BVAccel is focused on all things eCommerce, which is why we’re taking a full-service approach to helping you prepare this holiday season.

We’ve gathered insights across all of our teams, and are about to uncover what we consider to be the best and top tactics from a perspective that combines storefront strategy, marketing, creative, user experience (UX) design, Amazon, and more.

Welcome to Part Four of our six-part content offer, The Holidays in 20/20: How to Increase Customer Lifetime Value (CLTV).

Introduction:

Do you look at your holiday revenue numbers and wish that they could hold out year-round? Are you dreaming of converting those seasonal shoppers into lifelong customers? If you’re a direct-to-consumer (DTC) brand, the answer is probably... YEAH (*cue furious nodding*).

So, you want to increase your customer lifetime value (CLTV). The question we aim to answer in today’s article: how? How does your brand not only attract higher-quality customers but also simultaneously extend the LTV of said customers?

Here are the 5 things you need to focus on when it comes to increasing CLTV:

  1. The Basics: How Can Today’s Brands Retain Customers?
  2. Subscribe Now, If You Haven’t Already
  3. The Elephant in the Room… Amazon
  4. Up-selling & Cross-selling Your Way to Retention
  5. Setting Benchmarks & Measuring the Success of CLTV

1. The Basics: How Can Today’s Brands Retain Customers?

Just like any healthy relationship, maintaining a good emotional connection with your customers is critical to retaining them. Think of it this way - if you want to continue seeing someone after a first date, you have to put in the effort, right? Well, nurturing a customer relationship after their first purchase is just as important for brands as it is in dating.

During the holidays, your brand is likely going to encounter a lot of new customers as they shop for gifts. This seasonal traffic may have never heard of or interacted with your brand previously, so how can you extend their loyalty beyond just a one-time holiday purchase?

It starts with building trust, clearly defining what your brand stands for, and giving your customers a voice. Here are a few actionable steps:

Identify Behavior & Triggers of Repeat Purchase Customers

The first step in retaining customers is understanding who they are. You’ll want to segment your data by repeat customers and first-timers to identify demographic and psychographic trends of those that buy from you the most frequently. Based on your historical data, ask yourself:

  • Which touchpoints are converting the most new customers?
  • Are there any noticeable patterns in the products bought by repeat customers?
  • What stops some customers from re-purchasing?

Gathering and understanding this data will not only help you put the necessary optimizations in place to increase future conversions but will also help you define which customers are most likely to become repeat buyers.

Creating an Emotional Connection with your Customers

Now that you know more about your customers, you need to focus on building an emotional connection with them to entice them to return to your store.

How, you ask?

Consider brand archetypes. Brand archetypes are universally familiar characters or situations that your audience will recognize based on the messaging guiding the user experience.

To a user, the archetype is perceived through the manifestation of your brand’s truth and values. In the world of branding, there are 12 main archetypes, which include the pioneer, the wizard, the scientist, the sage, and the artist. Each represents the unique personality a brand can have.

Brand Archetypes

Brand Archetypes

Courtney Wall, Senior UX/UI Designer at BVAccel, says, “brand archetypes anchor brands against something iconic; something subconsciously understood by users. When a brand successfully embodies an archetype, users will notice. Without realizing it, they will pick up on visual and written cues that will help them more quickly understand your brand’s story and motives. This understanding leads to trust, and trust leads to conversion and loyalty.”

By embracing a brand archetype, you’ll gain a better understanding of exactly how to communicate with your customers across all channels. Consistent touchpoints will help you build a relationship over time, and your brand will begin to own a “role” in the life of your customers, thus turning them into customers for life.

Want to learn more about archetypes and how they can improve UX/UI? Check out Courtney’s article on how to leverage archetypal psychology in UX/UI design.

A Personalized & Stress-free User Experience

Improving the purchase experience is another way to build a stronger relationship with your customers and encourage them to come back for more. After all, and according to this Forrester Research study, a better user experience (UX) can increase conversion rates as much as 400%.

But our focus in this discussion is not only on increasing conversion, but increasing the quality of who is converting. Seamless UX is not only a tool to get new users to purchase, but also a tool to increase the longevity of your relationship.

Shoppers may come to your site for a gift, but if the UX is flawless and the overall experience goes well, they will be more motivated to come back as a shopper for their own needs. And, since they're doing so much holiday shopping, one very good experience is likely to stay in their mind.

