How to increase LTV (Life Time Value) & why it matters…!
Did you know that a whopping 40% of your online store’s revenue is generated by only 8% of the customers you serve?
It’s easy to see why there are two main reasons why most businesses go bust after 3-4 years of existence.
First, running a company today where competitors strive to put each other run out of business is no easy task.
Second, while each business strives for success at retaining customers, it’s unfortunate that only a few can really achieve it.
It’s this ability to retain customers that can prove vital for the health of your business because recurring revenues can become THE factor that separates successful businesses from unsuccessful ones…
What Do You Need to Know about Recurring Revenue?
Recurring revenue has been a goal that business organizations have always put on a pedestal.
When it comes to eCommerce, the average recurring purchase rate is about 27% for first-time customers.
To start making recurring revenue, it’s important to have a steady flow of customers in the first place – the thing that most businesses struggle with. This is known as an ever-green top of funnel strategy and something we can cover in another post…
Once you get a steady flow of customers, you have to grab the opportunity to retain those customers by giving them a reason to stay.
A few tips that you can use to do exactly that are –
- Presenting them Exceptional Products or Services
- Introducing Well-thought-out Customer Loyalty Programs
- Sending Timely Updates about Exciting Offers
- Taking Complaints or Negative Reviews Seriously
- Surprising Customers with Rewards and Gifts
- Highlighting Your Business on Social Media
BUT these tips will work only if performed the right way!
So, how is it possible to improve the likelihood of increasing the recurring purchase rate and lifetime value?
Let’s discuss that in detail.
3-Step Method to Turn One Time Shoppers into Lifelong Customers
Quick Stats –
- Shopify claims that an average repeat purchase rate for eCommerce websites is almost 27% when it comes to first time buyers.
- The same percentage shoots up to 45% for a customer making the second purchase.
- The average purchase rate of a customer who has made a fourth purchase jumps up to 56%.
Based on the above numbers, it’s true that any business can increase their profitability by up to 95% if their recurring purchase rate increases by JUST 5%!
Mindblowing, isn’t it? 🤯
Now – let’s discuss a simple 3-Step Method to Gain More Recurring Customers in Future!
Step-1: Welcome Your Brand the Right Way
Your product is what you sell. But in reality, your customers ARE your business. Therefore, the experience you provide your customers matters.
You can make the most of the customer onboarding process through an well thought out Email Marketing sequence. So make sure you have an email drip ready to welcome them to your family and thank them for the order.
Also, have emails ready for when you deliver the product or when you have exciting offers.
For example, when you know the average delivery time and purchase window, it’s easy to sequence your emails to align with the moment a product is successfully delivered to the customer, or to answer a frequently asked question about delivery…
For example by knowing the normal delivery timeframe you can time an email to be pushed to the customer asking ‘How did you like the product?’ immediately after they’ve opened it and have had a day to enjoy it’s benefits.
The goal here is not to bombard your customers with emails but to anticipate any customer services moment and cashing on it as soon as possible.
Personalization is the key here since companies that provide great customer experience grow 4-8% faster than others.
Inspire your customers with a relatable story that connects with them emotionally. Make them feel special and the feeling will be reciprocated!
Step-2: Ask Them To Leave Feedback
The revenue doesn’t matter if the customers are not happy with your service. If you do not improve your offerings, the customer is only going to pay you once.
So, you want to know if the customers enjoyed doing business with you. The best way to do that is by asking them to leave a review.
PLUS Social proofing works like a catalyst when it comes to growing sales. If a customer is really happy with your service, or really disappointed with the same, asking for a review will definitely help and will provide you with valuable insight to pivot or adjust your offering for maximum impact.
This makes it even more crucial to engage with the reviews and to leave a reply with utmost sincerity. Even if the review is negative, your reply should make the customer feel cared for and loved.
Be the brand that likes to help people!
Step-3: Upsell, Upsell, Upsell!
Now, it’s time to make the magic happen!
You have welcomed the customer and did a great job serving them. In return, you have a wonderful review to showcase on your site, social pages and even within ads.
You also have an idea of how the customer felt after engaging with your business so NOW is the right time to make the customer engage again!
Adding the customers to the email newsletter list is not the only objective here. It’s time to entice them with exciting offers and products that you know they’ll need.
So this is where you build out a cross sell or complimentary product bundle to accompany that amazing product they’ve just purchased from you. If you’re feeling extra generous, you can even offer them a VIP coupon to reward them for their purchase and to encourage them to buy again.
All of this can be automated through your email sequence or chatbot which doesn’t add costs onto your CPA and helps you extract additional LTV from the users you’ve already paid to acquire through your ads!
Over to You…
Generating additional LTV (life time value) from a customer is vital to the success of your business as everything over your CPA is additional revenue and profit to help offset your acquisition costs.
Knowing that no matter how good your product is, the customer will not return if you don’t follow-up with him.
So following the above three steps and advice is enough to get started with creating a great process to improve the customer retention rate of your business and will allow you to grow your eCommerce business into the superstore of your dream!
There you have it. We hope this piece of content brought great value to your business and helps it grow leaps and bound.R