How to Increase Customer Lifetime Value: 10+ Proven Tactics

In today’s highly competitive business environment, retaining customers is more important than ever. By increasing customer lifetime value, businesses can not only improve customer loyalty and retention rates, but also drive more revenue in the long run.

If you are wondering how to increase customer lifetime value that guarantees the success of your business, you are meant to be here!

In this article, we will explore the concept of customer lifetime value and the top proven strategies that businesses can use to increase it. Particularly, we will go through:

  • What is customer lifetime value?
  • How to calculate customer lifetime value?
  • 10+ proven strategies to increase customer lifetime value.

So let’s dive in and discover how you can improve the value that your customers bring to your business over time!

What is customer lifetime value?

Customer lifetime value (CLV) is a metric that represents the total amount of money a customer is expected to spend on a business over the course of their relationship. It is a critical metric that helps businesses understand the financial value that their customers bring to their organization and the potential revenue they can generate in the long run.

CLV takes into account various factors such as the customer’s purchase history, buying frequency, and average order value, among others. By analyzing this data, businesses can estimate how much revenue they can expect to generate from a customer over the course of their relationship.

How to calculate customer lifetime value?

Calculating CLV is an important aspect of customer relationship management and can help businesses make informed decisions about how to allocate resources, such as marketing and sales efforts, to retain and grow their customer base. 

The process involves using historical customer data to estimate the total amount of revenue that a customer is expected to generate for a business over the course of their relationship. 

The formula for calculating CLV can be represented as:

CLV = (Average Purchase Value x Average Purchase Frequency) x Customer Lifespan

Formula to calculate customer lifetime value

It’s important to note that there are different variations of this formula that take into account other factors, such as the cost of customer acquisition and retention. Additionally, the accuracy of the CLV calculation depends on the quality and completeness of the customer data used in the analysis.

However, to make the process of calculating CLV easier and to make the strategies of “how to increase customer lifetime value” more efficient, several apps and software tools have been developed. One such tool is TrueProfit – a real-time & automated profit analytics solution is designed to help eCommerce businesses calculate and track their CLV, as well as all other important financial metrics that you need to uncover how much you’re truly making. 

TrueProfit offers a number of outstanding features that can help businesses calculate customer lifetime value (CLV):

  • Data syncing: True Profit allows users to create an account and sync data from multiple sources to calculate CLV. The app will automatically gather revenue and cost data from different channels and platforms, and then bring it all together in one place.
  • Real-time tracking: TrueProfit provides automatic real-time tracking of CLV, which allows businesses to stay up-to-date on their customer value metrics as they change over time. This can help businesses identify trends and patterns in customer behavior that can inform future decisions (Find here how TrueProfit can help calculate your CLV). 

Track Your LTV With TrueProfit

Segment Customer LTV by country, traffic source, discount code, etc. to focus on higher-profit groups.

Track Your LTV

Overall, the app does the heavy lifting by analyzing customer data and providing insights into customer behavior. This can save businesses a lot of time and resources that they might otherwise have to spend on manual calculations and data analysis. 

10+ proven strategies to increase customer lifetime values

#1. Personalize the customer experience

Personalization involves tailoring the customer experience to the individual needs and preferences of each customer. This can include personalized emails, product recommendations, and targeted promotions. 

By leveraging customer data to personalize communications, offers, and product recommendations, businesses can build stronger relationships with their customers and increase customer lifetime value.

In order to personalize the customer experience, businesses need to collect and analyze customer data such as purchase history, browsing behavior, and demographics. This data can then be used to create customer segments and develop targeted marketing campaigns. 

For example, Amazon uses customer data to recommend products based on past purchases and browsing behavior. This personalized approach has been a key driver of Amazon’s success, with the company reporting that personalized recommendations account for up to 35% of its total sales.

#2. Leverage social proof

Lastly, social proof is a powerful tool for building trust and credibility with customers. By showcasing positive reviews, testimonials, or social media mentions, businesses can demonstrate their value and reliability to potential and existing customers.

To leverage social proof, businesses can ask satisfied customers to leave reviews or testimonials on their website or social media pages through review apps. They can also feature positive reviews or customer stories in their marketing materials or on their product pages. During this process, Ali Reviews, for instance, can be an excellent assistant! 

Ali Reviews is an all-in-one product review solution that can help businesses build their brand and reputation by collecting, showcasing & managing impactful customer reviews with aesthetic design.

With a wide range of features and integrations, Ali Reviews is a highly versatile solution that has been favored by thousands of Shopify store owners and benefits businesses of all sizes.

Additionally, businesses can use influencer marketing or user-generated content to showcase their products or services in real-life scenarios.

One example of a business that has successfully used social proof to increase customer lifetime value is Airbnb. Airbnb allows guests to leave reviews of their stays, which are then displayed on the hosts’ listings. By showcasing positive reviews and high ratings, hosts can increase customer lifetime value, build credibility with potential guests and increase their bookings.

#3. Offer exceptional customer service

Providing exceptional customer service can help businesses build strong relationships with their customers and increase customer satisfaction. This can lead to increased loyalty and repeat purchases, ultimately increasing customer lifetime value.

To know how to improve customer lifetime value, businesses need to prioritize responsiveness, empathy, and problem-solving skills. This can involve responding promptly to customer inquiries, listening actively to customer concerns, and going above and beyond to resolve issues. 

For example, Zappos is known for its exceptional customer service, with the company offering free shipping and returns, a 365-day return policy, and 24/7 customer support. This focus on customer service has helped Zappos build a loyal customer base and increase customer lifetime value.

