Increasing Customer Lifetime Value (CLV) in e-Commerce

Customer Lifetime Value

Though the amount of sales made is crucial in the ecommerce industry, it’s the ability of the e-tailing company to make more sales per person that edges them past their competition. Businesses which look to increase the customer lifetime value of their customers through proper understanding and analysis of their behavior and purchasing patterns are sure to get a larger chunk of the ecommerce market. The key here for businesses is to engage proper retail analytics which can directly help them to target their customers more effectively and increase their customer lifetime value to the best possible extent. Let’s see what businesses can do to increase the lifetime value of their customers:

Customer segmentation

Most e-commerce sites have special offers and discounts for regular shoppers and another kind of offers to attract first-time buyers. The likeliness of selling to an existing customer is around 60 to 70% and to a new customer, it is around 5 to 20% as per Marketing Metrics. The objective is to reach out to new customers, but more importantly, keep the regular customers more loyal. Customer segmentation shall not only be based on the regularity of purchases made, but also by having a holistic view of customer’s behavior, type and value of purchases made, the frequency of purchase, and so on. How efficiently businesses can extract this information through smart retail analytics will make customer segmentation more accurate and relatively more effective with retail sales.

Identifying right sales timing

In most cases, it’s the timing of the sale rather than marketing which is crucial. With retail sales now beyond the traditional sales frenzy months in a calendar and virtually throughout the year, businesses are forced to look at every opportune moment to make the offer. With a more vivid view of the customers’ behavior, businesses can not only make the right sales offer but also make the right cross-sale or up-sale proposition which can most probably prove beneficial for both the shopper and the retailer.

Personalized promotions

Fading are the days of generalized promotions. The online world is moving towards more of the segment based or more personalized sales promotions which work wonders. Personalized promotions give the shopper a feeling of being counted as an important customer to the company. This may at times aid in getting the sales done. Personalized promotions also give customers the feeling that promotions are actually aimed at his requirements rather than unsolicited marketing attempts. However, for retailers to be more effective with this they must have processed information about the customers through proper information gathering and analytics. Personalized promotions done through dynamic remarketing campaigns can effectively increase sales.

Identifying best channels for customer engagement

Not every marketing effort is successful and not every channel of communication is equally effective, moreover, one channel may be effective for one segment and ineffective for another. Businesses, through improved analytical tools, must gather information like knowing effective channels of communication-based on customer segments and customer demographics. Only this can give an insight into which channels to use for which segment and what kind of messages best work on these channels.

Optimizing interactive experience

The way you get shoppers to your website and the way they flow through your site to make the purchase — all put together makes the whole experience of the shopper. Now with many competitors making rapid and frequent changes to their interactive websites, you have to be proactive and constantly look for optimizations of your website. With proper analytics, you can get the browsing flow of your customer right from the landing page to the checkout page. You can then look for areas where they drop off, areas which push them to the next level, what they see at every point and how they would react. With these insights optimizing your pages for maximum yield can be extremely useful and effective. A/B testing and multivariate testing of your web pages can aid with right analytics.

Useful and informative feedback program

Never let your feedback system take back casual or normal information which doesn’t give you any actionable insights about customer experiences. A satisfied customer in most cases is ready to spend that extra minute to give you more useful and valuable information which can instantly help you. And an irate customer will vent out his anger to help you identify areas of improvement. You may find a way to cross-sell or up-sell or maybe get an immediate reference sale opportunity, or you can simply walk away with crucial information which can add value to your customer segment. Activity like this will also give out crucial information like the survey result mentioned below:

Proactive customer service

As per KISSmetrics, 71% of consumers ended their relationship with a company due to poor customer service. Nothing beats a proactive customer service, so avoid the generally expected service calls or communications that you associate with regular sales activity. Look for spaces where you can add more value, take that extra effort or make that call and be really concerned for your customer’s concerns. All this will not only make them more loyal but also let them open up to you in many ways. For this, you have to know when and where your customers require your support and what they are most expecting from you, and how you can surprise them with timely and proactive efforts. This again calls for predictive analytics which proves crucial in such situations.


The chance of a customer slipping away is highly probable with so many e-tailing businesses vying for market share. And it is reported that globally the average value of a lost customer to the company is estimated to be around USD 243 (KISSmetrics). And this makes increasing the lifetime value of a customer even more important in the quest for e-Commerce success.

» »

Author- Sanjay Kupae

Sanjay Kupae
Sanjay Kupae is Sr. Product Marketing Manager – Customer Analytics at Manthan. Sanjay is an analytics enthusiast, focused promoting structured and unstructured analytics solutions that help businesses understand and engage their customers better. Sanjay is passionate about marketing strategy, business development, messaging, marketing analytics and multi-channel campaign execution. Sanjay has a BE in Electronics and Communication from Bangalore University and a MBA in Strategy from University of Nebraska, Lincoln. Follow Sanjay on Twitter @skupae

Related Posts

Menu Engineering: Real-time insights enable menu optimization
How technology can mend the COVID-19 infected supply chain
Remaining true to its mission of “Serving the Underserved” during supply chain disruptions at Prince Retail

Leave a comment

Data Science for Restaurant