Boosting Customer Lifetime Value For Ecommerce Businesses with Effective Email Strategies.
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Tejas Pitkar
Tejas Pitkar
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Boosting Customer Lifetime Value For Ecommerce Businesses with Effective Email Strategies.

Published : May 29, 2021 | Updated : December 14, 2023


Since the time the world moved on from the pandemic, the ecommerce industry has thrived more than ever, and is expected to grow by 7.80% annually to reach $6,985.5 billion in 2023. This upsurge plays a crucial role in boosting retail sales in 2023, significantly enhancing customer lifetime value for ecommerce businesses.

The majority of businesses and consumers have joined the online bandwagon. The marketplace has become crowded, and the competition tougher. Acquiring new customers and retaining them is becoming increasingly difficult for Ecommerce businesses.

Since the last year, businesses are prioritizing customer retention over acquisition. According to a study, it costs 5 times more to gain a new customer than it takes to retain one.

High acquisition costs and a low customer lifetime value (CLV) are the toughest challenges today. We will discuss how to use email marketing to boost your CLV in this post.

But before that…

How can a high CLV impact your Ecommerce business?

Increasing CLV should be at the center of every online business’s growth strategy.

E-commerce marketers are obsessed with terms like AOV (Average Order Value), CV (Customer Value), and APFR (Average Purchase Frequency Rate): this helps calculate the average CLV.


A high CLV equates to high ROI and customer loyalty. In other words, more customers will stay with you for a longer time.

It also means that your products have found a market fit, and your customers simply love them.


Being ardent proponents of emails at Netcore Cloud, we’re here to guide you on harnessing the power of email marketing, a potent customer engagement tool, to amplify the CLV for your digital enterprise.

Email marketing is a direct channel to understand your customers and what they need from you. You can use your mailing list to improve customer CLV and make a difference in your company’s bottom line.

Here are some ways that CLV directly impacts your business:

a. A high CLV leads to a higher profit margin due to repeat purchases and greater ROI.


b. Repeat purchases from existing customers lead to a healthy recurring revenue that reduces part of your costs.

c. With the assurance of recurring revenue, you can re-invest the profits into expansion, development of new products, etc.


d. CLV is a good indicator of the financial impact of your marketing campaigns. 

e. A high CLV means that your customers love your products/service and they are loyal to your brand.

Prepare a CLV strategy as if it’s a long marathon rather than a short sprint.

But how do you calculate it?

How to calculate CLV?

CLV denotes the average amount of money spent by your customers throughout the lifetime of their relationship with your e-store.

Example: As an online e-fashion store, you spend $10 to acquire a new customer; the customer buys 5 pairs of shoes every year over the next 10 years. With a $15 gross profit on each transaction, you earn $75 each year and $750 over a decade. Now subtract the cost of acquisition from your profit, i.e., $750-$10=$740. That’s your customer’s lifetime value.

The generic formula to calculate CLV with a predictive approach is as follows:

Customer value = Average order value of the single customer / Average frequency of purchases

Average customer life span = Sum of all customers’ retention spans / Number of all customers
CLV = Customer value X Average customer life span.

If you’re leveraging a customer engagement platform or an Email Service Provider (ESP) for your email campaigns, they should assist you in pinpointing your average CLV.

Strategies to increase CLV for ecommerce business

Now that you know how to calculate it, how do you improve on it? It’s simple: make customers buy more, buy often, and be with you longer.

Let’s check out 6 strategies to increase the CLV for your Ecommerce business and boost brand loyalty.

1. Segment your list based on RFM value

It’s a common practice for email marketers to segment their mailing lists into active and inactive customers. Segmentation is done based on past engagement, purchase history, demographics, and variable preferences.

We suggest you segment a level deeper: divide your list according to Recency, Frequency, and Monetary value aka R-F-M.

R-F-M enables you to organize subscribers from the most profitable to the least profitable.

Segment list based on RFM value

Source: Crealytics


Example: Sally has recently purchased some products from your E-store. Here’s a breakdown of her R-F-M value.

Recency refers to Sally’s recent purchase history. A customer who has purchased recently is more likely to make a repeat purchase than someone who hasn’t purchased yet.

Frequency refers to how many times she has purchased in a given period. Active customers who have made frequent purchases will continue to do so rather than those who rarely purchase.

– Monetary refers to the amount of money spent by Sally on your products. A customer with a high purchase value is more likely to return than a customer with a lower purchase value.

Such a hyper-targeted approach provides you with a holistic view of the average CLV of your customers. According to the infographic above, the aim should be to convert the not-profitable customers to very profitable customers. In addition, you need to retain profitable and very profitable customers.

Get started on it with an analytical approach and purchase history from your website. With this strategy & a customer engagement platform by your side, you will gradually witness an improvement in CLV.

2. Use post-purchase emails to sell more

For an ecommerce business, transactional emails like order and shipping confirmation are important to send. These emails have a higher open rate than your promotional campaigns. Naturally, your consumers are curious to know more about their orders and expected delivery times.

Here’s a surprising statistic: Order confirmation emails have an average open rate of 70.9%, four times more than your promotional emails!

Post-purchase emails are a great opportunity to upsell complementary products to your customers. Incentivize the customers to purchase more with attractive deals in your shipping confirmation emails.

