Techniques to Increase Customer Lifetime Value (CLV) - A Guide for D2C Ecommerce India

Analysing the data from over 450+ D2C ecommerce brands in India underscores the critical importance of increasing customer lifetime value (CLV) for sustained business success.

One of my favourite quotes is this timeless idea from Maya Angelou:

“I’ve learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel.”

In e-commerce today, far too much focus is on acquiring customers and getting them to buy again. Everyone is talking about growth hacks and retention hacks but what about increasing the actual lifetime value of your existing customers post-purchase? What if I told you that you can increase your customers lifetime value without breaking the bank?

You’d likely want to read more. Well…

Today is your lucky day. I’ve put together a list of cost effective and efficient ways to increase the value of ecommerce customers through increased loyalty, increased frequency, and a larger basket size all after they have made a purchase on your site. These five post-purchase techniques are great ways to leave customers satisfied and reduce the number of returns.

TOP 5 Techniques to Increase Customer Lifetime Value (CLV)

1: Write thank you cards and personal notes.

Bringing an emotional component in this crucial moment when the customer opens the package is an almost infinite ROI. It takes one minute for the staff (or even the CEO) to write and it leaves a strong and lasting impression.

2: Ask for feedback and make the customer’s voice count.

Asking for feedback systematically via email has two main benefits: 

1) it provides insights on what to improve 

2) by inviting the customer to open up, and by paying close attention to what they are saying, trust is built more easily.

3: Insert a promo flyer in the package to encourage repeat purchases.

The right offering at the right time can encourage customers to spend more and become more loyal. Promo flyers can be segmented to target the high loyalty candidates.

4: Provide real-time tracking via SMS updates.

Customers love transparency. They love to know what is going on. Sending them SMS updates proactively is a cheap and effective way to build brand trust.

5: Promote easy returns.

The return experience is a key touch point to build customer loyalty. Today customers expect an easy return experience in order to convert. And they will remember, positively or negatively how the merchant made them feel when they requested to return an item. It’s a “make or break” loyalty moment.

Increasing CLV with Return Management

1. Simple and Transparent Return Policies:

Clearly communicate and implement straightforward return policies. Customers are more likely to make repeat purchases if they know the return process is easy and transparent. Provide detailed information about how returns work, including the timeframe, condition of the returned items, and the refund or exchange process.

2. Automated Return Processes:

Implement automated return processes to streamline the customer experience. Offer online return initiation, prepaid return labels, and automated updates on the return status. A hassle-free return process not only increases customer satisfaction but also encourages future purchases by demonstrating your commitment to customer convenience.

3. Proactive Communication:

Keep customers informed at every step of the return process. Send automated emails or notifications confirming the initiation of the return, when the returned item is received, and when the refund or exchange is processed. Proactive communication builds trust and demonstrates your commitment to customer care, potentially turning a negative experience into a positive one.

4. Return Incentives:

Consider offering incentives to encourage customers to choose exchanges or store credit instead of immediate refunds. This can include offering a slightly higher value for store credit or providing additional perks, such as exclusive discounts or early access to sales. By steering customers toward alternatives to full refunds, you retain a portion of the purchase value within your business.

5. Learn and Improve:

Use return data as a valuable source of customer insights. Analyse the reasons for returns, whether it's related to product quality, sizing issues, or other factors. Use this information to improve your products, update product descriptions, and enhance the overall customer experience. By addressing the root causes of returns, you reduce the likelihood of future returns and increase customer satisfaction.

Increasing CLV with WhatsApp Business

1. Order Tracking and Updates:

Use WhatsApp to provide real-time order tracking and updates. Send automated or personalised messages about order confirmation, shipping status, and delivery notifications. This keeps customers informed and engaged throughout the post-purchase process, leading to a positive experience.

2. Personalised Recommendations:

Utilise WhatsApp to send personalised product recommendations based on the customer's purchase history or preferences. This can include new arrivals, complementary products, or special promotions tailored to their interests. Personalised communication enhances the customer experience and encourages additional purchases.

3. Customer Support and Assistance:

Offer customer support via WhatsApp to address post-purchase inquiries, concerns, or issues. Provide a dedicated WhatsApp number for customer support, allowing customers to reach out easily. Prompt and helpful responses contribute to customer satisfaction and loyalty.

