If you are running an eCommerce, you would definitely know how much every single customer means to your business. But in saying that, there are some very important customers too.

How do you differentiate? 

Through a simple KPI, Customer Lifetime Value.

We will discuss more on Why customer Lifetime value is important, but before that, let us understand what it actually means. 

What is Customer Lifetime Value?

To put it simply, it is the total amount of profit that your company makes from a customer over a period of time. Higher profit means the customer is more valuable as he tends to bring your more profit.

On the other hand, it also distinguishes the “not-so-valuable” customer when compared to a profitable one.

Why is Customer Lifetime Value important for eCommerce?

Now that you know, what customer lifetime value [CLV] is, here are some key points to show you why it is important for your eCommerce.

Knowing Your Customer

The following KPI is a great way to understand your customers. It tells you the most popular sector on your eCommerce where your customer makes a purchase. It would also share with you the products that your customers are purchasing over and over again.

Now that you know the purchasing pattern of your customer, you can simply use the right marketing strategies, such as emails, subscription programs, and loyalty programs in order to increase your sales from time to time.


Undoubtedly, marketing is among the most important pillars of support when you are running an eCommerce. In order to make it strong and effective, it is very important that you have a target audience set.

Moreover, having a customer lifetime value by your side keeps you a step ahead in capitalizing your targeted audience. You will already know which is the most popular set of audiences that have a high probability of increasing your profit.

Also the retargeting gives better results if your audience already trusts you and can further purchase from you if the right products are shown to them, based on their previous purchase.

Increasing Returning Customer

Keeping it short, it is a side benefit where you have acquired a customer once and now that he trusts you, he would buy again from you in the future too. Increasing your Customer Lifetime value can also be counted as to increase the returning customers to your eCommerce.

Building Your Brand

In order to grow your eCommerce to a brand in itself, you need more than just sales. You need to make sure that you gain your customers’ trust and also their royalty. In order to do so, the best way would be to focus on increasing your customer lifetime value.

If a customer is returning and making a purchase, again and again, you may also be getting the benefits of the word of mouth, which is the most powerful marketing for any eCommerce..

Increasing Profit

It is no more a secret, at least after going through all the points above that customer lifetime value is essentially important to skyrocket your profit.

Do you know, in a study by Bain & Company, it has been found that the average repeat customer spends 67% more in the 31st-36th months of their relationship with a business than in months 0-6?

Hence you don’t need just new customers, but also returning customers in order to grow your business.

How to Increase your Customer lifetime Value?

I hope you are eager to know how you can practically increase your customer lifetime value as it is very crucial learning in order to grow your eCommerce.

Personalize for your customer

We are in a world where a customer can reach out to your store through a simple link. In order to make sure that they stay there are some steps that are to be taken care of. The first would be personalizing the store for your customers.

You can start by creating a new landing page for your customer coming through a targeted link or marketing practice that you have been following. This way, customers would tend to make purchases rather than searching for the product. 

Now talking about the returning customer, show them the products on the homepage that they would be interested in buying based on their previous purchase and search result.

Up-Sell, Down-sell, and Cross-Sell

Upselling, Downselling, and cross-selling are the three great strategies that we have discussed in our recent articles on Cross-selling and DownSelling Streategy to boost eCommerce Sales. But keeping it short, these are the strategies for promoting related products to your customers in order to increase sales.

To be very clear, these strategies are targeted over each product page to increase the personalization for your customer.

Engage your customer

It is very important your eCommerce or your brand be relevant to your customer and keep them engaged. The most popular method to do so would be using social media and social media marketing.

Other than social media, you can also engage your customer by reaching out to them through emails. As an eCommerce, you must collect the emails of your customer to recall them to make a purchase.

Through the following, you can attract them when you are running a campaign, a discount during festivals, and much more.

Either way, engaging your customer would result in better sales and an increase in your returning customers as well as the customer lifetime value.

Reassure and ask for their experience

You are already aware that in order to increase your customer lifetime value, you need to increase your returning customers. But before you start calling your existing customers back, it is very important to know about their previous experience.

How would you do that? By requesting a review and asking about their experience of shopping with your eCommerce. If you got positive reviews, well done, but focus on what are the things that are to be taken care of. Is it the interface, the quality of your product, or the shipping itself?

Accept the mistakes, and sort it out as soon as possible. Not just that, reassure the customer that you have taken the complaint under consideration and will be working on it to resolve it.

Prepare your Customer Support Service

Sometimes your customers might come across some situations or the problems that they might be facing. At this point, they would need you to sort out the issue.

To deal with this very common issue you need your customer support service to step in. Make sure that every problem faced by your customer is taken care of and resolved as soon as possible.

You can provide 24/7 live chat support or the cheaper alternative could be using a chatbot itself. It is an AI bot that can chat like a normal human would pre-set questions. You can take over when you find some new query and resolve it, but working with the chatbot would do most of your work.

Work with Expensive goods

This is something that most eCommerce companies avoid when they are looking forward to increasing the customer lifetime value of their eCommerce. You need to understand the difference that it’s not about the number of times you sell a product but is actually the amount of profit.

For example, if one buyer is purchasing at a regular interval but the profit is less, then you shall not invest much in him. Rather focus on the customer that has previously purchased expensive products and given you a fair share of profit.

Bring in loyalty Programs

Loyalty programs are a great way to attract a large chunk of customers to join a members-only community for some additional benefits. Benefits could be free shipping, members-only discount, reward points, or anything that normally they would have to pay for.

The reason why loyalty programs are so successful is that they tend to make a customer purchase more from your site whenever they are out on the internet for shopping.

Key Takeaway

Above as we already discussed the importance of customer lifetime value, there is something very important that I would like to share with you. As an eCommerce, you must make sure that you focus on returning customers more if not equal to the new customer.

The reason is fairly simple because the acquisition cost of a returning customer is much lower. This also increases your gross profit and makes your eCommerce a much more successful business to run.

Author Bio

Twitter: @chetanmenaria3

Instagram – @pixelphant

Bio: Chetan Menaria is Partnership & Collaboration Manager at PixelPhant an eCommerce & fashion photo editing service provider. PixelPhant edit product images to make them look professional & eCommerce ready. Loves to learn new things every day, read something all the time, never miss the sunset & do Product Designing & Create content.