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How To Enhance Customer Engagement & Lift Customer Lifetime Value

How To Enhance Customer Engagement & Lift Customer Lifetime Value

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An eCommerce store is nothing without its customers. Attracting them is one thing, but holding onto them and turning them into valuable, loyal shoppers requires a focused strategy. Successful e-retailers pump a lot of time and effort into achieving this as, in the long run, it helps businesses remain viable.

A surefire way to conjure such shoppers is by enhancing customer engagement and increasing customer lifetime value. So, get ready to learn precisely how to do this for your eCommerce store.

Customer Lifetime Value and Engagement In A Nutshell

Both customer lifetime value (CLV) and customer engagement are crucial to eCommerce businesses. But before we get into that, let’s define what each of these terms means.

Customer engagement is all about connecting with your customers and building relationships. The opportunity to engage with customers is present at every touchpoint you have with them. This includes your eCommerce store, social channels, and marketing campaigns. Essentially, in any interaction a shopper has with your brand, engagement efforts can be implemented.

Customer lifetime value refers to the total amount of money your average customer is expected to spend whilst they hold a business relationship with your brand.

customer lifetime value formula

(Source: Tidio)

In addition to indicating the monetary gain from customers, CLV also gives insight into the long-term value of your customers.

When we start to think about how the long-term value of customers can be improved, the relationship between engagement and CLV becomes clear.

You’re way more likely to purchase frequently, spend more money and be more committed to a brand that has connected with you on a deeper level. When brands master engagement, their CLV will inevitably rise, making CLV a metric of engagement.

The Importance of Customer Engagement and CLV

importance of customer lifetime value and customer engagement

There are so many reasons why eCommerce merchants should pay attention to CLV and customer engagement levels. An obvious one is profitability. Getting the most long-term value from customers will ultimately bump up your revenue. Moreover, when you nail how to effectively engage shoppers at every turn, the likelihood of them making purchases will shoot up.

CLV and engagement both have specific benefits and capabilities that work towards improving profitability. Let’s take a closer look at them.

Benefits of CLV

A major benefit of focusing on existing customers is that it can help your business keep a few extra pennies in its pocket. Acquiring new customers requires a fair amount of effort and tactics. When it comes to your existing customers, however, you’ve already done a lot of the necessary legwork. As a result, gaining a new customer can cost 5 times more than retaining an existing one.

Knowing the CLV of various groups of customers can go a long way in helping you make sound business decisions.

For instance, you can identify the profile of your most profitable customers, and then devise marketing efforts to retain these shoppers and attract similar ones. You’ll also be able to decipher how much you can spend on the acquisition of similar shoppers whilst remaining profitable.

customer persona

(Source: Adzooma)

You could also use CLV as a basis to do a deep dive into your best customers. Finding out key information such as demographics, interests, product preferences, and shopping behavior will help you fine-tune every aspect of your business to suit these high-value customers.

Keeping tabs on the trajectory of your CLV will also help your business stay strategy sharp. Should it begin to spiral downwards, you’ll know that recent or current efforts have lost touch with your customers. This essentially acts as a signal to revamp your tactics. If your CLV is on the rise, you can continue to invest in the development of your product catalog and engagement efforts.

Benefits of customer engagement

Having a well-thought-out engagement strategy is something you can’t neglect if you want to make it big in the eCommerce game. According to Salesforce, 80% of consumers say value the experience brands provide just as much as the products or services offered. Engagement is a vital component of the customer experience, so it’s definitely something you'll want to pay attention to.

When you successfully and continuously engage visitors to your store, you’ll build up trust and belief in your brand, which is the recipe for loyalty. Additionally, focusing on engagement strategies compels you to understand your customers. You’ll be enlightened with invaluable insights that serve to cater to your customers better with experiences that speak to them.

Moreover, your sales funnel velocity will improve greatly. By putting in the work to connect with shoppers and guide them through the shopping journey, you’ll drive them to purchase much faster.

Effectively engaging shoppers can work wonders for your business and in turn boost CLV. So, how can you improve these vital components?

