If you are running an e-commerce business and concerned about your Retail gross profit margin, then you might have come across the term: Customer Lifetime Value. And, if you know your online business game, then you will surely know the significance this term holds. For any business, especially the ones operating in retail segment (online or offline), Customer Lifetime Value decides the overall profit margin in the long term.
In this post, we will tell you about the basics of Customer Lifetime value, reasons to improve it, how it affects the Retail Gross Profit Margin, and how can you increase it.
Let us get started!
What is Customer Lifetime Value?
The simplest definition of Customer Lifetime Value of CLV states- The net profit a company can make from a customer over a given period of time. In other words, a higher Customer lifetime value indicates more revenue per customer, and ultimately boosted retail gross profit margin.
It must be noted that customer lifetime value is a direct function of customer loyalty. Both these functions are directly proportional to each other. That means, each increases with the other and vice-versa.
Reasons to Improve Customer Lifetime Value
Increasing your CLV comes as a no brainer considering these crucial reasons;
- Customer Lifetime Value can make your business stand out from your competition in the long run. A higher CLV automatically means larger loyal customer base which translates into long-term business sustainability.
- Higher revenue without the need for acquiring new customers means hyper profitability. When your repeat customers bring you repeat business, your retail gross profit margin can shoot up like mad.
- A higher CLV reduces your average marketing cost significantly.
How to Improve Your Customer Lifetime Value?
Your Customer Lifetime Value can be increased in the following ways to boost your retail gross profit margin;
Use Customer Loyalty Software
When seamless Customer Loyalty technology is at your disposal, there is absolutely no reason to bother about your business growth. For example, Customer Engagement and Loyalty platform like ES-Engage enable businesses to develop personal relationships with the customers, offer them tailor made personalized offers, and make a lasting brand impact on their minds. Customer Loyalty Platforms like these can significantly up the CLV of a business.
Improved Customer Onboarding Experience
Once a prospect customer comes to your business (online or offline), you have to ensure that he/she gets the finest onboarding experience to ultimately decide to buy, not once but for many more times to come. Onboarding experience includes everything in sequence- right from business discovery, assistance, personalization, and overall purchase experience. After sales service is as important as the pre-sales service. Remember, if you can provide great experience to a customer the very first time, he/she will stick with you for long.
Provide Unparalleled Support
Customer support is the most crucial part of the customer experience. A single negative experience can ruin a potentially loyal long-term customer. So, ensuring impeccable customer support is highly desirable. You must take care of 24×7 Call support, email support, after-sales support, and even onboarding support.
Keep the above points in mind. These will surely help you grow your online business by leaps and bounds via augmented Customer Lifetime Value. Good luck!