Why Customer Lifetime Value Should Be Your Team’s Priority Metric

Ask any digital marketing professional what metric matters most to them, and you’ll likely receive a wide range of answers. While it might be impossible to choose just one, customer lifetime value (CLV) should be among the most highly prioritized — and closely monitored.

That’s because CLV essentially tells a business how loyal its current customers are in terms of spending as well as what they might be able to expect from future customers. Keep reading to find out how measuring CLV can make a big difference in customer satisfaction and future sales.

The Power of Customer Lifetime Value

A business’s best customer is the one who’s already made a purchase, shifting the marketing team’s focus from acquisition and engagement — vital but expensive and lengthy buyer stages — to retention.

Retention goes beyond merely keeping people interested in your brand. The goal of retention is to create loyal brand advocates because the more someone purchases from you, the more likely you’ll see these benefits:

-Happy customers recommend your products/services to others, resulting in word-of-mouth marketing at no extra cost to you.
-Returning customers create sales patterns that provide stable profits and help teams predict sales trends.
-Customer response to retention campaigns can guide decisions in future marketing initiatives.

For companies to reap these benefits, marketers need to consider how their retention tactics are designed to increase CLV among current customers and encourage new customers to follow suit.

Using Strategic Follow-up Tactics to Boost CLV

Increasing CLV starts with looking for commonalities among current customers with strong lifetime values to discover what’s already working and where the customer experience can be improved.

After determining the best way to calculate CLV for your business, look for trends or patterns that your best customers share. Ask these questions to get started:

-Do they have similar paths through the acquisition stage?
-How often do they make purchases?
-Do they typically purchase the same items repeatedly or vary their order?
-Are your best customers from a particular income bracket, geographic region, gender, or other demographic segment?

These types of insights can help teams develop effective outreach and retention strategies. Hoping for a second conversion isn’t a strategy; reaching out and encouraging additional conversions with an appropriate tactic is.

For example, once a customer makes a purchase (or fulfills whichever conversion was targeted at them), capitalize on this interest by following up via email with a personalized request or offer. This could be asking them to write a review for the item they purchased, complete a survey about their shopping experience, or send links to relevant help articles or other brand content directly related to their purchase.

Tips for Building Customer Loyalty and Lifetime Value 

Personalized emails alone won’t increase CLV, but they’re an excellent jumping-off point for nudging customers toward future purchases — and eventually, brand loyalty.

Consider the customer satisfaction survey. This type of survey provides valuable insights that can be used to create customer service materials, product improvements, and marketing campaigns (to name a few); wouldn’t it be nice to give the customer something in return? Offering a discount or free shipping on their next purchase makes the customer feel like their opinion is valued (because it is!) while also nudging them toward making another purchase.

Leveraging both free and paid loyalty programs serves as an effective strategy to both appreciate customers and enhance CLV, fostering stronger relationships that encourage sustained engagement and profitability. Plus, there are many different ways to structure loyalty programs so that they align with your company’s business model and goals.

One of the biggest benefits of retention is the ability to reduce the amount of resources dedicated to communications without losing touch with the customer. Automation plays a key role in making this possible. Here are a few ways to connect while implementing CLV-boosting tactics:

-Customer completes an online purchase → company automatically sends a follow-up email asking for a review
-Customer submits a review → company sends a discount code for their next purchase
-Customer signs up for newsletter → company sends other relevant content and option to receive promotional emails as well

CLV is essential because it shows how much and how often current customers spend, and it gives insights into future customer behavior. Understanding and growing CLV is crucial because it’s tied to making sales and keeping customers happy—two must-haves for any growing business. By focusing on CLV, companies can tailor a more engaging customer experience, fostering lasting relationships and increasing sales over time.

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