Customer Lifetime Value (LTV) is one of the most important, though often overlooked, business metrics.
As the co-founder of an email remarketing provider I see a lot of email marketing campaigns and, let me tell you, not enough online businesses implement the email strategies that will help them increase their LTV permanently.
This blog post is going to help YOU stand apart from the crowd!
What is LTV anyway?
At the end of the day your LTV is simply how much an average customer is worth to your business over the long run. The key factors that drive LTV are the average order size, the average order frequency and the average total lifespan of a customer.
I’m going to share three campaigns that I guarantee will help optimize these metrics.
Each campaign and the examples I provide are design to be practical so I urge you to set them up!
1. Send product lifecycle campaigns
Lots of products that we buy day-to-day are repeat purchases. Food, beauty products, clothing, services and even electronics.
If you run an online store you’ll know better than anyone the purchasing patterns of your customers for your products. Take cologne or perfume for example. If a customer purchases one of these products and likes it they’ll often by the same item every 6-12 months year after year.
This is the perfect situation for email remarketing. To capitalize on a pattern like this you need to setup an automated email that is sent to a customer just before you expect them to re-buy an item. By pre-empting the secondary purchase and emailing everyone who buys the product initially you will certainly see a measurable return.
Why? Lots of customers forget where they bought the product from in the first place. Others re-buy the item from a store they walk past on the way to work and others simply forget to re-stock. By emailing them and reminding them you are giving yourself a much higher chance of gaining their business again.
Check out this example from Feel Good Contacts to see a product lifecycle campaign in action:
Product lifecycle campaigns are a win-win campaign in my opinion as they are often act as a true reminder for the customer and are a real revenue generator for your business.
By extending the average customer lifespan this campaign is a very handy strategy when it comes to increasing LTV.
2. Send recommendations based on behavior
The trick with nailing product recommendations is being specific and using them at the right time.
Here are two campaigns ideas that use product recommendations and work particularly well:
- Email customers who have shown interest in a product but not purchased. The following example from Amazon, the masters of product recommendation (they drive over 30% of their revenue), targets customers who have expressed interest in compact cameras. The recommendations in this example are extremely specific. This email is sent a few days after a customer browses compact cameras but does not make a purchase.
- Upsell customers after their purchase. Sending a campaign 1-2 days after you know (or estimate) a customer has received their product and asking them how they’re enjoying their purchase is a great time to insert some savvy recommendations. Offering customers items that can enhance the experience with their previous purchase is what should drive your recommendations.
Both of these campaigns help to increase your average order frequency. The more orders customers make, the higher your LTV will be.
Remember, the trick is to be specific with your recommendations.
Motorcycle Superstore stores details of each customers’ specific motorcycle. They do this so they know exactly which bike(s) a customer owns and. In their email campaigns they advertise a link that takes customers directly to a custom parts page that features parts for each customer’s specific motorcycle only.
This is an example of creativity when it comes to recommendations and the tactic has lifted their revenue from email marketing by over 10%!
For full details, check out this case study on Motorcycle Superstore.
3. Ask them to pay more
If you sell subscription-based software one of the biggest challenges is lowering your churn rate and keeping your customers around for as long as possible.
A fantastic campaign to increase your average customer lifespan (and LTV) is to ask customers to pay over a longer period. If your standard payment period is monthly, sending an email to customers who have been paying for 6+ months and offering them a special discount on your annual plan is the perfect strategy.
Locking people in for at least another 12 months is great for your cash flow as you will receive the money up-front. No business would even say no to this and it will give you some extra funds you can spend on customer acquisition. What a bonus.
This example from WP Engine, a specialist WordPress host, is clear, concise and has a killer call to action. It has been so effective that customers who have received this campaign have even blogged about it.
These three campaigns are just the tip of the iceberg but they are simple, practical and will genuinely increase your customer lifetime value. This means you’ll be making more money from the customers you already have!
If you want to learn more about these and other great campaign ideas, I recommend you check out this series of posts: it’s got over 15 examples from some of the world’s most successful online businesses.
So what are you waiting for? Implement some of these email remarketing strategies today!