How Measuring your CLV can drive profitability for your e-commerce brand.

Acquiring a low cost marketing is the ultimate goal for most brands in the D2C market, But How?

Even after spending a high amount and deeply invested efforts, if profitability is still a far fetched avenue, you may need to wonder how you are utilizing the acquired customer data.

When planning your digital marketing strategy, it’s natural to focus on acquiring new customers daily. However, research shows that repeat customers tend to spend a whopping 67% more than new ones. This insight underscores the need to shift your attention towards scalability and increasing the Average Order Value (AOV) of repeat customers.

Now, what exactly is CLV? Customer Lifetime Value represents the total revenue you can expect to earn from a customer throughout their engagement with your brand. It not only sheds light on your customer acquisition costs but also helps you identify your most valuable customers and their demographics. For sustainable growth, your CLV should be at least three times greater than your Customer Acquisition Cost (CAC).

How studying your CLV can drive profitability for your ecommerce brand?

Calculating CLV is instrumental in optimizing your marketing efforts. It allows you to evaluate your costs and profit margins accurately. If acquiring a customer costs as much or more than their CLV, it’s a red flag. Additionally, monitoring customer retention rates and churn rate is crucial, as they are closely tied to CLV.
Here are some key points to consider:

Drive Profitability in two easy steps to begin with -

Customer Segmentation

Identify the customers' cohorts into high spenders and low spenders. Invest and drive increased efforts to retain, remarket, and engage these high spending customers.

Engage high value customers

Engage with your brand loyalists who have a high-spend and a high CLV for scalability. Invest in retention marketing efforts to maintain these high-value customers to reduce marketing cost and increase efficiency of your digital marketing efforts.

How to build a high CLV and drive profit from it?


Invest in Customer Experience

New customers discovering your brand for the first time are an opportunity to build a loyal customer who will stay and keep buying for a longer time period. How do you achieve that? Well, by investing in customer support and user experience of your website/landing page, listening to customer feedback, and also, with a good onboarding and engagement process. Offer a better customer experience that’ll help your buyers stay longer and have a seamless and better view of your brand.

Focus on the relationships you want to form with your loyal, high-spending customers

Use creative communication strategies, be conversational and encourage your audience to interact with your brand. Make it easier for them to connect and converse with you. Share UGC content as much as you can. Leverage digital marketing services to establish an emotional connection with the customers
Your Website is place where you have control when it comes to conversions Any digital campaign you run is probably going to point back to your website. So, when potential customers land there, it’s important that you’ve done everything you can to encourage a conversion.

Create a Loyalty Program

Customer loyalty is crucial, but customer relationship is just one of the many ways you can improve it. By creating a loyalty program, you can drastically improve your retention rate, purchase frequency, and your average customer lifespan.

Consider Cross-selling

To improve purchase frequency and customer profitability, cross-selling and upselling are effective strategies that can be used to increase conversions and sales. We’ve often identified this as an underlying brand challenge and used cross-selling as a strategy to scale sales and increase conversions for brands. It is possible that the audience landing on your website needs more than one product or a different product or an upgrade. Behavior-based marketing automation allows businesses to map out a personalized experience for customers based on their needs, desires, and behaviors, which can help build a better, more engaging marketing strategy.
Fast fashion clothing brands & beauty and skincare category brands are a great example of this. Notice how brands like mCaffiene, FoxTale, Shein, H&M, even marketplaces like -Flipkart, Nykaa, Myntra, Ajio, etc, leverage push notifications and email marketing while the customer is in the stage of making the purchase decision?
One of our clients, “An Indian Saree brand acquired 40% increase in the AOV and 26% retention rate with Cross selling through Email Remarketing and Push notifications with ViralMint.” Another fragrance brand, leveraged Gpay offers and abandoned cart data to acquire 10% increase in NTB customers orders within 2 months.
Exactly, what we are trying to say!
Understanding and optimizing CLV is paramount for the success of your e-commerce brand. Performance marketing and advertising agencies possess the expertise to utilize your campaign budgets to maximize the CLV effectively. Collaborate with experts who have a decade worth of experience to harness the full potential of your hard earned CLV and implement strategies that drive sustainable profitability.

How to run effective campaigns that earn profits instead of high impressions or reach?

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