How Can You Improve LTV Without a Lifecycle Program?
Companies hoping to grow over time have many metrics they can look at, but customer lifetime value (LTV) should be a priority. If you’re not already giving a lot of thought to this metric, or you’re unsure how to boost it in sustainable ways, you may need to reconsider its role in your campaigns.
Why is LTV so important?
For one, it removes a lot of the guesswork. Matching the value of a single email in open rates or even conversions creates a limited view. It's just one event, and it may not be a true reflection of how well your campaign or your brand as a whole is truly performing. Cory Smith, Director of Lifecycle Marketing at Bamboo, explains further:
“Many people obsess over the performance of a single point in the journey instead of thinking about the path the user took to get there and the many different interactions that happen along the way.”
By choosing LTV as a priority, Smith says you can look at campaigns more holistically to see all the effort you’ve put in and how it affects the overall value of your customers.
You also have to consider the reliability of those other metrics. Open rates, for example, have been hailed as one of the most important things to look for when checking campaign stats. However, since Apple made changes to the way they report these open rates, it’s harder to assess them for trends and compare them to other metrics.
Metrics other than LTV aren’t unimportant, but they aren’t everything. They should be used as part of a whole in assessing the direction and operation of your campaigns.
Where do lifecycle programs come in?
Lifecycle programs encompass all the activities happening from a user's entire journey with a brand: from the sign-up to receiving an email or SMS to a friend to making a purchase online. Each direct interaction counts as a step in the lifecycle, which can trigger a branded engagement. Examples include email, SMS, and push notifications from an app on your phone.
If an action can be associated with a certain part of the customer journey (such as a prospect, first-time buyer, or repeat buyer), it counts as part of the lifecycle.
Tracking each point on the lifecycle has advantages, since knowing when, where, and how a customer engages gives you more data that you can use to market to them in a unique and personal way. It will hopefully get them to buy more and boost that LTV.
So, how can brands increase LTV without lifecycle programs?
Customers have lifecycles, whether you meticulously measure them or not. So, while it may be more difficult at first, it’s still possible to get your LTV up over time, even without intensive lifecycle tracking and engagement programs. The key is to think long-term about what you want from your customer. Remember, LTV is “lifetime,” so you shouldn’t reward one-and-done behavior that may get you a quick sale but not engage your customer to give you repeat business.
Smith shares that there's a risk in trying to improve LTV quickly.
"Attempting to reactivate a lot of customers with a screaming good deal can be a good solution for the short term. The effect of this, by its nature, is not likely to have a sustainable positive effect on the program."
It cannot be overemphasized that the long game should always be the focus of any campaign aimed at boosting LTV. Ideas include making a very effective and authentic welcome program or creating a post-purchase series of content that makes customers feel valued and serves them long-term.
You may also look at how you sell to customers. Changing your sales model to a subscription, for example, may get customers to buy more than if you have to remind them to refill a beauty product or come back for more batteries. There are also the perks of up-selling and cross-selling, which (if done right) seem more like a service to customers than an ask for more money. Making it convenient to buy from you helps them see value beyond just the thing they purchase.
Bottom line: Robust lifecycle programs offer tons of opportunities, but they may not be a possibility for those in the beginning stages of their business. It's never too early to focus on LTV, however. By keeping it as a priority metric, you can get a better idea of how your campaigns are really working and what effect they have on the long-term health of your customer base.
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