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Back to the Basics: How to Increase Customer Lifetime Value in 2021

Increase customer lifetime value, 2021.

Welcome to Part Two of our New Year Blog Series, Back to the Basics: How to Increase Customer Lifetime Value in 2021.

This article was originally published in September 2019 and has since been updated.

BVA is taking a full-service approach to helping you prepare for the new year. We’ve gathered insights across all of our teams, and are here to uncover what we consider to be the best tactics from a perspective that combines storefront strategy, marketing, creative, user experience (UX) design, Amazon, and more.

In our last article, we talked about increasing revenue, and now we’re diving into another core eCommerce metric.

Looking back at your holiday revenue numbers and wishing that they could hold out year round? Dreaming of converting seasonal shoppers into lifelong customers? If you’re a direct-to-consumer (DTC) brand, the answer is probably yes.

So you want to increase your customer lifetime value (CLV)? The question we aim to answer in today’s article is: how does your brand both attract higher quality customers and also extend their customer lifetime value?

Here are the 4 things you need to focus on when it comes to increasing Customer Lifetime Value in the new year:

Section 1: The Basics: How Can Today’s Brands Retain Customers?

Just like any healthy relationship, maintaining a good emotional connection with your customers is critical to retaining them. Think of it like dating — if you want to continue seeing someone after a first date, you have to woo them, right? Nurturing a customer relationship after their first purchase is just as important for brands as it is in dating.

Nurturing starts with building trust, clearly defining what your brand stands for in marketing messages, and giving your customers a voice. To accomplish this, here are a few actionable steps:

Identify Behavior & Triggers of Repeat Purchase Customers

The first step in retaining customers is understanding who they are. You’ll want to segment your data by repeat customers and first-timers to identify demographic and psychographic trends of those that buy from you the most frequently. Based on your historical data, ask yourself:

  • Which touchpoints are converting the most new customers?
  • Are there any noticeable patterns in the products bought by repeat customers?
  • What stops some customers from repurchasing?

Gathering and understanding this data will not only help you put the necessary optimizations in place to increase future conversions, but will also help you define which customers are most likely to become repeat buyers.

Creating an Emotional Connection with your Customers

Now that you know more about your customers, you need to focus on building an emotional connection with them to entice them to return to your store.

Start with brand archetypes. Brand archetypes are universally familiar characters or situations that your audience will recognize based on the messaging surrounding your user experience. To a user, the archetype is perceived through the manifestation of your brand’s truth and values. In the world of branding, there are 12 main archetypes, which include the pioneer, the wizard, the scientist, the sage, and the artist. Each represents the unique personality a brand can have.

Brand Archetypes

“Brand archetypes anchor brands against something iconic; something subconsciously understood by users.”

When a brand successfully embodies an archetype, users will notice. Without realizing it, they will pick up on visual and written cues that will help them more quickly understand your brand’s story and motives. This understanding leads to trust and trust leads to conversion and loyalty,” says Courtney Wall, Art Director at BVA.

By embracing a brand archetype, you’ll gain a better understanding of exactly how to communicate with your customers across all channels and marketing content. Consistent touchpoints will help you build a relationship over time, and your brand will begin to own a “role” in the life of your customers, thus turning them into a customer for life.

If you are interested in reading more about archetypes and how they can improve UX/UI, check out Courtney’s article on how to leverage archetypal psychology in UX/UI design.

A Personalized & Stress-free User Experience

Improving the purchase experience is another way to build a stronger relationship with your customers and encourage them to come back for more. After all, and according to a Forrester Research study, a better user experience (UX) can increase conversion rates as much as 400%.

But our focus in this discussion is not only on increasing conversion, but increasing the quality of who is converting. Seamless UX is not only a tool to get new users to purchase, but also a tool to increase the longevity of your relationship with customers.

Your goal should be to make everything easier on the customer; from editing their order, to saving their payment method, to adding products to a wish list that they can come back to and purchase later. Include detailed product descriptions and how-to information in this list. On your product description pages (PDPs) and collections pages, guide the path to purchase in a way that decreases buyer anxiety.

Section 2: Subscribe Now, If You Haven’t Already

The subscription model is almost always a win for everyone. For the consumer, it offers convenience and dependability. For the brand, it’s a source of recurring revenue and an effective method to increase customer lifetime value.

