How to Increase Customer Lifetime Value in Ecommerce

An online store can boost the customer lifetime value (CLV) in the long view by exploiting cross-selling and upselling potential, establishing holistic customer experience management as well. A high CLV eventually increases long-term loyalty and makes it easier to acquire new purchasers.
Daria Maksymenko
Daria Maksymenko

Digital Marketing Manager. Daria is proficient in SEO, marketing & customer acquisition strategies, ways to increase sales.

What is Customer Lifetime Value

This key metric comes from business administration and calculates the profitability of an individual customer. A high customer lifetime value means that an average customer generates massive sales, which may also be expectable in the future.

When it comes to customer value, the focus is not on individual transactions but on building stable and long-term customer relationships. The thing is, it’s not just about winning new purchasers, but also about retaining them.

As illustrated in the Invesp infographics, attracting a new purchaser costs 5 times more than retaining an existing one. What is interesting is that the chance that you’ll sell to a current shopper reaches up to 60 percent, meanwhile, a likelihood of a purchase by a new purchaser rises from 5 to 20 percent.

If you’ve set a goal to grow CLV, think about creating a comprehensive marketing strategy that includes efforts to retain customers and exploit their purchasing power.

How to Calculate Customer Lifetime Value

You could make calculations based on the expected sales and use it as a business variable to better plan customer management strategies.

There are several formulas and approaches to calculating the CLV. Here’s one of them:

If you’re willing to dip into figures and formulas, explore other ways to calculate CLV.

With careful customer care and support, long-term customer relationships could be established and maintained. As the customer lifetime value has an accumulative effect, it includes all sales a customer has already made and those that will be potentially generated in the future.

Tips to Increase Customer Lifetime Value

#1 Make a Purchase Decision Easier

A wide range of products is excellent, but keep in mind that in case there are too many options for your shoppers, users will instantly feel confused and mixed up. For example, Alexander Chernev, a professor of marketing at the Kellogg School of Management, Northwestern University, found that when consumers were given a wide choice of different variants of the same branded toothpaste, people would rather avoid making a decision in favor of only one option.

Remember that if you make it easier for customers to decide, it will improve your cart abandonment rate, overall customer satisfaction, and loyalty in the long run.

The key success factor here is working on navigation to improve a customer journey and make it possible for users to explore your store smoothly and quickly find what they need. Implementing top navigation bars with categories, layered or footer navigation will come in handy. You could also make use of mega-menus that allow placing additional sub-categories, adding images, popular collections, and other kinds of filters.


#2 Make Your Store Even More User-Friendly

The extra effort won’t hurt — suggest complementary items to make use of the leading and top-selling products. Related products, cross-sell, and upsell techniques are incredibly efficient but be careful — don’t overdo it and make friendly recommendations that don’t ‘overpromote’ your products.

For example, a ski jacket might work on its own, but if you add pants, gloves, or accessories that make up the kit or match the color, users will appreciate the idea. It saves hassle, makes the product much better to use, and takes the customer journey to the next level.

Helly Hansen

#3 Offer a Free Product on Purchases Over a Set Amount

It’s such a brilliant idea that inspires customer loyalty. Don’t hesitate — customers totally love it, even if they know they are paying a little bit more. Imagine that almost 90 percent of purchasers that have already received such a gift claim that they are likely to buy more frequently from the merchant in the future.

You could offer gifts from old stocks, new product tests, small cards, and other knick-knacks with orders over a certain amount. It could help you increase your average order value (AOV) and establish an emotional bond with your customers, which will pay off in repeat purchases.

If your store is multi-brand, contact your suppliers and ask them for samples to better promote their brand and product line.

Cult Beauty

#4 Provide Your Shoppers with Risk-Free Return

Returns policies are one of the critical concerns and headaches for ecommerce merchants worldwide. According to Paazl, it can directly influence profit margins, and while returns rates to brick-and-mortar stores are approximately 8 percent, this rises to around 25 percent for products bought online.

You definitely want to make the shopping experience enjoyable for your users, and as you know, almost 80 percent of consumers expect free shipping return.


Stil, you also need to carefully consider all the factors to stay competitive in the market and make a rational decision. Explore what your competitors are offering to their consumers and develop options that create a win-win situation for you and your customers.

Taste Plants

#5 Use Stock Alerts to Notify Your Users

As reported by IBM, retailers lose up to $93 billion a year in sales because of the out of stock items. If you don’t want to miss out on your profits, make it easier for customers to get what they want and get notified when a product is back in stock.

Paul Smith

To create a sense of urgency, you could also place information with ‘the last one in this size’ to encourage users to make a purchase. But still, don’t overuse it.

Harvey Nichols

#6 Implement Busy Promo Calendar

If you want to speed up the process and shorten the time between orders (TBO), your promotions need to be more dynamic. If all you do is announcing St. Valentine’s Day, New Year, Christmas, Winter Sale, and Back to School, it’s not enough.

Explore our promotional calendar for merchants with 28 dates with tips and tricks to spice up the rest of the year. Analyze your customers’ behavior and adjust your promotional campaigns accordingly to their preferences, industry, and niche trends.


#7 Make Use of Detailed Product Images

Product descriptions with measurements and other details need to be both selling and engaging for users. Special mention should be made of images, as more than 60 percent of customers say that high-quality ones are even more crucial than descriptions.

Showcase the texture, colors, and size at its finest to approach different senses at once. If you have multiple choice, place images of products in different colors and from different angles.

Cox & Cox

#8 Personalized Email Marketing Practices

Personalized recommendations that go with your customers and make their experience much better have become an industry standard.

Many retailers don’t cope with this task, send general email campaigns for all, and offer unsuitable items that cause only unpleasantness and annoyance. The least you may do right now is ask them first what they like most of all to come up with valuable products in your email campaigns. You could also implement abandonment cart emails or product detail page view emails.


#9 Use Sales & Communication Channels Your Customers Love

A list of the top 3 channels that are used the most for customer acquisition include websites, emails, and social media, according to the Invesp infographics.

Explore what channels your customers are fond of by receiving insights from Google Analytics reports. Take a look at acquisitions channels and find out which of them features the most extended average session duration.

Go a step further and analyze which communication channels our shoppers choose — live chats, emails, messengers, or even by phone.

To offer valuable options, keep your eyes on the ball and provide users with surveys and questionnaires to better understand their preferences. Ask them about everything — new products, site redesigns, and product usage — and encourage them to share user-generated content.


Last thing: you can have the most efficient and attractive website and biggest sales, but if your product quality goes down, so will customers’ satisfaction. Customers rarely forgive because they have other places to buy from. It is up to you to deliver the best items every time and outshine the rivalry.