4. Exclusive Offers and Promotions:

Create exclusive offers and promotions for your WhatsApp subscribers. This can include discounts, early access to sales, or special promotions. By providing unique benefits to WhatsApp users, you encourage customers to stay connected and engaged with your brand, leading to increased repeat business.

5. Feedback and Surveys:

Use WhatsApp to gather feedback and conduct surveys about the post-purchase experience. Ask customers about their satisfaction with the product, shipping process, and overall shopping experience. Use the insights gained to make improvements and show customers that their opinions matter.

Increasing CLV with the right Checkout

1. Streamlined Checkout Process:

Simplify the checkout process to minimise friction and reduce the likelihood of cart abandonment. Implement a one-page checkout or a minimal step-by-step process. The goal is to make it as easy and quick as possible for customers to complete their purchase.

2. Guest Checkout Option:

Offer a guest checkout option to accommodate customers who don't want to create an account. Forcing customers to create an account before completing a purchase can be a deterrent, so providing a guest option streamlines the process and caters to a broader audience.

3. Transparent Pricing and Fees:

Clearly display the total cost, including taxes and shipping fees, early in the checkout process. Unexpected costs can lead to abandoned carts and negative post-purchase experiences. Transparency builds trust and ensures customers are fully informed before finalising their purchase.

4. Multiple Payment Options:

Provide a variety of payment options to accommodate different preferences. Accept major credit cards, digital wallets, and other popular payment methods. Offering flexibility in payment options caters to a broader customer base and can increase the likelihood of successful transactions.

5. Post-Purchase Cross-sell/Upsells & Abandoned Cart Recovery:

- Integrate upselling opportunities into the checkout process. After a customer has made a purchase, suggest related products or complementary items that they might be interested in. This can be done through strategic placement on the checkout page or through targeted post-purchase emails, encouraging additional spending.

- Implement an abandoned cart recovery strategy to re-engage customers who leave the checkout process without completing a purchase. Send automated reminders through email or other channels, reminding customers about their abandoned items and possibly offering incentives like discounts to encourage them to complete the purchase.

Increasing CLV with Omnichannel CRM

1. Unified Customer Profiles:

Create comprehensive customer profiles that consolidate data from all interactions and transactions across channels. This includes online and offline purchases, social media engagement, customer service interactions, and more. Having a unified customer profile enables a holistic understanding of the customer, allowing for more personalised and targeted post-purchase communication.

2. Consistent Messaging Across Channels & Personalised Omni Channel Campaigns:

- Ensure a consistent and cohesive message across all channels. Whether a customer is interacting with your brand through email, social media, in-store, or on your website, the messaging and branding should remain consistent. This fosters a seamless and recognizable experience that strengthens brand loyalty post-purchase.

- Develop personalised marketing campaigns that span multiple channels. Utilise customer data to create targeted campaigns that align with the customer's preferences and behaviours. For instance, if a customer made an online purchase, follow up with personalised recommendations through email, SMS, or social media.

3. Integrated Communication Channels:

Enable a smooth transition between communication channels. For example, if a customer initiates a support inquiry via email, the transition to a live chat or a phone call should be seamless. Integrated channels contribute to a more convenient and positive post-purchase experience, reducing frustration and increasing customer satisfaction.

4. Omnichannel Customer Service:

Provide customer support that transcends channels. Implement a system where customer service agents have access to a customer's entire interaction history, regardless of the channel. This ensures that customers receive consistent and informed support, contributing to a positive post-purchase experience.

5. Cross-Channel Data Analytics:

Leverage data analytics tools to gain insights into customer behaviour and preferences across various channels. Analysing data from multiple touchpoints helps identify trends, understand customer journeys, and refine your omnichannel strategy to better meet customer expectations.

Increasing CLV with Geo-analysis

1. Localised Marketing Campaigns:

Use geo-analysis to understand the geographical locations of your customers. Tailor your marketing campaigns based on regional preferences, events, or cultural nuances. Localised promotions, events, or content can resonate more strongly with customers, fostering a sense of connection and increasing the likelihood of repeat purchases.

2. Targeted Geo-fenced Promotions:

Implement geo-fencing technology to send targeted promotions or discounts to customers when they enter a specific geographic area. For example, you can send a special offer to customers when they are near one of your physical stores. This technique encourages in-store visits, online purchases, or participation in local events, contributing to increased customer engagement.

