Today we’re going to be discussing something that is extremely pivotal to both online and offline businesses.
This is quite often the determining factor if a business will last 2 months, or 2 years. That factor is LTV, also known as Life-time (Customer) Value.
The reason why this is so important is because many businesses focus on obtaining one initial sale, and quite frankly, it’s impossible to make new sales for an infinite amount of time. New blood into a thriving business is always fantastic, but also difficult to acquire. The level of difficulty of making a previous customer purchase from you again versus attempting to make a cold lead purchase from you is vastly different. After crunching the numbers, a business is set up for much more profitability if they know that on average, a lead is worth $50 rather than $25.
Many business that sell consumable items, cosmetics, and other products can even take a loss on their front end sale, knowing that 4 weeks after initial purchase, that customer will most likely purchase additional products or partake in a monthly subscription that is highly profitable in the long haul.
Overall, increasing Lifetime Customer Value can be done in a few ways such as…
- Post Purchase Email Sequences
Building a solid post purchase email sequence is easier than ever. Keeping your follow up offers congruent with the initial product purchase, you can take the information you already know about the customer and sell them on an additional product that may supplement or compliment the original purchase. Setting up an email series like this can be done with softwares such as MailFunnels which is free for the first 14 days!
- Monthly Subscriptions
Recurring programs are extremely profitable and we’ve seen companies like these make a huge impact in eCommerce. Brands such as Dollar Beard Club, HiSmile, and countless cosmetic brands are capitalizing on this approach. It can cost $20 to acquire a $10 sale at first, but if the average retention rate is $10 / month for 6 months, then they’re setup for immense profits.
- Customer Retention
Customer retention is massive in regards to keeping LTV of your customers high. This can be done through things such as points and rewards systems, free gifts, and interactive features that keep customers feeling gratified and involved.