Why is LTV so important?

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Customer Lifetime Value is one of the most important metrics in your tool belt if you're an eCommerce retailer.

We all know that it is more expensive to acquire new leads than to retain existing ones, so increasing your LTV is essential for a healthy business model and customer retention strategy.

To be more precise, here are five reasons clinical nurse specialist email list why using Lifetime Value as a core metric is essential if you want to increase profitability, retention, and overall ecommerce success.

Generate real ROI on customer acquisition
LTV helps you focus on the channels that bring you the best, most profitable customers.

Therefore, you should optimize your marketing channels in terms of the lifetime value a customer contributes to your brand, rather than the gross profit on the initial purchase.

So, try to maximize your customer lifetime value relative to your customer acquisition cost (LTV:CAC).

Focusing on LTV will change the economics of your customer acquisition strategy.

You may be able to pay significantly more to acquire a customer because they are not stopped by the profits generated by a single purchase, but by the purchases made over their lifetime with your brand.

Information about your highest LTV customers (known as VIP customers) will also give you an accurate idea of ​​who you should target in terms of demographics.

lifetime value

Improving your retention marketing strategy
The value of a marketing campaign (for example, one aimed at converting your one-time buyers into repeat customers) should not only be assessed on the instant revenue that drives it.

It should be assessed in terms of what impact it had on the average LTV of the customer segment you are targeting.

How has the LTV trajectory changed over time for the average customer?

To calculate this you will need accurate predictive analytics so you can see how the predicted value is influenced by different marketing actions.

Create more effective messaging and targeting
Segment your customer base by LTV so you can improve the relevance of your marketing with more personalized messaging.

One variable you can use here would be the types of products you market to your customers in different segments.

Improving your behavioral triggers
By organizing data into natural groupings (or clusters), you can uncover the behavioral triggers that motivated your best customers to make their first purchase.

Once you have seen your good results, you should try to replicate this behavior with your potential customers in order to convert them into buyers.