Winning Ways To Enhance Customer Engagement & Customer Lifetime Value

Focus on collecting and analyzing data

data analysis helps with strategy to increase customer lifetime value

To kickstart your efforts to enhance engagement and CLV, you first need data. To drive engagement, you’ll need to understand your customers' needs, wants, and pain points. To help you get an idea of these, on your website you should pay attention to:

  • Average time on page: pages that have lower time spent on them aren’t holding the attention of shoppers. Conversely, longer stints on a page shows that the content on them is valuable.
  • Average session duration: similarly, short sessions on your eCommerce store can indicate a lack of engagement if no meaningful action, such as a purchase, occurred.
  • Bounce rate: this can be really telling of how effectively you’re engaging with visitors to your store. If no interaction is made
  • Repeat visitors: this metric will let you know how much shoppers value what you’re offering.

The channels you use to communicate with customers also need to be looked at. How’s the click-through rate of your emails? How much interaction are you getting from your social posts? Which channels do your customers seem to be using the most to interact with your brand?

These metrics will play an important role in discerning where and how you need to up your engagement efforts. You can then implement different tactics and look back at those metrics again to see how well they’re working.


Finally, take a look at customer feedback. Sure, some are singing your praises, but what about the ones who aren’t? What frustrations are they expressing? This type of feedback can really help you understand what your customers' needs and wants are. This information is super valuable, whether it’s positive or negative, so be sure to be proactive about collecting it.

Personalize interactions and messaging

Speaking of data, one crucial aspect of it we must mention is customer data. Intricate knowledge of your customers’ behaviors will help to put you on the path to providing personalized experiences that are inherently engaging. If you want to truly connect with each customer and boost their CLV, every interaction should have personalization baked into it.

This is quite a giant task so your best bet is to use AI-powered tools.

Personalize your web pages with unique product recommendations based on each shopper’s behavior with apps like Wiser. Make sure your marketing emails are made to fit specific customers.

Be on the lookout for email marketing tools that can segment customers based on behavior, campaign activity, and more. This will help you put the right content in front of the right customers in no time.

Major social media platforms such as Instagram and Facebook now streamline the process of creating personalized ads.

virtual tryon on an ecommerce website

Virtual Rug Styler by Miss Amara

Aside from using technology to craft data-driven content, you can also use it to provide interactive experiences. Miss Amara, for example, lets its customers visualize how different rugs will look in their homes.

Reward your most loyal customers

If you want to keep customers coming back and spending more over their lifetime, it makes sense to incentivize doing so. This can be easily achieved with a rewards program.

A rewards program has the ability to be the lasso that keeps customers coming back. In fact, 84% of consumers say they’d stick with a brand that offers a loyalty program. What's more, 66% state that the prospect of earning rewards influences their spending. This means you’re almost guaranteed to lift CLV.

To reap the rewards of a loyalty program, you need to design it carefully. Shoppers want a little bit more than just discounts and free shipping for being loyal. Early access to sales and products, as well as personalized rewards are a big draw.

sephora beauty insider rewards program

Take Sephora as proof of how variety in redeeming points can propel CLV. Members of the brand’s Beauty Insider program can use their points to get free gifts, attend exclusive events, get access to limited edition products, and more. This flexible and highly incentivized rewards program has led to its members accounting for 80% of Sephora’s annual sales.

Apps like Smile.io and Growave can help you get a rewards program up and running in no time.

Start a referrals program

Drawing new customers from existing ones is a fool-proof way to boost CLV. Why? Because referred customers have a higher lifetime value than non-referred ones. They also make more repeat purchases.

Referred customers are more primed to bring more value to your store as they are starting at a higher level of trust. If your friend or family member raves about a brand and insists you try them out, you’re almost certainly going to give them a go, right? This is basically how referral programs function to prospective customers.

Referred customers are also more likely to be the archetype of your ideal shopper. After all, most people would only tell someone to do business with a brand if they thought it would genuinely be of value to them.

Encourage your most loyal customers to recommend friends with incentives on both sides like a discount or loyalty points. You should also think about whether you want to have a standard reward for each referral or implement a tiered system.

Referring a friend needs to be as simple as possible. There shouldn’t be too many steps to getting someone on board. There should also be different ways for customers to share their referral links like by email, social media, SMS, etc.

okabashi referral program statistics

Stats from Okabashi’s referral program (Source: ReferralCandy)

You should also aim to reach out to customers shortly after they’ve made a purchase with referral information. Okabashi uses this approach to drive its referral program. After a new purchase is made, the footwear brand fires out an email with a shareable discount coupon. Customers can also share coupons on social media channels. This has seen its referred customers spend a whole lot more.

Some great apps to help you flesh out your referral program are Growave and Loyalty Lion. They also double as loyalty apps, so you can easily reward your customers for their referrals.

