Email Marketing Strategies to Increase CLV 

Email marketing strategies to increase Customer Lifetime Value

Email Marketing Strategies to Increase CLV 

Many e-commerce brands focus heavily on a few key metrics: ROAS, Revenue, and Profit. These are, of course, important things to track and optimize for. However, a huge, missed opportunity that many fail to focus on is Customer Lifetime Value (CLV). If you can improve the lifetime value of your customers, you’ll naturally start to generate more revenue and profit. Email marketing is a great tactic to extract more revenue from existing customers by providing them with more value. As a result, your CLV will increase. In this guide, you’ll learn email marketing strategies that will help you to increase the CLV of your online store. 

What is CLV?

Customer Lifetime Value (CLV) is a metric we use to measure how valuable our average customers are based on how much they spend over their lifetime with a brand. This takes several factors into consideration, such as your Average Order Value (AOV), Purchase Frequency, Margins, Revenue, and Retention Rate. Each one of these components is important on its own, but when you combine them to calculate CLV, you get a fresh perspective on the actual value of your customers. 

Why is CLV Important?

CLV is one of the most important metrics your brand can track because of the additional insight it brings to the table. Seeing how valuable your average customer is puts things into a new perspective if you haven’t looked at CLV before. 

For instance, if you were to find that your average CLV is $300, and the average customer lifetime is 2 years, then this would mean that each customer generates about $150 profit per year. Also, when you add in your average acquisition cost, that’s even less profit in your pocket. If your CLV is $300, but your Customer Acquisition Cost (CAC) is $100, then they really only bring in $200 of profit over those 2 years. 

Knowing this number can help you to really see the value of your customers, and sometimes, you may find they aren’t as valuable as you would like. If this is the case, you’ll be able to have a clear goal in mind. Either way, optimizing for CLV can have a huge positive impact on your revenue and profits.  

Audience Segmentation with RFM Analysis 

Email marketing is something all strong e-commerce brands utilize. While most brands do get results from their email campaigns and email flows, they’re only scratching the surface of their full potential. Many brands take the approach in their email marketing strategies by sending basic email flows, such as emails asking for reviews or sale campaigns where they send the same email to everyone for promotions. Though this works, the much more effective way to do this is through RFM Analysis

RFM stands for Recency, Frequency, and Monetary. This is a way to segment your audience based on how much they spend with you, how recent their last purchase was, and how frequently they buy from you. This method of segmentation recognizes that not all customers are the same, as some are worth much more than others, which can help with your email marketing campaigns when used correctly. 

Tips for Email Marketing to Increase CLV 

Increasing your CLV with email marketing strategies is simple if you have the right knowledge and resources to send effective campaigns and flows. There are a few basic email marketing strategies, including flows and campagins, that you can use to see huge gains in revenue and optimize customer retention. 

Email Marketing: Promotional Campaigns with RFM 

Promotional campaigns are one of those email marketing strategies all brands use, but a step above this is to create dynamic campaigns for different customer segments. As previously mentioned, you can use RFM data to segment your customers, but how can this be used to make you more money? 

Here’s a scenario: 

You want to do a promotional campaign to get a boost in revenue. You want to be strategic about it to get the best results you can. So, how do you do this? 

What you’ll need to do is segment by CLV and change the messaging accordingly. Your messaging in any marketing campaign is very important, so if you can tweak your message to speak to your segments directly, you’ll get a better conversion rate. For your most valuable customers with the highest CLV, you can message it as you’re giving them a coupon to thank them for being loyal customers and to show your appreciation. For your average customer, you can message it as just a random coupon, a “thank you” for being a customer, or any other creative ways you can think of. 

Cross-selling with Emails 

Cross-selling is one of the best email marketing strategies to increase your Average Order Value (AOV) and purchase frequency. These two metrics play a big role in calculating CLV, so if you can change how much your average customer spends at checkout and how many times a customer places an order, you’ll be able to improve your CLV, but more importantly, grow your revenue.

Cross-selling is typically done before checkout, but there are two ways to do it post-purchase. If someone places an order that’s below your average order value, you can create a flow that offers them a discount if they add additional products to their order before it ships out. Doing it like this gives them time to edit their order and add to it, which will increase the value of that order. 

After an order is shipped out, it may be too late to increase its AOV, but there is still a chance to entice the customer to come back and purchase additional products. In many cases, products have accessories or other items that pair well with them. This is a great opportunity to send emails recommending these products. For example, if someone buys a mattress, you could suggest pillows, sheets, and mattress protectors to them. Many customers might not have thought about these products or didn’t think they needed them until they actually received their new mattresses. 

Replenishment Emails

Email marketing strategies - Replenishment emails

Email Source: Sephora

For brands that have consumable products that have to consistently be replenished, replenishment reminder emails are essential. Your customers have busy lives, and it can be easy to forget to buy more of whatever it is you’re buying, especially if it isn’t something essential like toothpaste or soap. In some instances, your customers might not even be aware that they need to replace what they have every so often.  

For example, electric toothbrushes that have replaceable bristle heads need to be replaced every three months. It’s very likely that many customers can make them “last” well over this period of time; however, they may not be aware that after three months of use, they aren’t nearly as effective at removing plaque from your teeth. And some might even be aware, but they just forget that it’s time to replace it because it doesn’t look like it needs to be replaced. If a toothbrush brand were to send reminders, they would be able to get people buying their toothbrush heads more frequently, and with higher purchase frequency, CLV increases.  

Get Better Email Marketing Results 

If done right, email marketing strategies can really help your brand to reach its full potential and maximize the CLV of your store. Following this guide and implementing these email marketing strategies are sure to help you grow, but if you find yourself stuck, we offer E-Commerce Email Marketing and Customer Value Optimization (CVO) services or you can request a free CLV Audit to receive some free, actionable strategies that you can use to increase CLV (including email strategies).