How to Easily Increase Your Customer Lifetime Value 

Did you know that increasing your customer retention by just 5% could augment your profits by 25%

According to researchers at Bain & Company, that’s exactly right. 

What does this mean for businesses? 

It means the key to our profits is customer retention. We need to look after our existing customers to ensure they stick around. 

That’s where Customer comes into play. CLV is a key-performance-indicator (KPI) that helps us monitor the value of a single customer over time. 

And the key to increasing our CLV is retention, retention, retention. 

In this article, we’re going to discuss everything you need to know about your customers’ life time values and how to mobilise this metric for some serious success. 

We’ll be covering:

What is lifetime value?

How to calculate LTV in simple terms

How to increase lifetime value

Tools for increasing LTV 

So, what are we waiting for? 

What is lifetime value?

Customer lifetime value (CLV for short) is a key performance indicator that measures the total value of an average consumer throughout their customer lifetime. 

In other words, how much value does a customer bring into your business from their first contact to their last?

This metric helps retailers measure the overall performance of their marketing campaigns. 

When you know your shopper’s CLV, you’ll gain a better understanding of which types of customer bring the most value into your business. 

And then you can target your marketing to reach exactly those people. 

Neat, right? 

But lifetime value is often overlooked by businesses in favor of short-term sales goals. It’s all too easy to chase one-time-only sales. 

But to secure long-term growth that’s not going to cut the mustard. 

Today’s businesses need to mobilise the power of sustained customer relationships for success. That means relationships built on loyalty and repeat purchase. 

And the best way to measure this? 

You guessed it - it’s customer lifetime value. 

This single financial projection allows businesses to identify exactly what drives customers away and what keeps them coming back for more. 


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Customer Lifetime Formula - How to calculate LTV in simple terms

Calculating lifetime value (LTV) requires a lot of historic data and some simple arithmetic. 

The most common way of calculating a basic, average CLV is this:

Customer Lifetime Value = average value of sale x # transactions x retention time 

Keep in mind that this isn’t the only method of calculation. To delve deeper into individual customer values you’ll need to use one of these alternative methods.

To keep on top of your CLV alongside other key metrics and performance indicators, we recommend using a designated software. We’ll talk about some great software options in just a moment, but for now let’s talk churn. 

What is churn?

Churn is the term used to refer to customers who stop purchasing from a business. Your churn rate is the percentage of shoppers who cease making purchases over a specific time period. A high churn right is a key indicator of sub-par customer retention and loyalty.

As a retailer, this is a number you want to keep as low as possible in order to increase your Customer Lifetime Value. 

Here’s how you can calculate your churn rate:

Churn rate = (# customers at end of period - # customer at beginning of period) / # customer at beginning of period 

Don't lie to yourself about your LTV

Whatever you do, there’s no use lying to yourself about your real customer lifetime value. Your score isn’t there to scold you. Even if your current CLV isn’t great, this number is extremely useful - think of it as your first step to success. 

Your lifetime value score tells you:

  1. How much to budget for customer acquisition 
  2. How you can better segment your customers - which customers are high value vs. which customers are low value to your business

In turn, these insights help us decide where to add value, how to retain our most high-value customers, and how to turn our lower value customers into company loyalists. 

Remember the aim is to convert our brand-agnostics into high-value, loyal clients.


Because existing customers spend 67% more on average than new ones. 

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How to increase lifetime value

So, we’ve established that your customer lifetime value is super important. We’ve laid out all the sums. But what are some actionable steps we can take to increase our customer lifetime values and retain lots and lots of oh-so loyal customers? 

Excellent Customer Service 

The most important thing when it comes to customer retention is customer service. Customer service is the principal driver of customer loyalty. In fact 52% of consumers say they have made an additional purchase from a company after a positive customer service experience.

Luckily, these days, there are so many customer service options available to retailers. The internet age has changed what customers are looking for when it comes to support. More and more of us prefer self-service options over traditional call centers. 

So what can you do to improve customer service for the modern consumer? 

The answer is simple. Omnichannel customer support. 

Today’s customers want support on multiple channels, available on all of their devices (and that means mobile too). 

To keep your customers sticking around we advise checking all of these services off your to-do list. 

  1. Live chat – have live chat options available for more complex queries 
  2. Chat bot – mobilise an automated bot to answer simple FAQs 
  3. Knowledge base – designated a webpage to product resources and guides
  4. Customer forums – create a space for your customers to troubleshoot issues 
  5. Product tutorials – provide visual product how-guides and video tutorials

There’s actually an added benefit to this. Not only will your customer love these varied support options, but you’ll free up workflows and save money in the process. 

Improve onboarding

Better onboarding = better retention

What do I mean by this? 

Prioritise a positive customer onboarding experience. This should help your customers understand your product and derive it’s true value. And ultimately that’s going to reduces churn and confirm to the customer that they should stick around.

For example, when a new customer signs up for your product or service, try to:

  • Set their expectations
  • Make things simple
  • Highlight top features
  • Provide support - E.g tutorials 

Email marketing – target & retarget 

A great way to increase your customer lifetime value is to set up a killer email marketing campaign. That means streamlined engagement, and re-engagement emails (sometimes called retention emails). 

