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7 Great Ways To Increase CLV: Shopify Tutorial For Beginners

Customer Lifetime Value (CLV) is a pivotal metric, representing the cumulative value a customer brings to your business throughout their engagement with your brand. In our Shopify tutorial for beginners, we delve into what CLV is and discover the strategies and techniques that can help businesses maximize their CLV.

From personalized experiences to data-driven insights, we’ll explore 7 effective ways to enhance the lifetime value of your customers and drive sustainable growth for your enterprise. Let’s get started!

`What is Customer Lifetime Value (CLV)? Why Is CLV Critical?`

Customer Lifetime Value (CLV) is a metric that calculates the potential revenue a company can generate from each customer it acquires over the duration a person remains a customer. In other words, the longer a company can keep a customer, the higher its CLV and the more revenue it may earn.

Customer behaviors yield varying CLV figures. To exemplify, a customer makes their first purchase of $100 from your online store. If they only make this single purchase, their customer value is relatively low. However, say this same customer likes your product and buys an additional $100 worth of merchandise every 3 months for the next five years. This means the customer’s lifetime value is $100 x 4 (times per year) x 5 (years) = $2,000 – far more valuable than a one-off purchase.

This metric significantly benefits your business:

Strategic Decision Making: CLV helps businesses make informed decisions about resource allocation, marketing strategies, and customer retention efforts. By understanding the potential value of a customer, a company can allocate resources more efficiently and make strategic decisions to maximize profitability.

Customer Retention: It is often more cost-effective to retain existing customers than to acquire new ones. CLV highlights the value of loyal customers and encourages businesses to invest in strategies that nurture and retain their customer base.

Competitive Advantage: Businesses that understand and prioritize CLV often outperform competitors focusing solely on short-term gains. A strong CLV strategy can be a unique selling point that sets a company apart.

Customer Experience Improvement: Knowing that a customer’s value extends beyond the initial purchase, companies are incentivized to invest in improving the overall customer experience, which, in turn, can boost CLV.

7 Most Effective Tips & Methods To Increase Customer Lifetime Value

Here are the 7 most effective ways to boost your business’s CLV:

#1. Implement customer loyalty programs

Implementing customer loyalty programs is a highly effective strategy to increase Customer Lifetime Value (CLV). These programs are designed to incentivize and reward customers for their continued engagement and loyalty to your brand.

You can offer rewards that are enticing and relevant to your customers. This can include discounts, exclusive access to products or events, free products, or points-based systems that lead to discounts or gifts.

Besides, it is essential to make the loyalty program accessible across multiple channels, including your website, mobile app, and physical stores if applicable. You can also regularly communicate with your loyalty program members. Send them updates on their rewards, personalized offers, and reminders about the program’s benefits. This is to keep them engaged and build a good relationship with your customers.

Let’s take Dove as an example. Dove designs a points-based loyalty program, “Dove Rewards” that allows customers to earn points for every purchase of Dove products, engage with the brand on social media, and participate in surveys or product reviews:

100 points: $5 off a Dove product purchase.

250 points: Free Dove product of the customer’s choice.

500 points: Exclusive access to Dove product previews and events.

Following the introduction of “Dove Rewards” Dove experienced notable improvements in customer loyalty and CLV. Many customers become more loyal to Dove products by actively engaging with the brand to earn and redeem points.

#2. Offer incentives, promotions, and discounts

Incentives are another strategy to increase new and existing customer bases and the lifetime value of each. Small or large incentives can encourage brand loyalty and sales totals. Here are some to consider:

Free shipping: Providing free shipping, especially for orders above a certain threshold, can incentivize customers to make larger purchases. This can increase sales and repeat business as customers perceive added value.
Free returns: Offering hassle-free and cost-free return options can reduce the perceived risk for customers, making them more likely to make a purchase. This builds trust and encourages customers to shop with you repeatedly.
Bulk discounts: Bulk discounts encourage customers to simultaneously buy more of your products. This can lead to higher transaction values and increased loyalty from customers who regularly need your products in large quantities.
Referral programs: Encourage your existing customers to refer friends and family by offering incentives like discounts or rewards for successful referrals. This can expand your customer base and increase CLV, as referred customers are more loyal.
Birthday discounts or free items: Recognizing and celebrating your customers’ birthdays with exclusive discounts or freebies can create a personal connection and enhance customer loyalty. Customers often appreciate the extra attention and are more likely to return.

#3. Create personalized Email Marketing

Stay connected with personalized and relevant email campaigns to engage customers and prompt repeat purchases. Personalization makes your emails more relevant, engaging, and valuable to individual customers, increasing the likelihood of repeat business and loyalty.

Personalize Subject Lines: Personalize the subject line by including the recipient’s name or referencing their past behavior. A personalized subject line can grab their attention and increase open rates.

Recommendations Based on Past Purchases: Suggest related or complementary products based on the customer’s purchase history. For example: “Customers who bought [Product] also liked [Related Product].”

Personalized Offers: Tailor your offers to specific customer segments. For loyal customers, consider offering exclusive discounts or early access to sales. For new customers, provide incentives to make their first purchase.

Time Sensitivity: Create a sense of urgency by incorporating time-sensitive elements, such as limited-time offers or countdowns for flash sales.

