Everyone wants to win the lottery, but there’s a big difference between a $10 scratch-off and a $10M Powerball jackpot.
It feels good to win no matter what the payout is, but not all lottery tickets are created equal — and neither are your customers. Some are one-and-done buyers or shoppers who only make a purchase once in a blue moon. Others will continue to spend with your brand regularly and over the long term.
Your goal isn’t just winning new business, it’s retaining and growing it over time while prioritizing customer satisfaction along the way. Luckily, this isn’t a game of chance. It’s in your control to increase customer lifetime value (CLTV).
By collecting and unifying data to create a comprehensive customer profile — and then using this information to orchestrate a personalized customer experience — you can fine-tune customer acquisition and maximize how much your current customers spend with your business.
This is where your customer data platform (CDP) becomes indispensable. Here are three ways you can use your CDP to boost CLTV, from targeting high-value customers to inspiring long-term brand loyalty.
3 Ways to Increase Customer Lifetime Value With Your CDP
1. Prioritize High-Value Customers
You know which of your loyal customers are your VIPs — or at least your CDP does. They buy your products at full price, make multiple purchases over a certain time frame and have an average order value that is higher than your median. These are the types of customers who naturally have high CLTV. Create lookalike models within your CDP to find their matches outside of your existing customer base.
By examining the traits of your high-CLTV customer segment — and how these customers act throughout the sales cycle — you can determine which attributes and behaviors may indicate similar activity among your prospects. Simply operationalize your model within your CDP to begin targeting prospects who fit the profile.
You can also use your CDP to streamline the conversion process. First, collect and match data to subsequent actions to gain insights into what drives early conversions. Next, optimize the customer experience of your business based on your findings to speed up time to value.
Identifying high-value prospects via lookalike modeling has helped ActionIQ customers achieve a 13% increase in average order value among new customers. Meanwhile, analyzing behavioral data to understand what accelerates conversions has helped ActionIQ customers increase conversions by 15% in the first 30 days.
2. Enhance Purchase Frequency & Amount
The higher the purchase frequency of an existing customer — and the more they spend when buying — the higher their CLTV. But that doesn’t mean you should drop thousands of dollars on ad spend or bombard your customers with digital marketing messages.
Instead, focus on how to create personalized journeys that will keep your customers engaged and organically drive them toward new purchase opportunities to increase customer lifetime value.
Connected customer journeys that are tailored to the individual and their channel preferences— from welcome messages to post-purchase communications — are shown to increase repurchase rates by as much as 30% and boost CLTV by up to 25%. The key is identifying consumer behavioral patterns over time and customizing customer journeys to fit them.
Leveraging omnichannel journey orchestration across paid and owned channels from within your CDP, you can automatically serve up real-time experiences based on both streaming data and your customers’ full historical profiles. Use your CDP to monitor, A/B test, leverage control groups and report on performance in order to optimize your approach.
For example, one ActionIQ customer struggled with buyers who made a single purchase and never returned. By creating a 10-step customer journey that incorporated email, social media and web — and personalizing the journey based on customer interactions and purchases — the brand increased conversion to a second purchase by 30%.
Driving upsells and cross-sells among your current customers is an ideal way to increase CLTV. In fact, data shows that upselling not only increases revenue by 10-30% on average, it’s also responsible for 70-95% of revenue for businesses that do it. Meanwhile, cross-sells — in the form of personalized product recommendations — drive 26% of revenue despite accounting for only 7% of website visits.
Use your CDP to develop and automate your upsell and cross-sell strategy. For instance, by analyzing customer purchase behavior, you can identify the next best product to offer to customers after their initial purchase and determine the best time to do so. ActionIQ customers have used this method to increase 90-day purchase rates after the first order by 25%.
You can also use your CDP to figure out which loyal customers will respond best to upsell and cross-sell opportunities to further increase customer lifetime value. One ActionIQ customer used lookalike modeling to help determine which customers are more likely to branch out from their regular categories and make purchases from other product lines. Using demographic, purchase and behavioral characteristics to identify similar customers, the brand created and launched an ongoing campaign tailored to these individuals and achieved a 40% increase in the number of categories purchased by this target audience.
3. Improve Customer Loyalty
Customer loyalty isn’t just a goal to aim for — it’s a business strategy you can operationalize via loyalty or rewards programs. Nearly 60% of consumers say they make monthly purchases from brands whose loyalty programs they belong to, and 69% say whether a brand offers some kind of loyalty or rewards program influences their buying decisions.
Membership in a loyalty program can significantly increase CLTV, but first you have to get customers to opt in. Develop and operationalize a lookalike model within your CDP to target customers who are not yet part of your program but who resemble those who are. Create CDP marketing campaigns to highlight the benefits of joining your program and drive customers toward signing up. If your loyalty program has multiple tiers based on customer spending, keep the campaign going and encourage members to continue moving up through the tiers to obtain more rewards.
This strategy not only helped one ActionIQ customer increase engagement among program members, it also resulted in a 10% increase in spend velocity across all tiers of the loyalty program.
Every consumer has the potential to have an exceptionally profitable customer value, but it’s up to you to cultivate the right behaviors. Start by enabling your business users with a CDP that allows them to access valuable customer data and use it to orchestrate personalized, omnichannel experiences for individual customers at scale.
Learn More About How to Increase Customer Lifetime Value
Download our 2022 CDP Market Guide to learn more about CDPs and how the right technology can help you increase customer lifetime value. Prefer to speak with one of our experts? Contact us here.