What is Customer Life Time Value and How to Improve CLTV in 2021

Customer conversion — Upshot.ai
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What is Customer Lifetime Value?

ROI — Upshot.ai
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How to measure Customer Lifetime Value?

Let’s understand how to calculate your CLTV with an example.

Customer life time value — Upshot.ai
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  • Firstly, To project future cash flows.
  • Secondly, Understanding how many customers the company should acquire to achieve the desired profits.
  • Thirdly, Deciding the Marketing budget and other expenditures for the given time period.
  • Lastly, Verifying the quality of customers targeted during the marketing campaign

Factors contributing to the CLTV

Customer satisfaction — Upshot.ai
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  1. Customer Satisfaction
    The happier the customer is with the products and services, the more likely he is to spend more. This will increase the average purchase value of the order and increase the frequency of orders. Companies should continuously work along the lines of providing a better customer experience for high customer satisfaction.
  2. Customer Retention
    Acquiring a new customer is more expensive than retaining the existing customer. Nowadays, the business must identify and nurture the most valuable customers and convert newly acquired customers to a loyal base. Doing so will reduce the churn rates and bring in more revenue, which will have a positive impact on the CLTV.
  3. Optimized Marketing Spends
    Companies need to optimize their marketing efforts. Measuring campaign performance and tracking the critical KPIs will allow companies to develop the right marketing strategy. Companies should continuously explore new channels and do A/B testing to identify the right engagement strategy, reducing the marketing spending, thereby increasing the profit margins and CLTV.

How can you improve your CLTV?

  • Rewards and loyalty for customer retention: Rewarding users with points, coupons, digital coins, badges, etc., instill a sense of achievement and hook customers to your brand or product. Using upshot.ai, Puma experienced a 38% increase in retention, for instance.
Customer loyalty — Upshot.ai
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  • In-app push notifications for customer engagement: Leveraging highly personalized push notifications at the right time, with the right message to bring back your customers to your app or store. Leveraging upshot.ai, Panini experienced a massive increase of 300% in revenue, and average paying users went up by 20%.
  • Real-time analytics to predict churn: AI-powered real-time analytics based on user data allows you to predict churn or conversion. Adjust your messaging, channels, and overall campaign strategy accordingly to re-engage your customers.
  • Ask for customer feedback: Leverage surveys, feedback forms, and NPS to capture your customer feedback. Asking for customer feedback inculcates a sense of belongingness and confidence in your product. Implement relevant feedback to improve your customer experience and satisfaction. Amway leveraged omnichannel micro surveys and experienced a 400% increase in monthly active users.
  • Reports and dashboards to measure efforts: Get more in-depth insights into your user’s behavioral, transactional, demographic, sentiment, and psychographic data and measure your campaign effectiveness.

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