12 Proven Tactics to Increase Your Customer Lifetime Value (CLV)

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12 Proven Tactics to Increase Your Customer Lifetime Value (CLV)

Increasing customer lifetime value (CLV) is more vital than acquiring new customers for growing businesses.

It can cost five times more to acquire new customers than to nurture existing ones. Several factors contribute to how costly it is for a brand to acquire new customers including:

  • Industry
  • Marketing channels utilized
  • The efficiency of your marketing strategy
  • The current economic climate

Spending budget and resources to acquire new customers simply for a one-time purchase will hurt your bottom line in the long term. That's why learning how to increase your customer lifetime value is essential if you want to remain profitable.

In this article, we're going to help define customer lifetime value, how to calculate CLV, and the 12 most effective tactics you can implement to increase yours starting today.

What is Customer Lifetime Value?

Customer lifetime value is a metric that defines how much a single customer is worth to a business for the duration of their lifecycle. In other words, the more a customer spends on your brand, the higher their CLV.

You can calculate CLV in the following way:

Customer Lifetime Value

The customer value is equal to their average purchase value times the average number of purchases in that lifespan. The lifespan simply defines the length of time since your brand acquired them as a new customer.

Therefore, the way to increase CLV is to convince customers to either make more purchases or spend more per transaction.

How do you make this happen? Let's dive into our top 12 tactics every business should use to increase the lifetime value of a customer.

Tip 1 - Make it Easy to Get Started

Whether you're selling a physical product or a service, your business must prioritize its onboarding process. The easier it is for a customer to get their foot in the door, the easier it will be to get them to convert.

According to a study, up to 67% of customer churn may be attributed to bad experiences during the onboarding process. The same study shows that more than half of buyers would be willing to pay you more just for a better experience.

The easiest way to optimize your customer experience is by interviewing clients directly. Investigate their pain points and formulate an improved process that grants consumers access to what they want faster.

You can do this by creating separate onboarding processes based on what the person is consuming. If you acquire a new prospect due to interest in a specific service, avoid wasting their time by having them fill out unnecessary paperwork that benefits you only and provides no value to them.

Elements of Customer Onboarding

Businesses can also determine what information is necessary to create the initial account. That way, users can get started with the service, while you notify them at a later point to finalize the process at their convenience.

Furthermore, don't hesitate to remind consumers of why they're signing up throughout the process. Sometimes, a lengthier process may be necessary, so don't let them lose sight of the value they'll obtain at the end of the minor inconvenience.

Tip 2 - Offer a Personalized Experience

A survey shows that up to 65% of buyers are likely to switch to a different brand if the current one doesn't offer personalized communications. Similar surveys suggest that those same buyers are looking for personalization over speed, which is something to consider when reviewing the tip above.

Consider some of the most popular websites on the internet like Amazon or Facebook. Both sites focus on different types of service, but both tailor the experience to the individual.

Those who log in experience recommendations specific to their interests, communications with their name, and product promotions based on previous activity. They never have to waste their time sifting through information that doesn't apply to their buyer persona.

Your brand must consider how to personalize the user experience for each individual that logs in to your website.

The Four Rs of Personalization

eCommerce sites can store browsing history and promote similar items.

Subscription service sites like DashClicks offer each account user the ability to create their client dashboard and notification settings.

That personalized experience not only makes the customer feel special but makes it easier to discover new ways to spend money. For every additional purchase they make, you successfully increase their CLV.

Tip 3 - Upsell and Cross-Sell

Offering upsells and cross-sells is a powerful way to offer that personalized experience described above.

When a new customer moves toward the checkout process, they've already decided to spend money on your brand. With that persuasion process successfully out of the way, the customer is now primed to potentially spend more if the offer is right.

However, you wouldn't offer an unrelated product or service and call it an upsell. An example of a proper upgrade would be to sell a keyboard or mouse to someone who's already buying a new computer. The consumer is already committed to spending the bulk of the value, so adding a bit more to the purchasing cost is an easier sell.