Leverage upsell and cross-sell techniques

A great hack to get your customers spending more whilst keeping them hooked on your brand is cross-selling and up-selling. These techniques involve presenting your shoppers with items that are complementary to what they’re interested in or act as an upgrade of an existing product.

For upsells and cross-sells to positively impact your CLV, you need to focus on making sure they are genuine and appealing.

When selecting products for a cross-sell, it’s important that not only are they relevant to what is being viewed, but also that they’re relevant to the shoppers as an individual. AI and ML algorithms will come in handy here. It’s a good idea to give your customer a visual representation of how cross-sell items look or work together.

This tried-and-true tactic can be seen often in fashion stores, but other industries can benefit from it too. Urban Natural often recommends items that can be seen in the main product page image.

urban natural cross-sell with product recommendation

For upsell products, make it obvious that this is a better solution for your customers’ problems. As these are premium items with a heftier price tag, you should encapsulate shoppers with rich and diverse information. Include a variety of media such as videos, 3D images, and tutorials. Ensure the product description is compelling and informative, and don’t forget about social proof.


Create compelling content

To tap deep into engagement, you need to think of your business as a little more than an entity selling products or services. Rather, your brand is an expert in the field it operates in and can therefore be an all-round solution for your customers.

Providing customers with content relevant to the market you’re in can be extremely useful in fostering loyalty. 63% of marketers say that content marketing strategies help them build loyalty with existing customers. Thus, an effective content marketing strategy can do a lot more than just boost your SEO and generate leads.

When it’s useful and riveting, it will power relationship-building with your customers. It demonstrates to shoppers that you understand and care about their woes and interests, and can feed them the information they’re hungry for in the most delectable ways. As a result, the trust you’ll build in your brand from shoppers will skyrocket.

So, what type of content should you be creating and how can you ensure it’s compelling?

The first step is to investigate your customers’. Figure out what their pain points are in relation to the market you’re in to guide the information you intend to give. Look into the trends that are defining your industry to help you stay relevant.

Gymshark does a great job at identifying issues their customers may have in relation to sportswear and keeping its finger on the pulse of hot trends. Its content isn’t, however, just there to push products in its catalog. It also serves to give fitness enthusiasts resources that will enhance their workouts.

blog content on gymshark

You should aim to have a variety of formats for your content to appeal to the different ways consumers like to consume content. Video and short-form articles are the most favored types of content, so don’t skip out on those. Include video tutorials on product pages, and concise articles on your blog page. FAQs, ebooks, and webinars are also great for customers that want more insightful information.

Have a constant line of communication with your customers

Last but not least, if you’re to stand a chance at remaining connected with your customers, communication is key. You need to put your best efforts into staying in the front of their minds, and proving your store is reliable.

Be available to your customers at every hour and via all the channels they’re using. AI-powered live chatbots will ensure you’re at their beck-and-call to answer burning questions 24/7. You can add this capability to both your store and social media channels with apps like Tidio.

Initiate conversations and keep shoppers in the loop with the latest news and products that matter to them with regular, targeted email campaigns, social posts, and blog posts.

You should also craft communications strategies for shoppers that are likely to churn as well as those who remain active. We want to bump up that CLV, so you’ll need to think of ways to reel customers back in and keep others on your hook.

Active customers will benefit from the rewards tactics we mentioned earlier. Those likely to churn, however, need their belief restored. Find out why their loyalty dwindled with that all-important customer feedback. You can then use that as a basis to improve your store’s offering to them. In the meantime, a win-back email with an offer they can’t refuse could do the trick.

Check out how Sephora lures back its rewards scheme members with a coupon and different options for using it.

winback email campaign to re-engage with customers

(Source: Optimonk)


Prove Your Worth To Your Customers

All in all, enhancing engagement and increasing CLV is all about proving to your customers that your store is worth their time and money. The best way to make your brand irresistible to them is by forming deep bonds with them. When you put in the effort to understand your customers and provide them with the right experiences, you’ll have mastered engagement. With a firm grip on engagement, your CLV will shoot to the stars.

Author

Ellie Ho
eCommerce Enthusiast
A digital nomad that is engrossed with online selling, best practices, and tips to grow sales through website optimization. Love learning, sharing, and connecting with similar minds.
A digital nomad that is engrossed with online selling, best practices, and tips to grow sales through website optimization. Love learning, sharing, and connecting with similar minds.