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5 ways to increase your Customer Lifetime Value by 300%: Get your customers to shop more from you

5 ways to increase your Customer Lifetime Value by 300%: Get your customers to shop more from you
Published On
July 31, 2023

Uncover the secrets to boost Customer Lifetime Value (CLV) through these 5 powerful & underutilized strategies that are guaranteed to work.

“What are we doing to acquire more customers?”

A question that frequently gets asked in all the business meetings. But let’s talk about the real deal here- seeking new customers can be an exciting pursuit, but here's a not-so-secret revelation – it comes at a significant cost.  

Acquiring new customers can be up to 5 times costlier than retaining the ones you already have.

Unfortunately, lots of companies are so focused on getting new customers that they forget about the ones they already have. Silly, right? But hey, not you! You are here on this blog to learn about Customer Lifetime Value and learn how to boost it like a pro.

First things first, we're not saying you should forget about acquiring new customers altogether. Nope, that's not the way to go. Nah, we'll find a balance – like adding the perfect amount of sugar to your morning coffee. 

We'll dive into understanding Customer Lifetime Value & decode five kickass strategies that will have your Customer Lifetime Value skyrocketing. These are tried and tested tricks that have worked wonders for all our customers, and they'll work for you too. Let's get started!

What is Customer's Lifetime Value?

Customer Lifetime Value (CLV) is a measure that tells businesses how much money they can expect to earn from a single customer throughout their entire relationship with the company. 

Let's understand the meaning of CLTV with the help of an example:


Meet Pranav, a sneaker enthusiast. He's been buying shoes from your online store for the past three years. On average, he purchases a new pair of sneakers every six months for $100.

To calculate Pranav's CLV, you'll need to consider a few things:

1. How long do customers typically stay loyal to your store? Let's assume it's around 5 years for Tom.
2. How often do they make purchases within that time frame? Every six months, in Tom's case.
3. What's the average amount they spend per purchase? $100 for Tom.

So, Pranav's CLV can be calculated as follows:

CLTV = (Average Purchase Value x Purchase Frequency) x Customer Lifespan

CLV = ($100 x 2) x 5 = $1,000

Voila! Pranav's estimated Customer Lifetime Value is $1,000. That means, over the next five years, he's likely to spend around a grand on your sneakers.

Knowing Pranav's CLV helps you make informed decisions about how to treat him as a customer. You can now focus on keeping Pranav satisfied and engaged to ensure he continues coming back to your online store for more sneaker purchases.

How do you calculate your Customer Lifetime Value?

Calculating Customer Lifetime Value (CLV) involves a straightforward formula that takes into account three essential factors: Average Purchase Value (APV), Purchase Frequency (PF), and Customer Lifespan (CL). Let's break down the formula: 

CLV = (Average Purchase Value) x (Purchase Frequency) x (Customer Lifespan)

Average Purchase Value (APV):

APV refers to the average amount a customer spends on a single purchase with your business. To calculate this, add up the total revenue generated from all customer purchases and divide it by the total number of purchases.

APV = Total Revenue from all Purchases / Total Number of Purchases

For example, if your online store earns $10,000 in revenue from 200 purchases, the APV would be $10,000 / 200 = $50.

Purchase Frequency (PF):

Purchase Frequency is the average number of times a customer makes a purchase from your business within a specific period. To find this value, just divide the total number of purchases by the total number of different customers.

PF = Total Number of Purchases / Total Number of Unique Customers

For instance, if you had 300 purchases made by 100 unique customers, the PF would be 300 / 100 = 3 (indicating customers make an average of 3 purchases).

Customer Lifespan (CL):

Customer Lifespan represents the average period a customer remains engaged with your business before churning or stopping purchases. This can be calculated by adding the total length of time (in months or years) that all your customers have stayed with you and dividing it by the number of unique customers.

CL = Total Length of Time Customers Stayed / Total Number of Unique Customers

If, for example, your business has been around for 3 years, and on average, customers stay with you for 2 years before churning, the CL would be 2 years.

Now, let's put it all together with an example:

Imagine you run an online subscription service for $30 per month. Over the past year, you had 500 customers who made 1,200 purchases in total.

Calculate APV:

APV = Total Revenue from all Purchases / Total Number of Purchases

APV = ($30 x 1,200) / 500 = $72

Calculate PF:

PF = Total Number of Purchases / Total Number of Unique Customers

PF = 1,200 / 500 = 2.4 (approximately)

Calculate CL:

Assuming your business has been around for 3 years and the average customer stays for 2 years before churning.