Meanwhile, those suggested products offer additional value to the customer by enhancing the benefits of the original product or service. Instead of simply trying to sell more, your brand appears helpful by understanding exactly what they'll need to be satisfied.

Upselling is not always about offering additional products but can be used to push a higher-tier subscription service. You can collect data about your users and make recommendations when you notice that they are reaching current account limits or restrictions regularly.

Cross Selling and Up Selling

These types of actions can be automated, and you are once again personalizing those suggestions to that user's personal experience. They'll be grateful that you are aware of their needs and the offer reminder will inevitably convince many customers to convert and spend more.

Tip 4 - Address Payment Issues

Did you know that up to 40% of a company's customer churn can be attributed to payment failures? That makes it the premier cause of involuntary churn, which is devastating for your CLV.

Both new and existing customers can have their payment method declined at any point for the following reasons:

  • Incorrect card number / CVV
  • Change of address
  • Insufficient funds
  • Flagged activity
  • Communication errors

There are dozens of additional reasons that payment can fail at any time that is not the fault of you or the customer. Nonetheless, one too many failed payments can cause a customer to abandon your brand for another where they can avoid these types of interruptions.

An easy, cost-effective way to combat this issue is to automate reminders to those who need to update their payment method. If your system notices a card is reaching its expiration date, send a gentle reminder to the user to empower them to avoid service interruptions.

Additionally, you should consider utilizing a billing system that allows for payment retries if you don't have one already. If a customer that regularly pays without incident suddenly experiences a failure, you can manually retry the payment without having to bother the customer.

Software like Retain or ChargeSentry promises to offer automated solutions for this specific problem. Avoid letting this solvable problem get in the way of your business growth.

Tip 5 - Emphasize Value & Benefits

A proven method for increasing customer retention is to regularly remind them of the value and benefits they receive through your brand.

When a customer has been paying for a service for a long period, it can be easy to take it for granted. They may face a period where they are examining their spending and considering cutting your brand from their budget.

Virtually every major online storefront from Amazon to Best Buy, to Home Depot, keeps track of customer activity throughout the year. Using this data, these companies can and do create personalized messaging that highlights metrics such as:

  • Amount saved by shopping with that brand
  • Amount saved through promotions & offers
  • Number of additional rewards obtained through loyalty or rewards programs
  • The number of exclusive discounts obtained

While these examples apply to more retail and eCommerce-oriented environments, service and software companies can also apply these principles.

For another example, we use software like Grammarly for this very content. Grammarly then sends weekly email updates demonstrating how often we use the software and how many words they check and optimize for us.

After reminding us of how often we depend on the software, they occasionally throw in mention of exclusive offers or updates to take advantage of to further enhance the value and benefits we obtain.

This type of internal messaging or email marketing is far superior to sending out the same standardized content you would send to any prospect. Remember that personalization is essential for not only getting more from customers but for keeping them onboard indefinitely.

Tip 6 - Offer Superior Customer Service

A huge advantage to bringing your brand online is the ability to provide stellar customer service.

Any time you can communicate with your audience and solve a problem, you are providing that service. With that in mind, you can utilize countless marketing channels such as your website, social media, live chat, and more to provide constant support.

Customers will measure your brand by this, as well. A Microsoft survey found that 96% of respondents feel that customer service is a determining factor in making a purchase. Likewise, a similar study found that 89% of consumers switched brands following a poor customer service experience.

In other words, your brand must make customer service a priority. However, simply being polite and offering your expertise is just the baseline of what's expected in 2022.

More customers are likely to turn to customer support options in areas other than your dedicated live chat on a website. Younger demographics, especially, are likely to search for your brand on social media before going anywhere else. If you're on social media, they want a prompt response in 60 minutes or less.

This highlights one of the many reasons that having a dedicated social media manager is essential for digital marketing. Not only will they help your brand connect and gain exposure, but they can also be on hand to address customer queries throughout the day without delay.

You can also improve your customer service response times by leveraging a chatbot to handle basic queries. Sites like ManyChat or Chatbot allow you to create customized scripts to help customers get the answers they need.

