How to Create CLV Out of the Holiday E-Commerce Shopper
Consumers are constantly on the hunt for the best deal and the smoothest customer experience — these needs are only heightened during the holiday season. As consumers hunt, merchants see an influx of first-time buyers during the critical holiday months (not to mention an increase in spending).
While the holidays are important, long-term sales growth depends on whether a brand or retailer can optimize the customer lifetime value (CLV) of these first-time buyers. CLV refers to how much a customer spends with your brand. This is a key metric for e-commerce stores to keep track of as it provides a window into where time and budget have the most impact.
When it comes to growing revenue, retailers have two options: attract new customers or increase existing customers’ CLV. The former is a more expensive option since it involves improving advertising, while the latter enables the retailer to use existing customer data to strengthen relationships with returning customers. To optimize CLV, retailers must invest in a successful first interaction and then keep those shoppers engaged with unique product offerings and loyalty programs.
Make the First Encounter Memorable
CLV starts with the first purchase. If a retailer can create an outstanding initial experience, the shopper is more likely to return and develop a long-term relationship with the retailer. Oftentimes, a first experience is judged based on the simplicity of the shopper journey. In fact, Linnworks found that 76 percent of consumers ranked "convenience" as the top priority in selecting a retailer.
With this in mind, retailers must ensure every customer can seamlessly find the product (or a close substitute) that drove them to an e-commerce site in the first place. Optimizing site search can vastly improve conversions by guiding the customer to their ideal purchase, even if they don’t know how to best find it.
For example, a search should never return zero results. The search process should be optimized to suggest the next best product so the shopper never leaves empty handed, regardless of stock-outs or customer errors like search misspellings. An e-commerce platform designed to guide a customer from search to checkout seamlessly has a strong advantage when it comes to developing CLV.
Bundle Products and Test Subscriptions
Similarly, retailers can deliver an efficient shopping experience by using product bundles and subscriptions, which help shoppers save on items they would normally buy individually. These bundles can be based on personalized recommendations driven from past purchases or previous searches. This strategic tactic, particularly when placed in search results or targeted emails, can drive loyalty and improve average order value significantly.
For example, Fabletics can create a smoother experience for a shopper by offering a bundle of a sports bra and matching leggings. This tactic is also a smart way to introduce customers to the full product assortment, showcasing the value of buying the bundle rather than searching elsewhere for the related item.
Retailers can even offer recurring deliveries of a shopper’s favorite items for a slight discount. This boosts CLV by eliminating the need to reorder, thus removing even the risk of friction in the shopping experience.
Introduce Loyalty Programs
Let’s take it one step further: How can customers see value in remaining loyal to one retailer? When there’s a loyalty program with clear-cut benefits for sticking around.
The perks of a loyalty program can be free shipping for members, exclusive discounts, free gifts with a purchase, early access to sales, to name just a few. By offering compelling incentives to join their loyalty program, retailers can acquire valuable customer data and contact details. Then, more personalization opportunities are gained. Retailers can use these insights to offer better product recommendations, stronger email messaging, and more targeted discounts, ultimately creating a stronger connection between the retailer and the customer.
Keep the Connection to Keep the Success
Now is the time for retailers to invest in ways to foster the customer relationships they started during the holiday season. Retailers should take the time to focus on improving the customer experience and ensuring that every shopper’s visit to their e-commerce site is fruitful. By focusing on these key strategies, retailers can foster lifelong customer relationships out of the holiday shopper for years to come.
Peter Messana is the CEO at Searchspring, a global leader in site search and merchandising.
Related story: Why Personalization is the Linchpin for Retailer Success