🤔 What is the Customer Lifetime Value Report?
While sales and revenue are definitely the right points to look at when measuring success, some other metrics, such as customer lifetime value (LTV) may well be one to deserve some special attention. LTV gives you a valuable insight into your business’ present and future success.
Customer lifetime value is the average total worth to a business of a customer over the whole period of their relationship.
Synder’s Customer Lifetime Value Report tells you how much value a customer brings to your business in the long run, as well as shows you how much you should be spending on acquiring a customer.
⚖️ How is the Customer Lifetime Value Report calculated?
To generate the Customer Lifetime Value Report, Synder divides the total revenue of your business by the number of customers for a given period. The higher the number, the more returning clients you have.
LTV = total revenue/number of customers
🔎 What do these numbers tell us?
There’s a direct correlation between CLTV and revenue – the higher the average amount a customer spends is, the higher their value is. A high LTV also indicates that you have loyal customers who return to buy more products over time. This fact also means that you don’t have to spend more on marketing campaigns since retaining customers is less expensive than acquiring new ones.
The Customer Lifetime Value Report gives you a snapshot of your customer’s behavior. Knowing CLTV helps you understand how to build more efficient campaigns and optimize spending.
📈 What can be done to grow sales based on these numbers?
Boosting CLTV is one of the primary objectives of any ecommerce business and learning about your customer base is the most basic step you should take. CLTV represents customers’ retention and satisfaction so make sure they’re happy with their experience.
There are multiple ways to maximize it:
- Offer loyalty and referral programs
Show how much you care about your existing customers by offering exclusive discounts, and they’ll be excited to return. What’s more, when they’re satisfied, they refer new clients to you, and you get the so-much-needed exposure to an already interested audience.
- Upsell and cross sell
Urging customers to buy a complementary or upgraded product or service potentially results in increasing your revenue.
- Offer easy returns
Returns and refunds can’t be avoided, just make sure the returns experience is a good one. Ultimately, the return policy says a lot about you as a business.
- Improve customer service
Put quality over quantity, publish useful content, scale up the problems your customers have and make sure they get the attention they deserve—your clients won’t forget the extra treatment. Those who are treated well tend to return the favor.
Knowing your LTV opens up new opportunities for your business. Let Synder Business Insights guide you on the way to higher revenue and customer success!