Create automated flows depending on where your customers are in the lifecycle and remember to provide lots of value and open communication. These emails work hand-in-hand to encourage continued customer engagement (and therefore CLV).

  • Step 1: Send engagement emails that promote action
  • Step 2: Follow up with a retention email that captures your customer’s curiosity and reminds them why they signed up for your service to start with.

Take a look at this great re-engagement email by Grammarly!


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Rewarding loyalty

Reward loyal customers by setting up a personalised loyalty program. This is a great way to encourage repeat purchase. It could be something as simple as reward points or secret discounts for top customers. It’s a win-win. You customers will feel accomplished, heard, and appreciated, whilst you benefit from their loyalty and continued business. 

Top-tip: everyone loves freebies. Why not try out a loyalty card with the promise of a great free gift at the finishing line. It could be a month’s free subscription, a discounted subscription, or even first dibs on a new product release. 

Listen to your customers

When it comes to customer loyalty and retention, listening is critical. After all customers stick around when you give them what they want. And how are you supposed to do that if you don’t give them the time of day? 

Fostering open communication between company and customer is one of the best things you can do for you CLV. 

It’s all about accessibility. Your customers want to feel like part of the gang. Like they matter (which, by the way, they do). 

So how can you make your customers feel heard? 

  • Always reply to feedback. 
  • Take their advice and make relevant improvements. 
  • Send out regular questionnaires and polls (Typeform is great for this).
  • Make space for suggestions and feedback on all company platforms (ask questions like why did you sign up?  & what made you stop using our services?).
  • Credit customers for their great ideas.

But how will you know if any of this is making a difference? 

That’s where your Net Promoter Score (or NPS) comes in. 

 Your NPS is a key performance indicator that calculates the percentage of your existing customers likely to recommend your company. In other words, a high NPS means you’ve been doing something right. A low NPS? – time to start listening. 


Personalisation, personalisation, personalisation. Modern marketing is all about personalisation. Today’s customers want to feel valued as individuals. Use personalised, relevant content to keep your customers coming back. 

Keep tabs on what customers buy and how often. This is a great basis upon which to build personalised campaigns. Try to include:

  • Personalised product recommendations based on past purchases and price-points
  • Personalised newsletters with relevant product recommendations and trends 
  • Personalised product bundles and offers based on favourite purchases

You could even base personalised recommendations on customer locations. Check out this great example by The Dots, for example:


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Provide value - Without bias

At the end of the day what keeps customers coming back is value. And that means everything from price points to quality to customer care. Your aim should always be to solve a problem for your customer that nobody else has accomplished. 

Ask yourself, what it is that will make their lives easier. 

Then give it to them. 

For example you could add value with:

  • 24 hr customer service
  • Free delivery
  • Excellent post-purchase care
  • Discounts 

Upselling, cross-selling and offers

Once you’ve got customers interested in your particular product or service, you can increase their lifetime value by upselling, cross-selling, and offering fantastic offers and upgrades. 

This will capture their curiosity and keep them up to date with new products and listings. 

Upselling is effectively the act of selling a more expensive version of a product or service. 

Cross-selling is the act of selling a similar or complementary product or service. 

For example, a car-dealership might contact a previous customer with details about the latest model of their current car - highlighting enhanced features and product benefits. This is a classic upsell. 

Likewise, a fashion retailer might contact a previous customer with the new season’s stock, listing clothing items with a similar style and price bracket as their previous order. This is cross-selling through and through.  

Upselling and cross-selling can be enhanced even further with enticing offers. Why not try:

  • Product bundles
  • Temporary service upgrades 
  • Complementary products at checkout
  • Free shipping with a minimum spend 

Tools for increasing LTV

We’ve discussed the importance of your customer lifetime value. We’ve discussed how to improve it with improved customer service and engagement. 

If this all sounds like a lot of work – don’t worry. 

There are plenty of automated tools on the market to help you track and improve your CLV from one simple interface. 

We’ve selected three of the very best to get you started. 

Hotjar- for collecting feedback

Hotjar is an easy-to-use feedback collection software built especially for marketers, product managers, and UX designers. The software helps businesses understand how their users are experiencing their company website and platforms day in-day out. Hotjar uses traditional web analytics tools to help users analyse their traffic and help you understand those numbers in a digestible way. 

Check out Hotjar here

Klaviyo / Mailchimp – for email marketing

Klaviyo is an email marketing platform created especially with online businesses in mind. It features powerful email and SMS automation tools that generate highly relevant and personalised marketing solutions for their users. 

Check out Kaviyo here 

Intercom – for customer service / automation

Intercom is a conversational relationship platform that helps it’s users build customer relationships through conversational, messenger based experiences at all touchpoints across the customer journey. This software helps businesses scale their conversational experiences to every customer without burning out your service team. 

Check out Intercom here

Over to you

It’s over to you. It’s time to boost your customer lifetime value once and for all. And what better place to start than following some of our top-tips. We guarantee you won’t regret it. By building a following of loyal customers you’ll be priming yourself for success. It all starts with CLV. 

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