Brands can supplement automation like chatbots by linking to additional resources. Help center libraries can often help users solve basic issues without the need for an actual human response. That interaction is becoming less necessary as more people are becoming capable of using technology to overcome hurdles.

Chatbot Benefits for Businesses

Image Source

Meanwhile, you'll still have your dedicated support team on standby to aid with support requests that cannot be solved alone.

Be quick with your responses. Be ready to provide accurate knowledge and solve the problem quickly. Finally, have company rules in place to empower your support team to keep customers happy in those tricky scenarios where there isn't a spectacular solution to the issue.

Tip 7 - Deploy a Rewards Program

Rewards programs are everywhere. You can't shop anywhere in person or online without an attendant asking you to sign up for one.

The reason for this is that a customer rewards program provides a built-in loyalty incentive. Your marketing has already done the job of persuading a person to shop with your company. You can then reward that customer simply for choosing to shop with your brand.

Those rewards can come in a variety of forms. The most common type is to offer some form of money back compensation for every dollar they spend. Consumers can then convert those points into coupons, sweepstake entries, or anything else you might be able to offer without hurting your bottom line.

Credit card companies also offer cash back incentives, while transportation companies typically offer some form of mileage incentive for each trip purchased.

Consider how your brand can create an attractive, customized rewards program that provides even more value to your customers. If a loyal customer may consider shopping elsewhere, thinking of their potential rewards can often be enough to keep them focused on you.

Tip 8 - Start a Customer Feedback Program

If you want to learn how to keep your customers loyal, ask them directly.

Something you never want to do as a business owner is to get caught in the trap of believing you always know what's best for the customer. Despite your best efforts, it can be very easy to overlook what seems like a minor issue. However, mild problems and small annoyances can be enough to cause customer churn when there's always a better option available.

This type of program does not have to be fancy. Utilize your email marketing to follow through with customers that utilize any aspect of your services.

Check-in with customers that purchase products or services and ask them to provide feedback. If they're particularly satisfied, you can use those testimonials to further your social proof online. If they share criticisms, take note. If enough customers share similar criticisms, your team can get to work on making the proper changes.

You can also gather customer feedback by making sure that your brand is listed on listing websites like Yelp or Google My Business. This grants additional exposure and provides another channel for customers to rate and review your company.

Finally, you should also ask for customer feedback when it comes to your customer service. This can help you smooth out your support process, analyze the performance of each representative, and let your customers know that their thoughts and feelings are valued.

Benefits of Customer Feedback Program

Tip 9 - Offer Upgrades and Bonuses to Loyal Customers

Everyone loves getting something for free. Consumers love it, even more, when those gifts come unexpectedly from a brand they already use.

This provides a similar effect to a Rewards program. However, the surprising nature of it will make the consumer realize that you do think of and value them as an individual customer. Some may simply value the gesture, while others may choose to remain loyal in hopes of additional bonuses.

The key is to come up with bonuses that provide value without actually costing you additional money. If you're selling a product that directly competes with similar items, consider what bonus items you could add to the order for free. A bonus gift with purchase is a useful tactic that can tip the purchasing decision in your favor.

Other examples of this tactic can be seen in airline companies. Due to the hectic nature of the industry, your plane may be full or there may unexpectedly be empty seats. Loyal customers are always the first names picked when offering that free upgrade. The brand takes care of the consumers that take care of them.

Bonuses do not have to be limited to existing customers, however. With the right strategy, you can create a ā€�welcomeā€¯ package for first-time customers to make an excellent first impression.

After all, each customer is new at some point, and the extra attention and care may be just the solution to keep them coming back.

Tip 10 - Create Annual Memberships

Almost every SaaS company now provides multiple membership options to its customers.

Consumers can typically choose between monthly, bi-annual, or annual membership plans. Those brands then typically offer discounted rates for those who commit to the longer plans as opposed to going month-to-month.

The reason for this is that when a customer commits to an entire year, you automatically boost your customer's lifetime value. Meanwhile, they obtain a better value right out of the gate as the math works out to be less per month for the annual plan.