Customer experience enhancement can increase your customer lifetime value
Customer experience enhancement can increase your customer lifetime value

#4. Create loyalty programs

Loyalty programs aim to incentivize customers to become repeat buyers by providing them with special benefits and discounts. Businesses may boost client loyalty and acquisition by providing discounts, free delivery, and early access to new product lines.

If a company wants to build client loyalty, it has to provide incentives that are valuable to its consumers and within their reach. One method is to implement a rewards system with tiers, wherein consumers are offered progressively better benefits as they make more purchases.

For example, Sephora’s Beauty Insider program offers customers rewards such as free samples, birthday gifts, and exclusive product launches. This loyalty program has been a key driver of customer engagement and retention for Sephora, with the company reporting that its Beauty Insider members spend 2.5 times more than non-members.

A proper loyalty program can be the leverage to lift up your customer retention and loyalty
A proper loyalty program can be the leverage to lift up your customer retention and loyalty

#5. Upsell and cross-sell

With upselling and cross-selling, you may get clients to buy more of your items and encourage them to buy products that compliment each other. By using these tactics, businesses can increase the average order value and thus, increase customer lifetime value.

In order to successfully upsell and cross-sell, firms must first learn about their consumers’ wants and requirements before making any recommendations. Targeted marketing may be used to urge customers to make future purchases by identifying trends and preferences gleaned from collected customer data.

For example, McDonald’s uses upselling tactics by offering customers the option to “supersize” their meals for an additional cost. This tactic has helped McDonald’s increase its average order value and drive more revenue from its existing customer base.

#6. Focus on customer retention

It is more cost-effective to keep an existing client base than to find and win over new ones. In the long run, a company’s bottom line will benefit from a greater emphasis on customer retention and the implementation of methods to decrease churn.

Thus, businesses could increase customer lifetime value by proactively addressing consumer problems and providing incentives for repeat purchases. For example, you may put an emphasis on product quality and reliability and provide promotional offers tailored to each individual consumer.

A noticeable case study of such method is Apple. Apple has a strong focus on customer retention, with the company offering a range of services such as AppleCare and iTunes that help to keep customers engaged and loyal to the brand. This focus on customer retention has helped Apple build a loyal customer base and increase its CLV significantly.

#7. Implement a referral program

Referral programs have the potential to not only increase the lifetime value of current customers, but also to bring in new ones. Businesses may increase their client base and word-of-mouth advertising by rewarding consumers who bring in their friends and relatives.

To get consumers to spread the word about their company, businesses need to provide them with enticing incentives and make it simple for them to do so. Offering discounts, freebies, or early access to new products and services are all examples of incentives that may be provided.

For example, Dropbox offers free storage space to customers who refer their friends and family to the platform. This referral program has helped Dropbox acquire millions of new users while also increasing the lifetime value of existing customers.

A powerful referral program will boost your customer lifetime value to new heights
A powerful referral program will boost your customer lifetime value to new heights

#8. Offer subscription services

When customers subscribe to a company’s ongoing offerings, it may boost both customer loyalty and retention rates. Subscription-based business models allow companies to supply products or services to clients on a continuous basis, increasing value for them and decreasing the probability that they would leave for a competitor.

A compelling value proposition and continuous value for clients are essential to the success of any subscription service. This may take the form of providing early access to items, unique material, or individualized suggestions.

For example, Dollar Shave Club offers a subscription service that delivers razors and grooming products to customers on a regular basis. This subscription service has helped the company generate recurring revenue and increase customer lifetime value.

#9. Provide educational content

Providing educational content can help businesses build trust with their customers and position themselves as experts in their industry. By offering resources such as blog posts, tutorials, or webinars, businesses can provide value to their customers and increase their engagement and loyalty.

To provide effective educational content, businesses need to understand their customers’ needs and preferences and offer resources that are both relevant and engaging. This can involve conducting research to identify common pain points or questions among customers, and developing content that addresses these issues. 

For example, HubSpot offers a range of educational content on its website, including blog posts, ebooks, and webinars. This educational content has helped the company build a loyal following and increase customer lifetime value.

Besides selling your products, consider giving your customers educational content that they love
Besides selling your products, consider giving your customers educational content that they love

#10. Gamify the customer experience

Gamification is the practice of incorporating game mechanics into a non-game context in order to inspire greater participation from the target audience. Companies may motivate customers to take action and boost brand engagement by introducing features like awards, points, and badges.

To implement a successful gamification strategy, businesses need to offer rewards that are both meaningful and attainable for customers. To do this, you may choose to institute a system of points or badges that consumers may earn for doing certain tasks or accomplishing specified goals.

For example, Starbucks’ loyalty program offers customers rewards such as free drinks, food, and refills. By gamifying the customer experience, Starbucks has been able to increase customer engagement and loyalty.

#11. Build a community

Creating a feeling of community around a brand may help businesses enhance consumer engagement and loyalty by giving customers a sense of ownership in the brand. By creating a space where customers can connect with each other and with the brand, businesses can foster a sense of community and increase customer lifetime value.

If a company wants to attract and retain consumers, it has to foster an environment that is both warm and interesting. This might include hosting events or unique material for the community or simply just forming a social media group where consumers can talk about the business and share their experiences with one another.

For example, Lululemon has built a community around its brand by creating social media groups and hosting events such as yoga classes and running clubs. This focus on community-building has helped Lululemon build a loyal customer base and increase customer lifetime value.

Final thoughts

​​In conclusion, increasing customer lifetime value is a key goal for businesses of all sizes and industries. In other words, businesses that prioritize customer lifetime value are more likely to succeed in the long run, as they can build a loyal customer base that generates recurring revenue and helps to drive growth. 

By experimenting with these tactics and finding the right mix for their business, companies can unlock significant value and achieve sustainable success. 

See what proper profit-tracking looks like at

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