When businesses get to a certain maturity level, they become more and more interested in their customers’ lifetime value (CLTV). It’s a natural progression, because the business is starting to get diminishing results from acquiring new customers and has a growing need to maximize the value of its current base of customers. Additionally, the business at a certain point has gathered enough data to analyze behavior and predict future actions.
Calculating CLTV requires a LOT of data: average purchase value, purchase frequency, customer retention rate, and the expected lifespan of a customer.
There are different ways to calculate CLTV. However simple or complex your calculation, keep in mind that the historical value CLTV number itself means nothing. Some will use it to calculate the value of a brand-new customer to try to understand and plan how much to invest in marketing dollars. That is a mistake. The business must use CLTV and take the next step to design plans, test them, and commit to increasing CLTV in order to achieve the true goal of the business.
Strategies to Boost CLTV in Digital Marketing
1. Email Marketing Campaigns
This one is obvious and widely used. Email marketing remains a potent tool for nurturing customer relationships. While 74% of customers say they are frustrated when the email content is not relevant to them, still only a small portion (13%) use advanced segmented email lists to send personalized content, product recommendations, and special offers to different customer segments based on their behavior and preferences.
2. Retargeting
Another widely used method is retargeting. In most cases businesses target non-shoppers and try to get them to convert. Many forget to engage their current customers on a regular basis to keep their brand top of mind even though 60-70% more likely to convert compared to 5-20% that are new.
3. Organic Social Media
71% of consumers who had a positive engagement with a brand will recommend the brand to others. Creating content on social media and engaging with customers on the different platforms is time consuming and expensive. Between responding to comments, answering questions, and creating meaningful connections, this could be a full-time job for a business. But not responding transmits apathy so each business needs to find a way that works to engage on social media.
4. Tailored Content Marketing
Businesses create content all the time. It is often based on what will help them rank higher in Google on specific keywords. Instead, the business should focus on what their customers want to read and engage in. It might not always be at the specific expertise of the business, but if it’s interesting and important to their customers, it should be important to the business.
5. Customer Feedback & Surveys
81% of customers are willing to pay more for better service. The very best customers are always eager to tell businesses what they think and recommend ways to improve. The base will provide feedback willingly. Others won’t. Creating a program that regularly collects customer feedback through surveys and reviews will not only provide ideas and insights to improve products, services, and the overall customer experience, it will also send a message that the business cares about its customer and wants to improve his/her experience.
6. Loyalty Programs
84% of customers are more likely to stay with a brand that offers them a loyalty program. Businesses love to give discounts to people who haven’t purchased or give discounts to everyone equally. Implementing loyalty programs that incent the best customers to become repeat purchasers will guarantee they continue being customers and they often become natural brand advocates.
7. User Generated Content
Showcasing brand advocates in digital marketing can boost their influence beyond word of mouth. The impact is deeper than that, because asking key customers to create content to use in different platforms will create the feeling that they are a partner in the success of the business rather than merely a customer. In fact, 55% of customers feel a personal connection when brands acknowledge and respond to their UGC.
8. Personalize Recommendations
80% of customers are more likely to do business with a company that offered a personalized experience Leveraging data-driven personalization to tailor content and product recommendations to individual customer preferences increases the engagement of the customer with the brand, because the brand knows them and what they like.
In the ever-evolving landscape of digital marketing, businesses must have a plan to increase their customer engagement programs. Those plans must be a valuable form of engagement beyond the purely transactional: “give me money and I will give you a discount.” Those are hollow and at the end of the day, customers can get that from anyone.
While costly, the increased engagement of your business’ current customers will make them feel seen and heard and in the long term will increase their customer lifetime value, which in turn will help the business to invest in new customers. As a result, analyzing CLTV and designing programs to impact it is the only way a business can sustain long term growth.
Want to learn more? Read about how to improve your landing pages to maximize your digital marketing returns, leveraging AI, and how your agency can boost your account-based marketing efforts.
Contact us to talk about your challenges with CLTV or other digital marketing efforts and how our approach can help!
