How to Calculate and Increase Customer Lifetime Value in Your Store

How do you measure your online store’s success? Do you typically focus on things like sales and revenue?

While these metrics are useful for tracking the short-term performance of content and campaigns, they don’t always paint a complete picture of your business’s future. Even looking at your current sales numbers can sometimes leave you with just a fleeting glimpse of your true financial situation.

Customer lifetime value (CLV) is one of the most important factors in determining your business’s present and future success. It’s an often-overlooked metric that can accurately predict how much your customers are really worth. 

By measuring the net profit that you’ll take in over the course of your entire relationship with a customer, you’ll be able to narrow down exactly how valuable they are to your business.

While your calculations may have given you some results to get excited about, there’s always room for improvement! Here are some quick tips for getting the most out of every customer relationship by creating new opportunities to increase their value.

Start a loyalty program 

More than 90% of companies have a customer loyalty program. They are one of the most effective ways to increase revenue and retain customers. More than 84% of consumers say they’d stick with a brand that offers a loyalty program, and 66% of them say earning rewards actually influences their spending behavior. 

Use a loyalty program to show your most dedicated customers that you care by offering them gifts and rewards for repeat purchases. You can offer different perks to encourage upsells and cross-sells like:

  • Points
  • Gift cards
  • Discounts
  • Cash back
  • Free swag

For example, body care retailer Blume used a point system called Blume Bucks (BBs) for its loyalty program, Blumetopia. Customers earn BBs by completing tasks like following the brand on Instagram, buying products, leaving a review, or having a birthday. 

loyalty program by Blume

It’s free to join. And customers can redeem BBs for free products, merch, and other gifts from Blume. 

blume points for loyalty program

Starting your loyalty program is easy. With an app like Smile, you can set up a program that gives your customers access to exclusive perks and discounts, referral and VIP programs, and other fun ways to engage with your brand when they login to your store. 

loyalty program example

Learn more by reading Keep Them Coming Back: 7 Innovative Customer Loyalty Programs (And How to Start Yours).

Invest in customer experience

The pandemic forced brands across every industry to change their approach to customer experience. Almost immediately, eCommerce businesses responded by focusing on customer needs with shopping online and providing emotionally pleasing experiences. 

Recent data from The XM Institute also shows that 95% of consumers that rate a company’s customer experience as “very good” are likely to recommend the company. Some easy ways you can improve customer experience include:

  • Being open to customer feedback and using that information to improve the experience 
  • Removing high-effort tasks like slow customer support and payments processing
  • Thanking your customers by sending thank you notes, special gifts, and unexpected deals 
  • Creating a memorable unboxing experience that intrigues and delights customers 
  • Providing fast and easy support (Once a customer contacts you for help, the clock is ticking.) 
  • Measuring success and adapting (Use Net Promoter Score or customer satisfaction surveys to track customer sentiment. Higher scores mean your customer experience is good, while lower suggests your CX strategy isn’t working.)

Customer experience requires consistent nurturing and care. But with the right tactics, you can make a positive impact on your customer’s journey and realize higher sales and CLV. 

Offer easy returns 

You can’t avoid returns and refunds when running a business online. In 2020, consumers returned nearly $428 billion worth of products, just over 10% of total retail sales. Data suggests that 20% of online-bought products are returned, so you need to meet people in the middle. 

If you get the returns to experience right, 92% of customers will return to buy again. 

If you want to improve your returns experience, an app like Returnly is a great option. It directly integrates with your Shopify orders and offers self-service returns for customers, like the Outdoor Voices return portal below.

returnly portal

You can set your returns policy, control the branding, and automate the returns process. Returns also have a Green Returns program that helps you reduce waste by deciding whether an item can be resold if returned, based on your return policy. If it can’t, customers don’t need to ship it back, which means less waste, cheaper shipping costs, and better customer experiences.

Upsell and cross sell 

Upselling is a tactic to persuade customers to buy a premium or upgraded version of a purchased item or other items. The items are often more expensive, with the goal of making a larger sale. It’s used to sell to customers who’ve already made a purchase rather than selling to a new one. 

Upsells work to increase CLV for two reasons:

  1. The probability of selling to an existing customer is 60% to 70%, compared to a 5% to 20% chance of selling to a new one.
  2. It increases average order value, which contributes to higher customer lifetime value.

Cross-selling is often confused with upselling. The key difference is that cross-selling involves a recommendation that complements the original product, while upselling is an upgraded version. Think of cross-selling as a server asking “Would you like fries with that?” and upselling as “Would you like Hendrick’s instead of well gin?”

Use an app like ReConvert to add upsell and cross-selling tactics to your store. It provides post-purchase funnels and one-click upsell pages you can design in minutes. You can also use it to display product recommendations, offer coupon codes, collect birthdays, and so much more.


Provide amazing customer service

Customer service helps customers out when something goes wrong. Support is an area of business normally associated with slow response times and inefficiency. Today, customer service needs to be amazing if you want to retain customers and encourage sales. 

In fact, 36% of respondents to a US survey said “great customer service” is a motivation to recommend a brand online. Moreover, bad customer service is why 60% of Internet users hesitate when buying something online. 

Research what channels your customers prefer for support. Do they prefer self-service? Social media? Or website live chat? Once you know which channels to focus on, you can invest in them and provide better support. 

Shopify Inbox is a free Shopify app that helps retailers provide omnichannel support for customers. You can talk with and sell over online store chat, social media, and email, all from the app. You can also send products, discounts, and new orders from your Shopify store directly inside chats with just a few taps to turn more conversations into checkouts. 

shopify inbox

Shopify Inbox also connects with popular message platforms like Facebook Messenger so customers can contact you directly from your Facebook page, Facebook shop, and Messenger. 

Use email marketing

Customer lifetime value consists of many moving pieces and channels, but overall it boils down to one goal: increase engagement and improve customer relationships. Email works in two ways to improve customer lifetime value: fast, asynchronous support and encouraging repeat purchases from customers. 

Email lets you keep customers in the loop on product restocks, upcoming sales, and exclusive deals with a well-curated, beautifully designed newsletter. Other ways to lean on email to encourage sales and reduce churn rate are:

  • Sending thank you and appreciation emails post-purchase 
  • Targeting campaigns based on past interaction and purchases with your brand
  • Nonpayment and dunning emails that resolve failed payments
  • Providing useful resources 
  • Sending winback emails after periods of inactivity

“When we work with clients to increase their CLV, we always focus on two things,” says Danavir Sarria, founder of email marketing agency SupplyDrop. “First, we identify offers that encourage repeat purchases. Second, we align their email marketing calendars to fit with how their customers like to buy.” 

Danavir adds, “For example, if you sell body wash, the best thing you can do is come up with a strong subscription offer and schedule of new products you’ll be launching. By doing this, you give customers a strong reason why they should buy more from you.” 

From there, Danavir and his team plan to send email campaigns during busy shopping seasons, like the winter holidays and back-to-school season. They also send emails for branded holidays and product launches to keep customers active and engaged. 

Wrapping up

We at ShopShipShake have been working with businesses like yours with fulfilling experiences. We offer one-stop services, including an efficient supply chain, over 10 thousand of China’s suppliers, and more.
With a successful track record of over 20,000 clients, we are sure to deliver your orders requirements. Let’s get in touch to build, sustain, and grow your businesses.

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