The trick to a structured tier plan is to work out the pricing in a way that's advantageous to your brand. Companies are not taking a hit when offering annual discounts.

Instead, pricing is configured in a way that allows the brand to remain profitable while incentivizing consumers to commit to the long-term. If they cannot commit to an annual membership, they'll typically end up paying more for the monthly membership.

Let's look at the popular streaming service Disney+ as an example:

  • Monthly Membership - $8/Month or $96/Year
  • Annual Membership - $80/Year

Both memberships offer affordable pricing, but the annual plan saves consumers nearly $20 overall.

The monthly plan stays in place for those that are not comfortable with paying the lump sum in one transaction. However, they pay almost $2 more per month for that convenience.

Regardless of what plan the customer chooses, both serve to increase your CLV. You make a greater profit from the monthly customer while rewarding those loyal customers that choose to commit for the long-term. In either case, your company makes the desired revenue.

You can structure your tiers to offer customers something that makes sense for your brand and industry. The most vital tip is to make sure that each of those tiers provides value to the customer. You still want your monthly customers to feel appreciated while providing a natural incentive for them to choose a different tier whenever possible.

Tip 11 - Start a Referral Program

Referral programs can sometimes be conflated with the rewards program we discussed previously.

Rewards programs offer bonuses to a single customer for continued purchases from your company.

Referral programs reward those customers for sharing your products and services with those in their social and professional circles.

Referral programs can boost your CLV differently by effectively giving you free advertising. That customer doesn't necessarily need to make an additional purchase to add value. If your brand obtains five new customers as a result of one person's referral, you gain more revenue for what you paid to acquire a single customer only.

Customers may naturally refer to your brand provided that you offer exceptional products, services, and customer care. However, incentivizing customers to refer to your brand doesn't hurt your cause.

In the B2B space, 78% of marketers claim that leads from referrals are of better quality than from other sources. For marketers overall, 60% stated that such programs generated a higher volume of leads.

That marriage of both quantity and quality of leads is exactly the ingredient every brand needs to boost their average CLV.

Common incentives to encourage referrals can include:

  • Discounts on future purchases/subscriptions
  • Actual cash rewards
  • Bonus products/services relevant to the core offering

You can learn more about designing a quality referral program by checking out this handy guide courtesy of ReferralRock. They are a high-quality referral software provider that can help your program get up and running quickly.

Tip 12 - Make All of it Convenient

Last, but certainly not least, our top tip is to ensure that your brand offers convenience.

What makes digital marketing so intense is that there are thousands of companies vying for the same audience's attention 24/7. While many of these strategies may be new to you, countless business owners are already deploying their programs to cement customer loyalty.

How to Build Customer Loyalty

With that said, your customer experience will be nothing if it is not as easy and intuitive as possible for consumers to navigate.

However, your brand can continuously optimize the buyer journey to be more convenient by deploying each of these previous tips listed above.

Simplify the onboarding process, make it easy to add and update payment information, and provide exceptional customer support options at every step. While you may be online, think of each customer interaction as if you were face-to-face with them. Provide swift responses, high-quality information, and let them know that you're invested in their problems.

The better you understand the consumer experience and address those pain points, the better you will become at making your process more convenient for your unique audience.

Start Increasing Your Customer Lifetime Value

You can summarize all twelve of these tips in one important lesson: value your customers.

If you treat customers as disposable, they will just as quickly find a competitor that's happy to succeed where you are failing. Anyone adept in digital marketing can bring new leads to the door, but it takes an exceptional customer experience that only you can provide to make the difference.

Even as you explore new options and finetune your programs, showing appreciation and listening to your audience will keep customers satisfied. However, by delivering a unique, personalized experience, you'll find ways to convert everyday people into customers for life.

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Unlimited Sub-Accounts

Unlimited Users

All Apps

All Features


Active Community

Mobile App

Live Support

100+ Tutorials

Unlimited Sub-Accounts

Unlimited Users

All Apps

All Features


Active Community

Mobile App

Live Support

100+ Tutorials