As your ecommerce store attracts new visitors this holiday season, it’s important to think about how to transform seasonal shoppers into lifetime customers. Analyzing your customer’s lifetime value (LTV), or total amount a customer will spend on your business throughout their lifetime as a customer, is critical to developing effective growth strategies following the holidays.
The ability to retain, grow and convert loyal customers is a key to survival, especially with harder economic times on the horizon. Businesses focused on retaining their customer base during periods of economic uncertainty are better positioned to come out ahead when the economy improves.
So how can merchants better position themselves to increase long-term value? Start by digging into your analytics and learning how to calculate your customers’ lifetime value.
How to calculate lifetime value
Lifetime value is the (Average Order Value) x (Sales Frequency) x (Average Customer Lifespan).
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Average Order Value = (Total Revenue) / (Total Number of Purchases)
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Sales Frequency = (Total Number of Purchases) / (Number of Customers)
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Average Customer Lifespan = (Total Number of Years Customers Have Purchased) / (Number of Customers)
For example, if your AOV is $10, sales frequency is 10 times a year and customer lifespan is three years, then your lifetime value total is $300. Now that you’ve calculated the LTV, read on for tips and strategies to keep customers coming back after the holidays are over.
Reward customer loyalty
Only 20% to 40% of ecommerce consumers are repeat customers, but if a customer shops at your store a fourth time, they are 56% more likely to come back. By leveraging existing customers and rewarding customer loyalty, merchants can show shoppers that their business is valued.
Attracting new customers is anywhere from five to 25 times harder than retaining existing customers. As the holidays approach, implementing strategies like loyalty programs help to increase customer retention by giving customers an incentive to keep coming back. Discounts, birthday perks, and loyalty programs can help you increase brand awareness and reach.
Offer personalized discounts and promotions
By rewarding repeat purchases, retailers show customers that they are incentivized to return time and time again. Research shows that 92% of consumers use coupons in their shopping journey.
Wildly successful reward programs like Sephora’s Beauty Insider program draw hundreds of customers with free shipping, birthday gifts and beauty samples year round. “Insiders” look forward to spending their rewards and can track and collect points toward new rewards or credit toward future purchases. Sephora’s LTV is one of the strongest in the ecommerce beauty industry.
You can also drive lifetime value by offering personalized discounts for subscriptions to products and newsletters. Checkout platforms like Bolt can help ecommerce businesses personalize their checkout experience with product recommendations and discount codes among other checkout enhancements.
Prioritize customer service & checkout
Providing excellent customer service, especially during the holidays when customers are shopping in high volumes, is essential for retention. By offering customer-centric perks such as free returns and free shipping on big purchases, it can be the difference between a one-off shopper and a lifelong customer.
One Harvard Business Review study found that as more Americans seek customer service online, high-quality customer service with a swift reply can turn temporarily angry customers into loyal shoppers for life.
Last but not least, the customer checkout experience should be fast and mobile friendly, especially during the holidays when shoppers have a lot to juggle. Solutions like Bolt can help offer retailers a secure, one-click checkout experience that is fast and seamless.
