In today’s fast-paced retail landscape, more is needed for businesses to focus solely on attracting new customers. Accurately measuring success lies in nurturing and retaining those customers over time. This is where Retail Customer Lifetime Value (CLV) comes into play. CLV is the total value a customer brings to your business over their relationship with your brand. In this article, we’ll explore seven proven strategies to increase CLV, ensuring long-term success for your retail business.
What is the retail customer lifetime value?
Customer lifetime value (CLV) is the total amount of money a customer is expected to spend in your business throughout their relationship. The formula to calculate customer lifetime value is CLV = (Average Value of a Sale) x (Number of Repeat Transactions) x (Average Retention Time in Months or Years for a Typical Customer).
A good CLV is around three to five times your customer acquisition costs. So, if it costs you $100 to acquire a customer, aim for a CLV of at least $300.
Now, let’s delve into the 7 proven ways to increase retail customer lifetime value:
- Create a Community Around Your Brand
Modern consumers want more than just products; they want to feel connected to the brands they support. Building a community around your brand allows customers to share their experiences, insights, and inspiration. This emotional connection can be a powerful driver for repeat purchases. Research shows that emotions significantly influence buying decisions, so fostering a sense of belonging can increase CLV.
- Provide Utility to Customers Beyond the Purchase
The journey with a customer should continue beyond the point of sale. Post-purchase engagement is essential for building lasting relationships. You can re-engage customers and encourage additional purchases by offering educational content, value-added services, and complementary product recommendations. Utilise data to segment your customer base and personalise your follow-up communications, making them relevant to individual preferences and behaviours.
- Involve Shoppers in Your Marketing Efforts
In the age of social media, consumers are actively sharing their experiences with brands and products. Leveraging user-generated content and encouraging customers to participate in your marketing efforts can create a sense of community and authenticity. This content enhances the communal feeling and provides valuable insights into your target audience’s preferences and behaviours. It can be used across various marketing channels, both online and offline, to strengthen your brand’s presence.
- Provide Great Customer Service
Exceptional customer service is a cornerstone of customer loyalty. Ensure that your staff is well-trained in product knowledge and soft skills like communication, empathy, and active listening. A swift and helpful response to customer inquiries, whether online or in-store, can significantly impact their perception of your brand. Trust is built through consistently positive interactions, which can lead to long-term relationships and increased CLV.
- Offer Loyalty Programs
Loyalty programs are a tried-and-true method for increasing CLV. Customers appreciate the opportunity to earn rewards, discounts, or exclusive offers in exchange for their loyalty. These programs incentivise repeat purchases and provide valuable insights into customer preferences. Implementing a well-structured loyalty program can create a circle of trust and rewards between your store and customers, boosting their desire to shop with you repeatedly.
- Make It Easy for Customers to Buy Again
Convenience is vital in encouraging repeat business. Simplify the purchasing process by offering easy returns and exchanges—Utilise technology to streamline the checkout process, reducing customer friction. For online retailers, tools like Shop Pay can remember customer details, making subsequent purchases faster and hassle-free. Focusing on the customer experience can remove barriers that deter customers from returning.
- Follow Up with Email Marketing Campaigns or Retargeting Ads
Staying in touch with your customers after their initial purchase is crucial. Utilise AI email marketing campaigns or retargeting ads to remind customers about your brand and products. By showing them items they’ve shown interest in, you can rekindle their desire to buy. Whether through personalised email campaigns or targeted advertising, keeping your products in mind increases the likelihood of repeat purchases.
In conclusion, increasing Retail Customer Lifetime Value is vital to sustainable growth in the retail industry. These seven proven strategies—creating a brand community, providing post-purchase utility, involving customers in marketing, offering excellent customer service, implementing loyalty programs, simplifying repurchases, and staying in touch through email and retargeting—can help you build lasting relationships with your customers. Remember, the customer journey extends far beyond the first sale, and by focusing on their needs and desires, you can convert one-time shoppers into loyal, lifelong customers.
Grozeo is a pioneering force in the retail technology sector based in the United Kingdom, dedicated to empowering retailers with innovative solutions like an online store builder which drives growth, efficiency, and customer satisfaction. With a relentless commitment to staying at the forefront of technology, Grozeo delivers cutting-edge products and services that help retailers thrive in an increasingly competitive marketplace.