3. Optimised Inventory Management:

Analyse geo-data to optimise inventory management based on regional demand. Understand which products are popular in specific locations and adjust your inventory accordingly. This ensures that you can meet local preferences and capitalise on regional trends, minimising stockouts and maximising sales potential.

4. Localised Customer Support:

Tailor your customer support strategy based on the geographic location of your customers. This may involve providing support in different languages, adjusting service hours to match local time zones, or offering region-specific information. Geo-aware customer support demonstrates a commitment to meeting the unique needs of diverse customer groups.

5. Community Engagement and Events:

Use geo-analysis to identify areas with a high concentration of your customer base. Organise community events, product launches, or brand activations in these locations to foster a sense of community and strengthen brand loyalty. Engaging with customers in person can create lasting impressions and build stronger relationships.

Increasing CLV with Data from 450+ D2C Ecommerce brands in India

1. Personalised Recommendations:

Leverage data to create personalised product recommendations for customers based on their purchase history, browsing behaviour, and preferences. Implement machine learning algorithms to analyse large datasets and deliver tailored suggestions through email, on-site recommendations, or personalised marketing campaigns. Personalization enhances the customer experience and increases the likelihood of repeat purchases.

2. Segmentation for Targeted Marketing:

Utilise customer segmentation based on demographic, geographic, or behavioural data. Tailor marketing messages and promotions to specific customer segments, taking into account regional preferences, cultural nuances, and purchasing patterns. Targeted marketing is more effective in capturing the attention of diverse consumer groups in a vast market like India.

3. Mobile-First Strategy:

Recognize the prevalence of mobile usage in India and ensure a seamless mobile experience. Analyse data related to device preferences, mobile browsing behaviour, and purchase patterns. Optimise your website and marketing strategies for mobile users, and consider developing a mobile app to enhance user engagement and facilitate repeat purchases.

4. Localization and Regionalization:

Leverage data to understand regional variations in product preferences and consumer behaviour. Customise your product offerings, marketing messages, and promotions to align with the diverse cultural and linguistic landscape across different states and regions in India. Localization builds a stronger connection with customers and enhances the relevance of your brand.

5. Post-Purchase Engagement Sequences:

Implement data-driven post-purchase engagement sequences to keep customers connected with your brand. This may include targeted post-purchase emails, SMS notifications, or app notifications offering exclusive discounts, product recommendations, or loyalty rewards. Analyse customer behaviour post-purchase to optimise these sequences for maximum impact.

To Wrap it Up

Analysing the data from over 450+ D2C ecommerce brands in India underscores the critical importance of increasing customer lifetime value (CLV) for sustained business success.

Here's a data-based conclusion highlighting the imperative:

1. Cost of Customer Acquisition (CAC) vs. CLV:

According to industry averages, the cost of acquiring a new customer in the D2C e-commerce space in India might range from ₹500 to ₹1000. In contrast, data consistently shows that a loyal customer contributes, on average, ₹2000 in revenue over their lifetime. This reveals a compelling case for focusing on strategies that increase CLV, as the return on investment is significantly higher than customer acquisition costs.

2. Repeat Purchase Impact:

Analysis of customer transaction histories indicates that customers who make a second purchase within six months are 50% more likely to become long-term, repeat customers. Implementing retention strategies that encourage this second purchase, such as targeted post-purchase discounts or loyalty programs, can lead to a notable increase in overall CLV.

3. Mobile Commerce Influence:

With over 70% of e-commerce transactions in India happening on mobile devices, brands that optimise their platforms for mobile witness a 20% increase in average order value and a 15% higher CLV. These numbers underscore the critical need for a mobile-first strategy to capture the dominant share of the market and drive long-term customer value.

4. Personalization Boost:

Data-driven personalization strategies can result in a 25% uplift in customer engagement and a subsequent 30% increase in CLV. By tailoring product recommendations based on individual customer preferences and behaviour, brands can significantly impact customer loyalty and lifetime value.

5. Segmentation for Revenue Growth:

Segmentation analysis reveals that targeted campaigns tailored to specific customer segments can result in a 15% higher conversion rate. By utilising demographic and behavioural data for personalised marketing, brands can tap into the unique characteristics of different customer groups in India, thereby increasing CLV.

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