CL = 2 years

Now, calculate CLV:


CLV = $72 x 2.4 x 2 = $345.60

So, the Customer Lifetime Value for your online subscription service is approximately $345.60. This means, on average, each customer is likely to spend around $345.60 during their entire time as your customer.

Why is CLV Important To Your Business Growth?

Customer Lifetime Value (CLV) is vital for your business growth as it reveals the true worth of each customer over their entire journey with your company. By understanding how much a customer is likely to spend with you, you can focus on nurturing lasting relationships, maximizing repeat business, and providing personalized experiences that drive customer loyalty. Here's why it's so important in simple terms:

1. Spot Your Loyal Fans: CLV helps you identify your most loyal customers - the ones who keep coming back for more. These loyal fans are like the backbone of your business, and they contribute significantly to your revenue.

2. Less Chasing, More Earning: Instead of always chasing new customers, CLV encourages you to focus on keeping your existing customers happy. It's much easier and cheaper to retain loyal customers than to attract new ones.

3. Boost Your Profits: When you understand your customers' lifetime value, you can make smarter decisions to increase their satisfaction. Happier customers tend to spend more, boosting your overall profits.

4. Maximize Marketing Impact: Knowing your CLV lets you target your marketing efforts better. You can personalize your messages and offers to appeal to your high-value customers, making your marketing more effective.

5. Referrals: Satisfied customers are more likely to recommend your business to their friends and family. Positive word-of-mouth can bring in new customers without spending much on advertising.

6. Resource Management: With CLV, you allocate your resources wisely. Instead of spreading your budget thin on random marketing tactics, you can invest more where it matters most – on your loyal customers.

7. Long-Term Growth: By nurturing strong relationships with your customers, you secure long-term growth. Repeat business is the foundation of a thriving enterprise.

8. Competitive Edge: When you understand your customers better than your competitors, you can offer more personalized experiences and stand out from the crowd. Happy customers stick with you!

9. Surviving Tough Times: During economic downturns, loyal customers are your lifeline. They provide a steady stream of revenue, helping your business weather the storm.

10. Empower Business Strategies: Armed with CLV insights, you can make data-driven decisions. Whether it's launching new products or improving services, CLV guides your business strategies towards success.

Remember, your customers are like precious gems, and understanding their lifetime value empowers your business to grow, thrive, and make a lasting impact in the market!

How to grow the CLTV of your retail business & get your customers to shop more from you?

As a retail business owner, you're constantly seeking ways to enhance your Customer Lifetime Value (CLV) and ensure your customers keep coming back for more. Growing your CLV is crucial for sustainable growth and profitability. Here are five top retail-specific strategies to achieve just that:

1. Cultivate Personalized Customer Experiences Beyond Surface-Level Tactics

Your customers are unique individuals, and catering to their specific needs and preferences can significantly impact their loyalty. By cultivating personalized customer experiences, you'll create a strong emotional bond with your clientele, encouraging repeat purchases and lasting relationships.

Gather Customer Data (Not Just Numbers and Surveys): Get to know your customers beyond just basic information. Utilize feedback surveys, and purchase history to understand their preferences and what they truly care about. Use data to create a holistic customer profile, not just numbers.

Segmentation for Targeted Marketing (Go beyond demographics): Group customers based on their behavior, go beyond age, gender, or location. Tailor marketing messages and promotions that resonate with each customer segment.

Personalized Recommendations (So much more purchase history): Utilize the data collected to offer personalized product recommendations. Go beyond past purchases. Recommend products that complement their lifestyle, not just what fits a predetermined algorithm. Customers will appreciate the relevant suggestions, increasing the likelihood of additional purchases.

Dynamic Content (No gimmicks): Implement dynamic content on your website and social media platforms, showcasing products that align with each customer's preferences. Engage customers with content that genuinely interests them. Don't use flashy gimmicks; create content that sparks real engagement.

2. Build a Robust Loyalty Program that goes beyond just Earn & Burn

A well-designed loyalty program can be a game-changer for driving repeat business and increasing your CLV. Rewarding customer loyalty not only encourages return visits but also strengthens the emotional connection between your brand and your customers. However, basic rewards might keep customers coming back, but if you want to truly elevate your CLV game, it's time to step into the realm of engagement and experiences. Here’s how:

Rewards and Incentives (Not the basic boring ones): Create memorable experiences that leave a lasting impact. Offer exclusive access to events, workshops, or behind-the-scenes tours, strengthening the emotional connection with your brand.

