Customer Lifetime Value (CLTV/LTV)

Customer lifetime value (CLV, CLTV, or LTV) is a metric that helps eCommerce companies anticipate how much profit they make from their relationship with each customer over a specific period of time.

To calculate customer lifetime value: {(Average order value) x (The number of times your customer buys from you each year) x (The number of years the customer is associated with your brand)}

Here are some sure-fire strategies that can help improve CLV:

  • Improve customer service: The quality of customer service can help determine your customer’s relationship with your brand. If you offer outstanding after-sales support, CLV is likely to increase because customers like to purchase from those brands that give a hassle-free experience when solving issues related to shipping, returns, etc.
  • Reach out to passive customers: The best way to increase CLV is to never let your customers go into the passive mode. It is crucial because if your active customers turn into inactive ones, it’s a matter of time when you’ll lose them to your competitors. Therefore, reach out to your passive customers and urge them to share why they are not doing business with you. After that, take the best course of action to drive sales again. For example, you can give discount coupons, offer early access to upcoming sales, etc.
  • Run loyalty programs: Allowing saving money on purchases to customers is the most effective way to increase your overall CLV rate. With loyalty programs, you increase customer lifetime value and acquire new customers without putting much effort. It’s like hitting two birds with one stone.

Create a world-class post-purchase experience