers will think they are actually saving. And they would gladly spend more money now to save money later.
Below you will find an example of what a tiered discount system might look like:
- 10% discount if the buyer spends more than $100.
- 20% discount if the buyer spends more than $200.
- 30% discount if the buyer spends more than $300.
Once you implement this scheme, you will notice that buyers with more likely to exceed the previously planned limit and buy $100 to receive a 10% discount. The smaller group will add items to the cart to get 20% off.
Finally, the smallest but most significant group of shoppers will spend $300 to get a 30% discount.
But when implementing this strategy, it is worth considering points such as:
- Don’t forget about margins. We need to exclude certain items from this special offer. Check to see if you have excluded all low-margin items from this offer. Otherwise, the stock will bring you losses.
- Think carefully about the minimum amount for the special offer. Also, note that the discount will apply to the minimum amount. That is, if the order totals $100, then when taking into account the discount, the client will pay you $90.
Reward Customers
This is another powerful strategy to increase your average customer check. When customers place an order for a certain amount, offer them a free gift.
Below are the most popular gifts that customers will love:
- A sample of one of your most popular items
- Goods that you have in surplus
- Seasonal items designed for a specific holiday
- You can also send a free gift with an expensive item. Instead of offering a gift when a customer spends $100 or more, you can instead offer them the option to purchase an item that comes with a free gift.
Offer Free Shipping
Free shipping is a proven method of retaining customers and increasing sales. This strategy works for two reasons:
- A customer is more likely to spend more money on goods if free shipping is provided.
- Free shipping degrades the shopping cart abandonment ratio.
- A recent study by Deloitte found that about 40% of people are more likely to shop online if they are provided with free shipping. In addition, the report stated that the lack of free shipping is often the reason for abandoned items in shopping carts.
The Importance of Customer Lifetime Value (CLV) for Magento Store Owners
In this article, we’ve shown you how to increase your ecommerce customer’s lifespan. Without a doubt, CLV cannot be viewed as a negligible metric for e-commerce. However, this is an indicator calculated for months and even years, so there is no need to check it every day.
Customer Lifetime Value helps you find balance. You will be able to find out how much to invest in order to retain existing customers and get new ones. What’s more, CLV research will provide insights into how to build customer loyalty and increase sales.
CLV is important because it is focused on your business growth and financial health, and in the long term, your business will benefit from customer lifetime value.
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