3 Tips for Increasing Customer Lifetime Value (CLV)
With so many options available to consumers, you really need to make your marketing efforts personal in order to stand out among the competition. This is why Neil Hoyne has been studying customer lifetime value (CLV) and other game-changing marketing strategies at Google for more than a decade.
Neil now serves as Google’s chief strategist for data and measurement. In his debut book, Converted, he uncovers the data-driven ways you can win your customers’ hearts.
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According to Neil, customer lifetime value “is going to tell you how much each relationship is worth to your business going forward, how many times you expect the customer to come back, and how much they will spend.”
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3 tips for increasing your customer lifetime value
Discover Neil’s three tips for increasing the customer lifetime value (CLV) at any stage of your business.
1. Focus on conversations (and trust) not conversions
“The height of trust and the most underutilized space for collecting data comes after [the customer] gives you money. It is the thank you page,” Neil says. After the customer has made a purchase and given you their trust, you have the opportunity to have a conversation that gives you a deeper understanding of who your customer is. You can ask vital questions about competitors, family size, income, etc., and in turn develop strong marketing content and build long-lasting relationships with your customer base.
The answers to these questions can help businesses plan future expansion opportunities and campaign strategies, making these conversations with customers more valuable than the actual sales themselves.
2. Identify the “good” customers from the “bad”
Breaking your customers into two general categories (“good” and “bad”) will help you attain more of the customers you want for your business. “There are some customers, like friends and family members, who you couldn’t imagine living your life without, and then other customers who, no matter how much you try, just won’t love you,” Neil says.
To help differentiate between these two types of customers, Neil recommends looking into specific questions related to purchasing history. What products did these customers buy? Which product category are they interested in? What channel did these customers come from? Once you find out where the better customers are coming from, or which categories they are connecting too, invest more in those areas.
“You need to be mindful about what’s leading you to slightly better people [customers who stick with you longer and spend more money], and put a little bit more emphasis there and a little less emphasis on those people we know aren’t going to come back,” Neil says.
3. Use the data to make informed decisions, not emotional ones
“When we capture data, we often don’t do it with an intention of what we’re going to do after that data comes back,” Neil says. It’s important to have plans in place before collecting data sets to avoid this common mistake. Knowing how your business will adjust based on the data before it is collected—and before emotional responses come into play—is key.
“Don’t just collect information for the sake of collecting information—use it to personalize your emails, the customer’s experience, or deliver more value [with your products or services],” Neil says. Taking the time to understand which data points have the most impact on your brand will help you better use your data and eliminate confusion.
With Neil’s strategies, you can begin developing stronger and more meaningful relationships with your customers that will help grow your business over time.
Tune in to the full Shopify Masters episode to discover even more ways you can connect to your customers and increase their value to scale your brand.
