Growth and Monetization

8 Ways to Increase Customer Lifetime Value

October 1, 2020
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What makes Sally a more valuable customer than Andrew? To determine that, you need to understand what customer lifetime value is, how to calculate it, and then learn how to increase customer lifetime value. 

Brands and businesses have various types of customers. At the end of the day, they have market to these different types.

But what sets customers apart? It's their "value" to the business.

What Is Customer Lifetime Value?

Customer Lifetime Value (CLV) is the measure that determines the value of a customer for a business over a period of time.

Using CLV, businesses can estimate how much a customer would be worth to them over the span of a long-term business relationship, normally several years.

By using CLV, businesses can then decide how much they are willing to invest on a customer (in terms of marketing and operational costs) based on the return that they would get from that customer's long-term relationship with them.

Calculating Customer Lifetime Value

Calculating customer lifetime value comes with many benefits. But first let's see how it works:

If ABC store estimates that its customer Sally is worth $100 a month. That means Sally is likely to spend $1,200 a year or $3,600 over 3 years.

This means that ABC store can then decide how much they would be willing to spend on marketing to attract and retain Sally.

On the other hand, Andrew is likely to spend $30 at ABC store. That translates to $360 a year and $1,080 over 3 years.

Naturally, the value ABC store will spend on marketing and retention for a customer like Sally will not be the same as that spent on Andrew.

ABC store maybe even decide not to invest on marketing to Andrew to begin with.

When to Increase CLV

As mentioned, CLV is about a long-term relationship between brands and customers.

But what constitutes a long-term relationship?

Typically, when a business has had a relationship with a customer for around or over 2 years, then this relationship is deemed long-term.

It's also then that this business should consider increasing its customer lifetime value for that customer.

Why Increase Customer Lifetime Value?

The reason is CLV helps with many things in business, not just marketing.

Plus, it's important to remember that the cost of acquiring new customers is significantly higher than retaining and upselling to current customers.

Acquiring a new customer can cost from 5 times to 25 times more than retaining a current customer.

That's why by calculating customer lifetime value, you can:

  • Understand which of your customers have a high CLV and which have a low CLV
  • Learn what types products or services your high CLV customers like to buy
  • See how much you can spend on marketing to different customers and maintain profitability
  • See which of your products are repeatedly purchased
  • See which of your products or services have a higher profitability
  • See who are your top and most profitable customers  

By reviewing the above points, you can then begin to focus your strategy on how retain customers and increase customer lifetime value.

“Basing the CLV on the net profit and not just the revenue is important because when viewed through this lens, it can guide a company’s strategy for which market segments to target, how much to spend on what channels to acquire these customers and how best to serve new customers,” explains UK-based Markow director of marketing David Richter to CMSwire.

How to Increase Customer Lifetime Value?

Now that you have a basic idea of what CLV is, it's time to focus on how business owners and marketing managers can increase customer lifetime value.

Part of the methods of increasing customer lifetime value relies on loyalty.

Not necessarily loyalty programs but on the fact that what you do need is to create a sense of loyalty towards your brand or service.

Here are 8 ways to increase customer lifetime value.

You don't have to apply all of them at the same time but find out which of these suit your product best.

1. Effective onboarding

By creating an effective onboarding process, you help customers understand how your service or product works and therefore helps them stay loyal to you.

“It doesn’t matter how effective your product is at solving a painful problem, if a customer doesn’t know how to use it effectively and doesn’t get into the habit of using it then they’re likely to churn,” stresses Richter.

2. Listen to your customers

Hearing your customers' complaints and understanding their needs, their wants and their pains not only helps your product – and possibly upselling your product – but also makes customers feel appreciated.

When you show customers that you are listening to them, they won't want to leave your store or service, notes Braze's chief marketing officer Sara Spivey.

It becomes personal to them, she says, adding that this "increases their propensity to more fully engage with you over longer periods of time.”

Listening to your customers therefore helps both with loyalty and customer retention, both of which result in a longer relationship between a customer and a business.

3. Create a loyalty program

One of the best ways to retain customers and therefore have a longer relationship with them is through loyalty marketing or by creating a loyalty program.

By lengthening your business-customer relationship, you will then be increasing your customers' lifetime value. A win-win.

You can create a customer loyalty program and get tons of support via Gameball.

4. Increase customer satisfaction

There's no doubt that an unsatisfied customer will leave your store or stop using your product.

And it's pretty much impossible to satisfy all customers, especially if your store or business caters to a large group.

That said, it's important to heed unsatisfied customers, reach out to them and attempt to alleviate their pains.

Unsatisfied customers can "tell you about potential areas within the business that are not optimized or offer insight into extended use cases," CMSwire cites Susanne Gurman, senior vice president of marketing at SecurityScoreCard, as saying.

5. Engage customers through content

Content marketing is a great way to maintain customers.

Why? Because you offer them value through content.

You can do this through your business blog or a weekly or even monthly newsletter.

But don't fall into the trap of creating a series of valueless drip campaigns that end up driving customers away.

The trick is to see what customers' pain points are and help alleviate them through your content.

"The key to an effective message is to find that value and present it to your customers in a way that shows your contribution," explains

From a CLV point of view, an email "that explains the benefits you bring in goes a lot further than another promotional email," the website adds.

Want examples? Subscribe to Gameball's blog and get helpful tips in your inbox every week.

6.  Create a Personalized Experience

Customers are no longer interested in the one-size-fits-all methods used by businesses.

They want content and services that are tailored to their needs.

You can create a personalized experience within your online store to give them that sense of uniqueness.

This can be done through personalized messages and special offers.

Not only will this result in your customers being more loyal to you, but also they will want to buy more from you.

By the way, you can also provide these personalized messages through Gameball, regardless of the platform you use.

7.   Create a Community

Creating a community can help increase customer lifetime value. Why?

Because the sense of community makes it harder for customers to leave your brand.

Communities create a kind of affinity, which in turn makes customers more likely to remain loyal and stick to your business and products.

“If you build loyalty based on a deep understanding of who they are that loyalty will be rewarded again and again,” Braze's Spivey adds.

8.   Offer great customer service

Customer service goes a long way into building strong relationships with customers and creating a sense of loyalty.

According to data compiled by Nextiva, around a third of customers say they would "consider switching companies after just one instance of bad customer service."

Similarly, the majority of Americans decide not to continue with a purchase if they encounter a bad customer experience.

In addition, the average American tells about 15 people they've had a bad customer service experience with a store or business, the data shows.

What does all of this mean?

It means that the better customer service you provide, the more customers would be willing to do business with you, come back to your store, and tell others about their good experience.

Also through great customer service, you can ask customers for reviews, or ask them to refer you to others.

Final words

Acquiring customers with high CLV is expensive BUT "they provide the greatest value — in terms of revenue, feedback, and referrals — than other customers," notes HubSpot.

So, whether your store is on Shopify, WooCommerce, BigCommerce, or anything commerce, you need to know how CLV works and learn how to increase customer lifetime value for your business.

Check out Gameball's services to drive engagement, increase loyalty and boost CLV among your customers.

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