Here is an example:

Exclusive Birthday Offer: Celebrate with 20% Off Your Next Outfit!

Dear [Customer’s Name],
Happy Birthday! We hope your day is filled with joy and special moments. As a token of our appreciation and to make your day even brighter, we have an exclusive birthday offer just for you.
[Image: Image of a stylish outfit]
Get ready to celebrate in style with a 20% birthday discount on your next outfit purchase. Whether you’re looking for a new dress, a pair of jeans, or the perfect accessories, we’ve got something that will make you shine.
Use code BDAY20 at checkout to redeem your 20% birthday discount.
[Shop Now Button]
Thank you for joining our fashion community. We’re thrilled to be part of your special day and look forward to helping you find the perfect birthday outfit.
Your birthday offer is valid until [Expiration Date], so don’t miss out on this opportunity to treat yourself!
Wishing you a fantastic birthday celebration filled with fashion, fun, and happiness.
Best regards,

This type of personalized email campaign demonstrates the value your brand places on each customer, encourages them to make a purchase, and strengthens their loyalty, ultimately contributing to increased CLV.

Note: Sometimes you need a VPN tool to access email marketing programs. Read the blog here to choose the right VPN tool!

#5. Offers free upgrades when reaching a certain purchase quantity

This approach motivates customers to increase their spending, ultimately increasing their lifetime value with your brand. The free upgrades act as an attractive incentive for customers to continue making purchases and reaching those purchase milestones.

For example, upgrade feature X for free when purchasing 50 orders, when using the service 50 times. Free gifts and upgrades keep customers happy and ensure they remember a positive experience with your business.

Basic Tier: Start with a basic loyalty program where customers earn points or rewards for every purchase, similar to a frequent buyer program. As customers accumulate points, they can gradually unlock the potential for free upgrades.

Upgrade Threshold: Set specific purchase thresholds that customers need to reach to qualify for a free upgrade. For example, after spending a certain amount, they qualify for an upgrade to a premium version or product.

Upgrade Options: Offer various upgrade options, such as upgraded product features, premium versions of products, or even complimentary add-ons or accessories.

Exclusive Access: Make the upgrades exclusive to loyalty program members, creating a sense of exclusivity and value.

#6. Seek customer feedback

Customer feedback is invaluable, and you can often create higher CLV by asking them what they want directly. When customers feel heard and valued, they are likelier to remain loyal and continue doing business with your company. Here’s how you can effectively seek and utilize customer feedback to enhance CLV:

Surveys and Feedback Forms:

Create customer surveys to learn about what products they like, prices that would influence their buying decisions and what programs, promotions or products they want to see more often.

Implement customer satisfaction surveys or feedback forms after interactions, purchases, or service experiences. Use these surveys to gather insights into what customers appreciate and what can be improved.
Incentivize feedback with discounts, rewards, or entry into a contest.

Net Promoter Score (NPS) Surveys:

Use NPS surveys to gauge customer loyalty and identify promoters (loyal customers), passives, and detractors.
Segment your follow-up actions based on NPS scores, focusing more attention on detractors and nurturing relationships with promoters.

Customer Support Interactions:

Analyze interactions with customer support and service teams to identify recurring issues or pain points.
Use feedback from these interactions to refine support processes and enhance the customer experience.

Feedback from Sales and Account Managers:

Encourage your sales and account management teams to provide feedback from customer interactions. This feedback can help you understand customer needs and preferences, enabling you to tailor your products or services accordingly.

By continually improving your products and services based on customer feedback, you can build stronger, more loyal customer relationships and increase their lifetime value to your business.

#7. Targeted messages and offers

Sending your idled customers targeted messages via email, text, and even snail mail is almost guaranteed to put you back on their radar. Doing so from the beginning of your relationship can help keep you relevant and decrease churn altogether. Here are several methods of customer-targeted messages you can consider:

Birthdays: Send a personalized birthday email with a special discount or a free gift. This not only celebrates the customer’s special day but also encourages them to make a purchase.
“Anniversary” with your business: Recognize and celebrate the customer’s anniversary with your company. You can offer a loyalty discount, a bonus reward, or a thank-you message to express your appreciation.
Special offer on previously purchased products or related products: Send targeted recommendations based on the customer’s purchase history. Offer discounts on products related to their previous purchases. For example, if a customer buys a camera, offer a discount on camera accessories.
New Program, Product, or Promotion: Keep your customers informed about new programs, products, or promotions. Send them exclusive early access or discounts, making them feel like VIPs and encouraging them to explore what’s new.
Thank-you note: Send a heartfelt thank-you email expressing your gratitude for their business after purchase. In this message, you can encourage them to leave a review or refer friends and family.

Final Words

Understanding and harnessing the power of Customer Lifetime Value (CLV) is paramount for businesses aiming to thrive in a competitive market. The ability to extend and maximize each customer’s value over time not only drives sustainable revenue but also fosters brand loyalty and advocacy.

We hope our 7 strategies in this Shopify tutorial for beginners can help your business enhance the lifetime value of your customers, turning them into loyal advocates who return and promote your brand to others. Contact us if you have any further questions!

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