Under current circumstances we are spending more time than usual in our homes, so it’s no surprise that natural instincts to decorate and spruce things up are kicking in.
Providing a unique customer experience and engagement will help you to build longer-lasting relationships with the customers that you are acquiring during this time.
In this post, we pinpoint three strategies to increase the customer lifetime value of both your existing customers, and the new shoppers hitting your store at the moment.
Firstly, what is customer lifetime value?
Customer lifetime value indicates the total value of a customer to your business during the entirety of their relationship with you – from their very first purchase right up to their most recent sale. Ideally, the CLTV should be greater than the cost of acquiring that customer, which means increasing the value of existing customers is an important way of driving growth.
Our recent research shows that on average 53% of a store’s total revenue comes from just 20% of its customer base, while research from SumAll suggests there’s a 27% likelihood that once a customer has made their first purchase they will return to buy again. This figure jumps to 43% between a customer’s second and third purchase. This means keeping existing customers onside is a win-win strategy.
We can see that loyal customers have a higher customer lifetime value and higher average spend, but how do you keep that value going up over time?
? Offer exclusive rewards and perks to increase repeat purchases
79% of customers said they are motivated to be loyal by the feeling of accumulating points they can benefit from at a later date. Use your loyalty program to offer exclusive rewards and perks to your customers. This will give them a meaningful reason to return to your store.
For example, Terry’s Fabrics, offer two loyalty points for every pound spent and three loyalty points for each time they visit their site. Such activities encourage their customers to return to the store and spend more.
Our recent research also showed that 74% of customers are motivated to become loyal by working towards a goal or reward. With this in mind, to increase their repeat purchase rates and spend still further, Terry’s Fabrics also created a tiered loyalty program structure. Members can move across three tiers respectively: Bronze, Silver, and Gold. To encourage customers to move up to the next tier, Terry’s Fabrics offered two more loyalty points per pound spent. For instance, members who are in the Bronze tier can earn four points for each pound spent, however, members who are in the Silver tier can earn six points per pound spent.
? Segment your customers to deliver more targeted communication
Identifying your loyal and at-risk customers will help you to deliver more personalized communication that leads to longer-lasting relationships. It’s important to use data on individual buying behavior such as purchase frequency to segment your customers.
For instance, you can send points expiry emails to your at-risk customers to urge them to return to your store and repeat purchases. Here you can see that Sleep Society also creates a loss aversion strategy by providing a limited time to return to the store and make a purchase to redeem rewards.
? Turn your reviewers into referrers to acquire customers with a higher lifetime value
91% of customers trust online reviews as much as personal recommendations. To boost your reviews and referrals, you can send a prompt email to your customers who left a review to refer a friend.
A recent study shows that referred customers are between 16 and 24% more loyal on average. Therefore, through following this strategy you can increase your acquisition and lifetime value at the same time.
For example, Studio M encourages its reviewers to turn into referrers by offering them 200 in return. To convert the referred friend into a new member, they also offer a $10 discount on their first purchase.
? Key takeaways
Now is the time for homeware brands to step up connect with all those customers who are working hard to create a cozy home. Use the below tactics to increase your customers’ lifetime value and build longer-lasting relationships with your all of your shoppers:
- Offer exclusive rewards and perks to increase repeat purchases
- Segment your customers to deliver more targeted communication
- Turn your reviewers into referrers
By following the above strategies, you can pursue steady growth for your business and begin to boost your customer lifetime value.
If you’re a homewares brand and you’d like to talk about any of the retention strategies outlined in this post in more detail, then get in touch with one of our team – we’d be happy to show you some more examples or talk through your store’s unique challenges.
This article originally appeared in the LoyaltyLion blog and has been published here with permission.
