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Why CLV is The Only Metric You Need To Worry About 

As a retailer, you will be worried about a whole plethora of KPIs and metrics. You’ll have your merchandisers, marketing teams and agencies all driving to improve everything from conversion rate on site, to dwell time and number of product views. But really, we would argue, the key metric you need everyone to be focused on is Customer Lifetime Value and here to investigate is Tom Johnson, the Head of Marketing at The Filter, who has nearly ten years experience in marketing and digital.

customer lifetime value | The Filter

Why is Customer Lifetime  Value so important?

We know that acquiring customers is both difficult and expensive, so once you have done that, it’s hugely important to try and retain them. Obviously continually driving acquisition of new customers is vital to your business, but if they are constantly dropping out the other end, growth will prove extremely difficult. It is the archetypal leaky bucket effect.

If you can both acquire and then retain your customers your revenue will grow, and you can more confidently plan for the future.

What Effects CLV?

If CLV is so important, what effects it and what can you do to improve those levers?  As you can imagine, a variety of factors will have an impact but we see the following as being the key contributors to a healthy CLV:

Conversion Rate

We know the conversion is the holy grail of eCommerce, if we can increase a customer’s likelihood to convert when they visit, revenue will increase and their value to your business will increase as well.

Average Order Value

The more each customer spends every time they make a purchase, by definition the more valuable they will be to you over time.

Re-visit Interval

If you reduce the time between visits from a customer, they will visit the site more often over time, increasing the chances of them converting to a purchase each time that they do.

Likelihood to churn

Ensuring customer’s want to come back again and again after they have purchased from you is vital. If they have a good experience they are more likely to come back and spend again, and not look elsewhere, increasing their long-term value to you.

How Can Intelligent Merchandising and Personalisation Improve Your CLV?

The impacts on Customer Lifetime Value might seem like common sense; get people to come back to your site more often, make sure they convert more and that they spend more on average when they do. But ensuring those things happen is easier said than done. So how do you actually ensure that you affect the factors that contribute to Customer Lifetime Value? And how can AI and intelligent merchandising help?

How To Increase A.O.V

Utilise intelligent personalised product recommendations to encourage up-sell and cross-sell both on product pages and in the basket area.

Reduce Re-Visit Interval

Increase the frequency of a customer’s visits through integrating engaging content and relevant products into their journey.

Improve Your Conversion rate

Shorten a customer’s path to discovery through the dynamic reordering of products and 1 to 1 personalisation.

Reduce The Likelihood Of Churn

Increase the likelihood to repurchase through journey optimisation and intelligent identifying a customer’s journey stage.

Ultimately, It’s all about the experience

It’s clear that a whole range of different factors can impact the Customer Lifetime Value of a customer and not all of them can be affected by an intelligent merchandising tool. But one thing holds them all together; a good experience and a tool like The Filter can significantly improve the experience your customers have on site.

If you ensure that your customers receive a great experience the moment they land on your site to the moment they receive your product through their door, then you stand a very good chance to ticking all the CLV boxes; get them coming back more often, get them converting more and spending more when they do.

To find out how you could improve your Customer Lifetime Value with an intelligent merchandising platform, please get in touch with us at The Filter.

The Filter is an industry-leading provider of machine learning and CX solutions for eCommerce and the retail sector; specialising in increasing your revenue and customer experience through intelligent merchandising, recommendations and personalisation.


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