When businesses get to a certain maturity level, they become more and more interested in their customers’ lifetime value (CLTV). It’s a natural progression, because the business is starting to get diminishing results from acquiring new customers and has a growing need to maximize the value of its current base of customers. Additionally, the business at a certain point has gathered enough data to analyze behavior and predict future actions.
Calculating CLTV requires a LOT of data: average purchase value, purchase frequency, customer retention rate, and the expected lifespan of a customer.
There are different ways to calculate CLTV. However simple or complex your calculation, keep in mind that the historical value CLTV number itself means nothing. Some will use it to calculate the value of a brand-new customer to try to understand and plan how much to invest in marketing dollars. That is a mistake. The business must use CLTV and take the next step to design plans, test them, and commit to increasing CLTV in order to achieve the true goal of the business.
Strategies to Boost CLTV in Digital Marketing
1. Email Marketing Campaigns
This one is obvious and widely used. Email marketing remains a potent tool for nurturing customer relationships. While 74% of customers say they are frustrated when the email content is not relevant to them, still only a small portion (13%) use advanced segmented email lists to send personalized content, product recommendations, and special offers to different customer segments based on their behavior and preferences.
2. Retargeting
Another widely used method is retargeting. In most cases businesses target non-shoppers and try to get them to convert. Many forget to engage their current customers on a regular basis to keep their brand top of mind even though 60-70% more likely to convert compared to 5-20% that are new.
3. Organic Social Media
71% of consumers who had a positive engagement with a brand will recommend the brand to others. Creating content on social media and engaging with customers on the different platforms is time consuming and expensive. Between responding to comments, answering questions, and creating meaningful connections, this could be a full-time job for a business. But not responding transmits apathy so each business needs to find a way that works to engage on social media.
4. Tailored Content Marketing
Businesses create content all the time. It is often based on what will help them rank higher in Google on specific keywords. Instead, the business should focus on what their customers want to read and engage in. It might not always be at the specific expertise of the business, but if it’s interesting and important to their customers, it should be important to the business.
5. Customer Feedback & Surveys
81% of customers are willing to pay more for better service. The very best customers are always eager to tell businesses what they think and recommend ways to improve. The base will provide feedback willingly. Others won’t. Creating a program that regularly collects customer feedback through surveys and reviews will not only provide ideas and insights to improve products, services, and the overall customer experience, it will also send a message that the business cares about its customer and wants to improve his/her experience.
6. Loyalty Programs
84% of customers are more likely to stay with a brand that offers them a loyalty program. Businesses love to give discounts to people who haven’t purchased or give discounts to everyone equally. Implementing loyalty programs that incent the best customers to become repeat purchasers will guarantee they continue being customers and they often become natural brand advocates.
7. User Generated Content
Showcasing brand advocates in digital marketing can boost their influence beyond word of mouth. The impact is deeper than that, because asking key customers to create content to use in different platforms will create the feeling that they are a partner in the success of the business rather than merely a customer. In fact, 55% of customers feel a personal connection when brands acknowledge and respond to their UGC.
8. Personalize Recommendations
80% of customers are more likely to do business with a company that offered a personalized experience Leveraging data-driven personalization to tailor content and product recommendations to individual customer preferences increases the engagement of the customer with the brand, because the brand knows them and what they like.
In the ever-evolving landscape of digital marketing, businesses must have a plan to increase their customer engagement programs. Those plans must be a valuable form of engagement beyond the purely transactional: "give me money and I will give you a discount." Those are hollow and at the end of the day, customers can get that from anyone.
While costly, the increased engagement of your business’ current customers will make them feel seen and heard and in the long term will increase their customer lifetime value, which in turn will help the business to invest in new customers. As a result, analyzing CLTV and designing programs to impact it is the only way a business can sustain long term growth.
Want to learn more? Read about how to improve your landing pages to maximize your digital marketing returns, leveraging AI, and how your agency can boost your account-based marketing efforts.
Contact us to talk about your challenges with CLTV or other digital marketing efforts and how our approach can help!