Your goal should be to make everything easier on the customer; from allowing them to edit their order, to saving their payment method, to adding products to a wish list that they can come back to and purchase later. Add detailed product descriptions and how-to information to this list. On your product description pages (PDPs) and collections pages, focus on guiding the path to purchase in a way that decreases buyer anxiety. Especially during the holidays, users are more likely to be shopping in a hurry which is why a convenient and stress-free purchase is critical.

Another trick is to track customers who select gift-wrapping of their purchase. These people are quite obviously gift-givers, and you can use the data to target those shoppers during other holidays of the year (i.e. Mother’s Day, Father’s Day, Valentine’s Day, etc.).

Additionally, you can send gift-givers promotional deals with “treat yourself” messaging; these are likely to feel more customized and show that you understand your customers and how exhausting the holidays can be. Or, try offering “His and Hers” bundles, or “Something for the Kids, and Something for Mom” discounts.

Post-Purchase

The purchase experience is critically important, but don't forget about the post-purchase experience as well. Two areas that your brand should focus on optimizing include shipping and increasing customer engagement.

Largely due to the precedent set by Amazon, consumers now expect 2-day shipping across the board. If your DTC storefront doesn’t offer free, rapid order fulfillment, you’re facing a serious risk of losing that customer to Amazon Prime, or a competitor that does.

As we touched on in Part 2, The Holidays in 20/20: How to Increase Revenue, this is why creating a competitive shipping offer (and smoothing out supply chain inefficiencies) is crucial during the holidays. But how does this affect LTV? Well, if customers are leaving your storefront to buy on Amazon Prime, you risk losing them to a competitor and/or losing control of the customer experience.

2. Subscribe Now, If You Haven’t Already

What if there was a magical way to allow your customers to effortlessly continue purchasing from your brand on a regular basis? Imagine that automatically, every month, your customer re-purchases their favorite product without even having to think about it?

Oh wait, this already exists. And it’s called a subscription.

The subscription model is almost always a win for everyone. For the consumer, it offers convenience and dependability. For the brand, it’s a source of recurring revenue and an automatic increase in CLTV.

During the holidays, a subscription model comes in extra handy because it offers gift-givers the opportunity to gift something a little bit more unique. Why give a loved one a single gift, when you can give a whole subscription - a gift that keeps on giving year-round?

Outside of gifting a subscription, the subscription model still adds value. Let’s say you receive a product as a gift and love it so much that you go onto the DTC storefront to re-purchase. Lo and behold there is a subscription option! Cha-ching, now you’re locked in as a returning customer.

When it comes to creating your new subscription service, integrating ReCharge into your Shopify storefront is a great option. Within ReCharge’s analytics capabilities you’ll even be able to view stats pertaining to CLTV, as well as other important data specifically about your subscription customers. 

In thinking through the UX for subscription account pages, remember to give the consumer more power and choices to make their subscription unique to their needs. This will help to build trust and loyalty and create an engaging experience that will keep those customers happy and subscribing.

A good example is the deodorant brand, Native. They use ReCharge, and their PDP allows for the option to select the duration of the subscription via a dropdown menu and also shows the customer how much they can save by subscribing rather than purchasing just one unit.

Native's PDP

Native's PDP 

Another tactic Native integrates is up-sells. They allow their customers to add an additional product to their subscription with a single click. This is a great way to increase both AOV and CLTV, seeing as customers that already love your brand are much more likely to accept an up-sell, especially one that is so quick and easy to purchase.

Section 3: The Elephant in the Room… Amazon

Although Amazon is highly effective at converting new customers, it may be less effective at retaining them.

While your DTC storefront allows full control over things like UX, personalization, and follow-up, you're going to be more limited on Amazon because Amazon owns the experience. And Amazon doesn’t allow a lot of customization throughout the buying process, which is key to retaining customers.

However, there is a definitive way to use Amazon to help improve CLTV through your DTC storefront.

Amazon DSP, the Amazon advertising platform, enables brands to programmatically buy display and video ads. Through this platform, even though you’re advertising on Amazon, you can still send targeted and qualified customers to your DTC storefront to make their purchase.

“When your brand’s DTC storefront has a really good user experience, a really good design, and displays a really good understanding of who their customers are, you should use this Amazon data to send consumers to your DTC storefront because you’re going to be way more effective at owning the customer relationship,” says JJ Bannasch, Senior Vice President of Marketing Services, at BVAccel.

