When analysts talk about the trends, numbers and statistics that make up the ways in which people look at a business and evaluate its success, one tricky concept to look at is the Customer Lifetime Value. It may sound like a mouthful, but what the CLV essentially is, is a measurement or prediction of the net profit you may expect from a single customer over the long term.
In other words, the CLV is a figure that looks at just how much money a long term customer can make for you, should they remain committed to giving you business.
It’s an often overlooked number, as people tend to look at the larger mass of customers, and think mostly in terms of quarterly reports on profits. But if you are able to think in the longer term, and see the value in customers that return and reengage you on a regular basis, you are one step closer to achieving a stronger, more profitable business with a stable future.
So what can you do if you want to increase your CLV figures? Personalized email marketing can actually make a big difference in five ways.
Study The Data
Personalized email marketing has its basis in software that tracks the shopping activities of your customers. It gives you a quick compilation of what items they were looking at, what items they bought, and even what items they may have been thinking of buying but ultimately “abandoned” in the electronic shopping cart without making a purchase.
All of this early information is market research gold for you and your marketing team. Take advantage of this “early warning system” to see what customers are interested in, and make sure you use the software to its fullest advantage to remember these purchasing actions. Increasing the CLV of an individual customer starts with understanding what that customer’s interests are.
Remember Their Purchases
This is the most basic and most important stage of personalized email marketing. By keeping track of purchases, monitoring what items shoppers are viewing, and remembering what items they go so far as to put in the digital shopping cart, but ultimately not purchase, you are building an important personal profile for that shopper. Your emails to that shopper should reflect this knowledge, showing them items similar to the ones already purchased, informing them of discounts, sales and promotions on those items, or items they may have decided against buying.
This step is important for building retention and increasing CLV because it shows an interest in the customer. And that interest in the customer will be returned by the customer. By showing that you remember what they like and are committed to keeping them informed of things that matter to their personal interests, you give them more reason to return to your services, rather than start a new search somewhere else. You are making it easier for them to shop with you, and thus giving them less reason to go somewhere else.
Exploit Product Lifecycles
Every product has a fixed lifespan of some kind. In the case of some electronics, like smartphones or tablets, it may only be for one year until the latest, greatest version comes out. For other things, such as consumables like pet food or personal care products like shampoo, it may only be a few weeks. When a relevant period of “replenishment” arrives, such as an opportunity to upgrade to new equipment, or a notification that a six month supply of vitamins is coming to an end, personalized email marketing can make an important impact on a customer.
Consumables and other products that require replenishment are evergreen products that a shopper is going to have to buy from someone. A personalized email marketing effort dramatically increases the chance that you are the supplier the shopper goes to. Your email achieves a number of things at once, acknowledging a customer’s patronage of your services, taking the time to inform them of something useful, like reminding them to “stock up,” and giving them an easy way to accomplish this goal.
Show Customer Appreciation
Everyone enjoys a little flattery and this is especially true of shoppers. If you take the time to acknowledge, praise and even reward customers for their patronage, this will form strong relationships that keep them coming back. A loyalty or reward system that tracks their progress works well, as do special events and promotions that celebrate their relationship with you.
There are many ways to do this, such as providing special shopping bonuses or “perks” on birthdays, acknowledging certain milestones, such as discounts for being a loyal shopper for one year, or even “random” bonuses, such as some companies upgrading shipping on items to the next tier as a “thank you” for continued patronage. Personalized emails that reward or acknowledge the shopper will always make a positive impression and foster a stronger sense of relationship and loyalty.
Specialize Your Marketing
One of the most valuable things that shopping data can do is fine tune exactly which areas your shoppers are focused on. This, in turn, can make your marketing much more specific and effective. If, for example, you have a customer that is only buying boots, shoes, and other footwear, and has consistently shown a lack of interest in other forms of apparel that your store offers, this means you that a personalized email marketing campaign specifically pointing that shopper towards a footwear promotion will be much more effective.
In the same way, if that shopper has shown no interest in consumer electronics, there is no point including that shopper in such a promotion, especially if their purchasing habits are well documented. This has the two-sided effect of not just making your targeted marketing far more efficient, it also helps foster retention with your customers because you are not constantly filling their inbox with things they don’t care about.
These are five very important factors to consider if you want to increase you customer lifetime value. By giving them more reasons to shop you with you, this figure will only rise with time and more attentive marketing.