You can provide such nudges to increase additional purchases on related products. They improve the repeat purchasing pattern of your customers and add to the CLV.

This shipping confirmation email from Dollar Shave Club for their monthly subscription box goes the extra mile in promoting complementary products. It prompts the customer to “toss in” extra grooming products for a small price.

Use post-purchase emails to sell more

3. Upgrade your loyalty experience

There’s nothing better than giving a loyalty membership to your customers to make them feel special with exclusive access to products and services.

A loyalty membership should offer perks to your customers to keep purchasing.

The use of human psychology in marketing creates a behavior pattern in the customers; they keep making purchases from your business in return for the perks.

Example: As an E-grocery store marketer, you can add loyalty points for all your customers’ purchases. When enough points accumulate, you can offer to redeem them with special services like same-day delivery, half-price discounts, early bird access to limited products, and more.

Loyalty programs are a simple way to reward and increase repeat purchases of your loyal customers and improve their lifetime value.

Read more here on encouraging repeat purchases for your E-commerce store.

The campaign from Loeffler Randall promotes their loyalty program and allows customers to earn even more rewards. The offer of 250 exclusive bonus points is attractive, while the limited-time rider creates an urgency to buy.

Upgrade your loyalty experience

Source: Pinterest

4. Hyper-personalize your emails

We live in an era where hyper-personalized messaging is all the rage.

Expect your customers to stay only if the deals resonate with them: collect relevant information during sign-up, segment based on past interaction, and offer relevant products to each customer.

Example:

As an E-grocery store, you will have segments for the health-conscious, vegans, fruit lovers, and others. By onboarding a customer engagement platform, you can automate campaigns tailored to each segment, ensuring your customers feel understood and valued.

Your messaging should create a ‘wow’ moment that adds to their experience.

Besides being personal, you also need to have a goal for your messaging. Whether you wish to communicate about your latest sale, growing registered users on the app, or new cool collaborations on website products, have a goal for creating the email.

Carefully thought-out emails make your customers feel at one with your brand. So, get personal and get specific.

The personalized campaign from Forever 21 provides a 20% discount on the products browsed by their customer. Personalization strengthens customer experiences by sending the right content to the right person at the right time.

Hyper-personalize your emails

Source: Reallygoodemails

5. Follow up with automated replenishment

In these pandemic times, automated replenishment emails are a powerful tool to get repeat orders.

Be it new customers or existing, automated reminder emails based on customer behavior data lead to repeat orders.

With the current pandemic era we live in, your customers will appreciate your replenishment emails on essential items, supplements, health care needs, etc.

Here’s another surprising statistic: According to Ometria, replenishment emails have an average open rate of 50-60% and an average click rate of 40-50%. That’s a high level of engagement!

Example: When a customer buys hand-wash liquid from your store, note the quantity, date, and purchase pattern. If they have bought enough for 30 days, trigger a replenishment email around day 25 to remind a re-purchase.

Automated reminder emails are a golden opportunity for your brand to generate recurring revenue.

This campaign by Drugstore is the perfect example of an effective replenishment email that appeals to a customer’s need for practical products. The casual question of “running low” gets a customer’s attention and urges them to re-order before they run out of stock.

Follow up with automated replenishment

Source: SaleCycle

6. Engage smartly using AI-optimized campaigns

Anytime marketers talk about increasing customers’ lifetime value, improving customer retention is a prime consideration.

Throughout your email journey, you must have crafted some beautiful campaigns with engaging subject lines, attractive deals, and purposeful content. They might have performed well for your business.

So why not duplicate them and get similar results every time?

By creating emails similar to your top-performing campaigns, you increase the probability of boosting conversions with every send.

So how do you go about digging through tons of data to get these customer insights? Here’s where Raman – our AI assistant can come in handy.

Raman will reduce these time-consuming tasks to seconds!  It provides on-demand insights on your customer behavior data and gives real-time results.

Powered by artificial intelligence algorithms, Raman optimizes every customer engagement from start to finish. Whether you need to send off emails, create personalized online boutiques, or analyze your metrics, Raman will be there for you every step of the way.

Leveraging AI-optimized customer engagement solutions can fortify relationships with your customers from the outset.

Similar to the example provided, your AI assistant should be able to point out which subject lines have gained engagement in your sending history and which keywords can provide better performance on your next campaign.

Engage smartly using AI-optimized campaigns

Summing it up

Running a growing E-commerce business means increasing CLV and reducing churn.

Improving CLV starts with your first interaction, i.e., welcome email, and goes right up to your latest interaction. Your retention and optimization efforts should be focused on every stage of the customer journey.

Use the above tactics to build a stable foundation for your E-commerce email program. Some tips to prepare your CLV campaign checklist include:

– Segment customers according to purchase value to improve your order value
– Use post-purchase emails to upsell and cross-sell relevant products
– Upgrade your loyalty program to offer exclusive services to the best customers
– Hyper-personalize your emails to resonate with your subscribers
– Use automated reminder emails to get repeat purchases
– Use AI to get customer insights and smartly replicate offers

If you haven’t already, we invite you to book a demo to take our Customer engagement platform for a spin to experience our marketing features in real-time!

#fortheloveofemails

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