4 Effective Ways to Increase LTV for an Ecommerce Business

Over the past few years, marketing professional has made their definitions of what the customer lifetime value, is. But, all these definitions come down to a common theme that LTV is a projected profit contribution of the customer with time.

It is basically an estimated dollar value that is attributed to every customer and client relationship. Being a business owner, it is important to have customer lifetime value eCommerce that is higher than the cost of getting the customer. Or, you will continue to lose out on money with time.

 

Why Do LTV Matter?

LTV is the total amount of money that you will get from the customer throughout your whole life as the customer. For instance, you have an eCommerce store and the average customer spends around $100 every year for three years, then an average customer LTV will be $300.

Here is why it is the important number that you need to know.

• Increasing LTV means more profits.

The customer lifetime value eCommerce is important as it shows you the real path to get more profits. Suppose you increase your LTV, you will increase the profits, quite simple to understand. The probability of selling to the new prospect will be 5 to 20%, but the possibility of selling to your existing customer will be 60 to 70%. So, by focusing on the returning customers —the lifetime value — you’re focusing on the strategy, which gives your business much higher profit margins in a long run.

• Create demand just by pointing out the necessities

The customers are likely to act whenever they find any product necessary. For example, imagine you have a technology eCommerce site, and your customers have recently bought the smartphone. You can present them with a good protective cover and related product that will be useful to them. Make this one best deal just by giving a little discount for bundling. Many big e-commerce brands such as Amazon make use of this method for upselling and capitalize on every individual sale they make.

• Develop recurring payment model

Another powerful method to improve your customer LTV is turning your product into a subscription. With the subscription product, you will get the recurring revenue stream and customers pay a bit more and last longer, and get valuable. You can consider the standard LTV eCommerce calculation. In the best-case scenario, the customer makes 4 purchases every year.

• Develop Interaction Points

Do you want to create an environment where your marketing message is constantly transmitted to your customers? Just imagine your brand & message are omnipresent: your consumers will read Twitter or Facebook as well as check the product photos over Instagram. Is this possible? 

Obviously. According to this description, this might be the same the multi-channel marketing, however, do not let the corporate jargon push you away – just by interacting with the customers only at certain points, you influence the purchases, and information they are checking & searching for, or slowly increase their maximum value of the life cycle. Concept of the multi-channel marketing appears to be very simple in the theory however difficult in the practice. Here is the basic way of increasing LTV just by creating several points of interaction:

• Place the content or ad there.
• Find where the customers spend most of their time offline & online.
• Stay sensitive to your customers’ requirements 
• The easiest way you can use multi-channel marketing will be by putting the links to the business pages on the social networks
• Attract your audience and interact with the brand.

Customers would like to know your company truly cares about their wants. Give them a chance to talk about it –also do not wait for the nasty emails and start solving the customer service problems. But, attend to your customers’ needs on each social media channel & online outlet that your company uses. It can help to build loyalty as well as improve the customer lifetime value.

 

Final Words 

There’re a lot of troubleshooting strategies out there, but they hardly talk about how they must optimize LTV, an important function of the business performance. Stay in touch with the customers just by sending them quality newsletters and it really helps in the long run.