Omnichannel Loyalty (Bring in some consistency pls): Seamlessly integrate your loyalty program across all touchpoints. Whether online or in-store, ensure customers have access to personalized offers, rewards, and engagement opportunities. A unified experience fosters loyalty, making them feel valued and appreciated, no matter where they interact with your brand.

Gamification (Only if you want to stand out): Infuse your loyalty program with gamified elements that ignite excitement. Create interactive challenges, missions, and competitions that reward customers for their active participation. 

3. Upsell and Cross-sell Smartly

Turning a single purchase into a more substantial transaction is a fantastic way to boost your CLV. Upselling and cross-selling strategically can increase your revenue per customer while enhancing their overall shopping experience.

Personalized Product Bundles (Not Just Random Pairings): Avoid the mistake of offering generic product bundles. Analyze customer data and purchase history to create personalized bundles that cater to individual preferences and needs. Show customers the value of combining products that complement each other, increasing their overall satisfaction.

Targeted Upsell Recommendations (Beyond Pushy Sales): Don't be pushy with upselling. Instead, use customer insights to recommend relevant upgrades or premium versions of products they already love. Emphasize the added benefits and value they'll receive, making the upsell enticing and customer-centric.

Post-Purchase Cross-selling (No random suggestions): The sales journey doesn't end at checkout. After a purchase, continue cross-selling through tailored follow-up emails or targeted ads. Recommend complementary products based on their recent purchase to keep them engaged and interested in expanding their collection.

4. Create an Omnichannel Shopping Experience

Integrate your brick-and-mortar store with your online platform to provide a seamless and consistent shopping experience for customers across all channels.

Seamless Inventory Management (No More Out-of-Stock Surprises): Avoid the frustration of customers finding their desired product out of stock. Implement a robust inventory management system that syncs real-time stock levels across all channels. This ensures that customers receive accurate information and can purchase their favorite items without disappointment.

Unified Loyalty Program (One Loyalty, Many Channels): Don't let loyalty be limited to just one channel. Create a unified loyalty program that rewards customers for their purchases, engagement, and referrals across all touchpoints. This encourages them to interact with your brand both online and in-store, cultivating stronger relationships.

Personalized 360° Shopping Profiles (Understanding Customers Holistically): Go beyond basic customer profiles. Create comprehensive 360° shopping profiles that capture their preferences, purchase history, and interactions across all channels. Utilize this data to offer personalized recommendations, promotions, and experiences that resonate with each customer, fostering loyalty and satisfaction.

5. Offer Limited-Time VIP Sales and Previews

Create a sense of exclusivity and urgency by offering limited-time VIP sales and previews for your high-wallet-share customers.

VIP Early Access: Provide your top-spending customers with exclusive early access to new product launches or sales events. This makes them feel valued and encourages them to shop more during these exclusive periods.

Limited-Time Discounts: Offer time-sensitive discounts or promotions to your high-wallet-share customers. This encourages them to make purchases during the promotion period, increasing their spending with your store.

VIP Events: Host special events or workshops exclusively for your high-spending customers. These events provide added value and strengthen the emotional connection between the customer and your brand.

 Key Takeaway

In the retail realm, one golden rule stands tall - cherish your customers, and your revenue will flourish. Appreciate and value them, offer top-notch service, and keep them satisfied. Remember, happy customers, mean loyal customers, and loyal customers mean a thriving business. So, as you bid farewell to the obsession with new customers, embrace the power of CLTV and cultivate a loyal customer base that propels your retail business to new heights. 

Happy Retailing. 

P.S: Need help boosting the Customer Lifetime Value of your brand? Schedule a demo with us and let our CRM & Loyalty experts guide you through this journey.  Let's create loyal fans, happy customers, and a thriving business together. ;) 

Frequently Asked Questions

Still Got Questions?

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What is Customer Lifetime Value (CLV)?
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COO & Founder at Xeno

Ayushmaan Kapoor is the founder & COO of Xeno. Ayushmaan & Pranav started Xeno together in 2015 and together have a vision to make Xeno the #1 customer intelligence platforms for retailers all across.  Outside of work, Ayushmaan finds joy in traveling to the hills and often takes short trips to recharge & rejuvenate

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