Report: How to Maximize Customer Lifetime Value
Customer loyalty is a tricky thing. With so many choices in how, where and with whom we shop, it’s getting increasingly more difficult for retail marketers to attract, engage and retain shoppers. It’s also becoming increasingly more expensive with the combination of what we now consider “traditional” marketing and advertising tactics with Google, Facebook and other important places where your shoppers are spending their time online. In this world of increasing complexity and rising marketing costs, what’s an eCommerce company to do? A recent report from RJMetrics suggests that Customer Lifetime Value (CLV) – that is, a prediction of the net profit attributed to the entire future relationship with a customer – is “the most important metric for understanding your business.” According to its 2015 Ecommerce Buyer Behavior Report, which looks at data across 176 eCommerce retailers and 18 million customers, new eCommerce customers spend approximately $154 within their first year, with a majority of the spend occurring within the first 30 days. But less than a third of customers – just 32 percent – place a second order with retailers within that first year. Like all rules, there are exceptions. Some retail categories will have higher CLVs than others, such as grocery, drugstores and mass merchants, which have much higher frequency rates. Others, like electronics retailers, rely heavily on new customer acquisition and hefty average order values. We’d also argue that retailers with strong loyalty programs, annual shipping memberships and generous return policies attract and retain more customers in the long-haul. With the top 1 percent of customers being worth 18 times more than the average customer, it’s imperative that retailers tap into CLV insight to determine which customers will be most profitable and heavily market (and cater to) to those customers. In fact, the report claims the fastest growing companies are those that are able to improve CLV because they not only excel at acquiring more high-value customers, they also know how to increase the value of existing ones. Once you get a customer shopping with you more than once, the likelihood of them making additional purchases increases significantly with each purchase. We encourage you to download a copy of RJMetrics report here, which includes specific recommendations of the data every retailer should be looking at when determining how to maximize their CLV and turn new customers into brand loyalists.