When it comes to creating a new subscription program for our clients, BVA works with ReCharge’s solution. Within ReCharge’s analytics capabilities you’re able to view stats pertaining to CLV, as well as other important data specifically about your subscription customers.


ReCharge Analytics dashboard.

In thinking through the UX for subscription account pages, remember to give the consumer more power and choices to make their subscription unique to their needs. This will help to build trust and loyalty, and create an engaging experience that will keep those customers happy and subscribing.

A good example is the deodorant brand, Native. They use ReCharge, and their PDP allows for the option to select the duration of the subscription via a dropdown menu and also shows the customer how much they can save by subscribing rather than purchasing just one unit.


Native’s PDP

Another tactic Native integrates is up-sells. They allow their customers to add an additional product to their subscription with a single click. This is a great way to increase both AOV and CLV, seeing as customers that already love your brand are much more likely to accept an up-sell, especially one that is so quick and easy to purchase.

Section 3: Up-selling & Cross-selling Your Way to Retention

Shopify offers a wide variety of integrations for cross-sells. These apps allow you to recommend related products on PDPs or in the cart, and provide an easy way for your consumer to add it to their final order. Through Shopify you’ll also be able to track clicks and conversions on these recommendations to learn over time which items to push at checkout.


Leveraging Shopify data, you can take this strategy a step further and build highly targeted email marketing campaigns to re-engage with past customers.

For example, say a customer purchased a new cell phone on your storefront. As the merchant, you know the obvious complementary product to recommend is a charging cable. You also know that the charging cable product lifespan is roughly three months.

Keeping this in mind, you can set up an automated email campaign to customers who bought a cell phone, suggesting a new charger every few months, right as they’re about to need one.

The more you’re able to understand your ideal customer’s purchase funnel (i.e. what they buy, what they’ll need next, when they’ll need it), the more you can provide accurate and useful recommendations and targeted marketing efforts.

Providing these cross-sell and up-sell opportunities at exactly the right time is one way to build a relationship and increase convenience for your consumer. And of course, happy customers tend to lead to more revenue.

When it comes to up-sells, you should be notifying your repeat customers when a product they previously purchased has an upgrade. Launching a new and improved version of that skin care line? Shoot an email off to all of the email addresses that previously purchased the older version. Repeat loyal customers can be more incentivized to stick around if they feel they can upgrade their own life as your brand upgrades its product game.

Section 4: Setting Benchmarks & Measuring the Success of CLV

When it comes to figuring out your CLV, you should be able to complete a fairly straightforward calculation by using a few different metrics.

In brief, to calculate CLV you must find your AOV and Average Purchase Frequency Rate, and then use these two numbers to find the Average Customer Value (ACV).

ACV = AOV x Average Purchase Frequency Rate

You will next have to extract the average lifespan (i.e. how many years an average customer will continuously shop with you), and finally multiply ACV times the average lifespan. Et voilà, you have your LTV!

LTV = ACV x Average Customer Lifespan

However, when it comes to benchmarking the success of all your efforts to increase CLV, what are the best metrics?

Start with the conversion rate of returning customers. What percentage of your conversions end up being new users vs. previous customers? As you move the needle incrementally, increasing the percentage of returning customers over new customers, consider that a win!

Another factor to consider is customer Purchase Frequency Rate on its own. For example, your brand should be thinking, “our average customer purchases four times per year, how can we increase that so that they purchase more than four times per year?

Leverage data on how frequently your ideal customer is purchasing, OR, the demographics of your most repeating customers. You want to know if consumers are diving into cross-sells or up-sells, and which marketing tactics made them engage in that new purchase.

“A customer coming back and buying from different areas of different product lines is a win in terms of lifetime value,” explains Kelly Lender, Associate Director of Client Services at BVA.


So now that you’ve learned everything you need to know about increasing customer lifetime value (CLV) what’s next? Annual planning and crushing revenue goals!

We’re hopeful that some of the ideas we’ve shared in this article will help you maximize your core metrics in 2021. Stay tuned for Part 3 of our Back to the Basics Series!

Happy planning!

Have a project in mind? Reach out to us here!

Special thanks to our friends at BVAccel for their insights on this topic.
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