It’s no secret that attracting a new customer costs more than increasing the value of an existing customer. The simplest formula to calculate their LTV (long term value) is to take a customer’s average amount purchased per reporting period (e.g. months or quarters), multiply it by the number of periods in the year, then multiply the result by the number of periods that the customer has been with you. For example, if they spent on average $100 per month for two years, their LTV would be $2,400.
To fully capitalize on your customers, so that they reach or exceed your target LTV, you need to establish a retention strategy. Email, a very inexpensive medium, can be a highly effective tool to help you attain your goal.
Here are some useful strategies to consider:
- Cross-sell your products
In your purchase confirmation emails, propose complementary or similar products. You can also boost sales by bundling products and offering package deals. Following a transaction, offer the customer a discount coupon and motivate them to make another purchase now, instead of waiting for another time.
- Encourage regular consumption
If you sell a consumable product or service, determine how often each customer buys the item and send them an alert shortly before you anticipate their next purchase. Inform them of new trends, keep an eye on their needs and show them that you’re an expert on this product.
- Propose higher-value items
A certain time after they make a purchase, offer your customer related products that are of better quality or are more advanced. Send out a series of automated emails to inform them on your full range of products or services, as well as how to get the most from them. For best results, personalize your emails based each customer’s purchase history and shopping behaviour.
- Create a sense of urgency
Notify your customers by email when an item is about to go out of stock. Indicate that you’re aware of their interest in the product.
- Show your appreciation
On occasion, send your customers a message conveying your gratitude and acknowledging their contribution to your business. Build a genuine relationship of give-and-take.