Overall, it is always important to consider your big-picture brand goals. If your goal is to increase the volume of conversions, regardless of whether they are coming from new customers or returning, Amazon all the way. But, if you’re thinking strictly about CLTV and building long-term customer relationships, spending your time on your DTC site is likely going to be more rewarding.

4. Up-selling & Cross-selling Your Way to Retention

We already talked about leveraging up-sells and cross-sells to increase AOV in Part 3 of the Holidays in 20/20, but you may also want to consider using these tactics as a way to increase CLTV as well.

Lucky for you, Shopify offers a wide variety of integrations for cross-sells. These apps allow you to recommend related products on PDPs or in the cart, and provide an easy way for your consumer to add it to their final order. Through Shopify, you’ll also be able to track clicks and conversions on these recommendations to learn which items to push at checkout over time.

Boost Sale Shopify Integration

Boost Sale Shopify Integration

Leveraging Shopify data, you can take this a step further and build highly targeted email campaigns to re-engage with past customers.

For example, say a customer purchased a new cell phone on your storefront. As a merchant, you know the obvious complementary product to recommend is a charging cable. You also know that the charging cable product lifespan is roughly three months.

Keeping this in mind, you can set up an automated email campaign that goes out to customers who bought a cell phone, suggesting a new charger every few months... right as they’re about to need one.

The more you’re able to understand your ideal customer’s purchase funnel (i.e. what they buy, what they’ll need next, when they’ll need it, etc.) the more you can provide accurate and useful product recommendations. Providing these cross-sell and up-sell suggestions at exactly the right time is one way to build a relationship and increase convenience for your consumer.

When it comes to up-sells, you should also be notifying your repeat customers when a product they previously purchased has an upgrade. Launching a new and improved version of that skincare line? Shoot a notification out to all of the email addresses that previously purchased the older version. Repeat loyal customers are likely going to be more incentivized to stick around if they feel they can upgrade their own life as your brand upgrades its product game.

Apple's iPhone 11 launch

Apple's iPhone 11 Pro Launch

5. Setting Benchmarks & Measuring the Success of CLTV

When it comes to figuring out what exactly your CLTV is, you should be able to complete a fairly straightforward calculation by using a few different metrics.

In brief, to calculate CLTV you must first find your AOV and Average Purchase Frequency Rate, and then use these two numbers to find the Average Customer Value (ACV).

ACV = AOV x Average Purchase Frequency Rate

You will next have to extract the average lifespan (i.e. how many years an average customer will continuously shop with you), and finally, multiply ACV times the average lifespan. Et voilà, you have your LTV!

LTV = ACV x Average Customer Lifespan

However, when it comes to benchmarking the success of all your efforts to increase CLTV, what are the best metrics?

Start with the conversion rate of returning customers. What percentage of your conversions end up being new users vs. returning users? As you move the needle incrementally and increase the percentage of returning over new, consider that a win!

Another factor to consider is Customer Average Purchase Frequency Rate on its own. For example, "if our average customer purchases four times per year, how can we increase that so that they purchase more than four times per year?”

Leverage data on how frequently your ideal customer is purchasing, OR, the demographics of your most repeating customers. You want to know if consumers are diving into cross-sells or up-sells, and what made them engage in that new purchase.

“A customer coming back and buying from different areas of different product lines is a win in terms of lifetime value,” explains Kelly Lender, Product Owner at BVAccel.

Conclusion

So now that you’ve learned everything you need to know about increasing customer lifetime value (CLTV) this holiday season, what should you do next? START PLANNING!!! Our team strongly recommends that you plan for the holidays at least two months in advance, especially if you’re going to test any optimizations or changes to your storefront.

We’re hopeful that some of the ideas we’ve shared in this article, Part Four of The Holidays in 20/20, will help you maximize revenue this holiday season in ways that benefit you and your brand for years to come.

Stay tuned for Part 5 of The Holidays in 20/20. Up next, “How to Deepen Relationships with Customers,” where we will move beyond CLTV and boldly go where no man has gone before - Star Trek anybody?

The most wonderful time of the year is coming FAST, and it’s time to get ready. Happy holidays, and happy planning!

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Chelsey Debalsi Chelsey DeBalsi is the Agency Marketing Manager for BVAccel, responsible for managing the agency's digital marketing initiatives, inbound marketing strategy, and branding.