How Leading Brands Are Boosting Customer Lifetime Value
Choosing which metrics you’re going to use to measure the success of your customer engagement program can sometimes feel like throwing darts in the dark. With dozens of options to choose from, it’s hard to know what will be the most meaningful for your brand. But there’s one metric that stands out as nearly universally important to brands: Customer Lifetime Value (CLV.)
CLV tells you how much money you’ve made from an individual customer over the course of their lifetime as a customer. It can help you measure your brand’s overall performance, as well as assist you to make decisions like which customers to prioritize and where to focus customer acquisition spending.
Boosting CLV starts with effective customer engagement. The right message on the right channel will prompt users to engage more, spend more, and stick around longer. Here are three ways you can boost CLV by activating, monetizing, and retaining your customers:
Activate Users With Value-Driven Messaging
Congratulations, you’ve acquired a new user! Acquiring users on your app or website is the first step to increasing CLV, but until those new users start paying for your products or services, their CLV is stuck at $0. To start growing the CLV of your newly acquired users, you need to activate them. Activating your users is all about helping them effectively use your brand’s products or services, because when users get value from your offerings, they’re more likely to pay for them.
Think about all of the activation touchpoints in your customer journey. These could be onboarding flows, free trial offers, app download campaigns—anything that highlights the value of your offerings and encourages users to take an action. Now, ask yourself: Does this campaign highlight the value specific to each user? The more personalized your value proposition is in activation campaigns, the more you’ll boost customer lifetime value.
Take Fishbrain, for example. During onboarding, the fishing app asked users questions about their experience level and interests. Then, it used that information to send emails, in-app messages, and push notifications to new users with personalized recommendations for different features to try. Users understood the value of Fishbrain in a more personal way, which paid off for Fishbrain: This activation campaign resulted in a 33% increase in paid Fishbrain Pro subscriptions!
Monetize Customers With Personalized Promotions
It should come as no surprise that monetization campaigns are a powerful way to boost CLV. More money, more value! Effective monetization strategies aren’t as simple as batch-and-blast promos, however. Sure, you may drive some revenue with that strategy, but you’re probably leaving money on the table.
To really boost CLV through monetization, you first need to understand each user’s willingness to pay (WTP) aka the maximum dollar amount that a user is willing to spend on your offering. From there, you can personalize promotional messaging to users based on their WTP. For example, you might send a 5% promo code to users with a high WTP and a 15% promo code to users with a low WTP. The closer you can get to a user’s WTP, the more you can maximize their customer lifetime value.
Customer engagement data can be a great source of information about a user’s willingness to pay. Things like how often users engage with your app or what items they’ve purchased previously can give you a hint about the value they see in your brand. Gaming app Dots increased average CLV by 25% and revenue by 33% with this strategy. By individually targeting the amount and content of promotional offers to their users based on engagement data like levels completed and previous conversions, Dots successfully boosted CLV.
Retain Valuable Customers with Smart Segmentation
While activation and monetization generally focus on increasing the “value” side of customer lifetime value, retention strategies boost the “lifetime” side. After all, as lifetime increases, so does lifetime value. A customer who comes back again and again to make purchases is one that will be valuable to your brand for a long time.
To boost CLV through retention, you basically need to keep activating and monetizing your users again and again and again. You have to continue providing value if you want customers to do the same, so you’ll need to keep your value propositions and your messaging fresh. This might sound daunting, but a smart segmentation strategy goes a long way here.
One way to segment customers is to look at which customers already have a high CLV, since those are the customers you most want to retain. Streaming service Showmax created an audience segment for paid subscribers, with the goal of retaining those subscribers by keeping them watching, engaged, and happy. They further segmented this audience by content preferences, key moments, and user characteristics so that they could send more personalized content recommendations. This targeted approach increased the retention rate of their paid subscriber base to 71% with a 37% increase in ROI. The more times a subscriber renews, the higher their CLV!
Increasing customer lifetime value is no simple task, but a solid customer engagement strategy can really pay off. Need more inspiration for activating, monetizing, and retaining your customers to boost LTV? Download the new Braze Inspiration Guide for 40+ use cases.