How Do I Increase the Lifetime Value of my Customers?

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Lifetime value is a metric that has gained a lot of attention from marketers who are looking to better understand what their users/customers are worth to the business. Instead of looking at average order value or revenue per transaction, lifetime value takes into account all of the effects of loyalty programs that keep customers coming back again and again to make new purchases.

By using lifetime value as your core revenue metric to measure against marketing costs, marketers get a truer sense of their margins and the return on their investment.

But often, knowing the lifetime value of your customers is just the starting point. As marketers, we also want to grow that number, so that every customer we add brings more revenue to our company.

How to Increase Lifetime Value

If you want to increase the lifetime value of your customers, there are three main paths that you can pursue. First, you can keep them in your company’s orbit for a longer period of time, thereby increasing the number of purchases that they make from you. Second, you can aim to increase the value of each purchase they make by upselling them to higher priced items. Third, you can add new products or services aimed at increasing the amount of needs you fulfill for each customer.

Keep Customers Longer

This is where your loyalty program makes a difference. When you keep customers happy and give them an incentive to continue to purchase from you rather than switch to one of your competitors, you are sure to increase lifetime value.

Typical loyalty programs include some form of customer community, discounts and specials offers, points or rewards toward future purchases, news and events. Whether your company already has an existing loyalty program or not, there are things that marketers can do to entice repeat business.


For many customers, the first time they purchase from your company they are taking a risk. They are giving you their hard earned money and they don’t know what to expect. So it makes sense that they might start small. Perhaps they buy one thing. Or they sign up for the low price option instead of the premium.

A good upsell program encourages these “lower value” customers to come back again and upgrade. That starts with fulfilling your initial promise. Whatever they bought the first time had better solve their problem.

And then, you have the time and attention necessary to convince them that there is more you can do for them. You can sell the benefits of your higher-priced alternatives in person, by phone, or in emails. And as a part of your loyalty program, you can even offer them a discount to upgrade.

Add Products

Many companies employ this third strategy. After enjoying success in one product line, they look to expand their offerings. The key to making this strategy pay off, is knowing your customers intimately. Understand why they shop with you, what problems you are solving, and then look for related problems those same people are also having.

By offering complementary products, your company can become a larger part of each customer’s total spending in this category.

In Conclusion

If you have 1,000 customers and each one is worth $100 today, that’s $100,000 in revenue. If that same group of customers could be worth $150 by employing some of the suggestions above, that’s an additional $50,000 in revenue without bringing in any new customers.

And that means that as marketers, you have more room in your margins to market more aggressively and test new campaigns.