HomeBlogMarketing AutomationUsing Marketing Automation to boost Customer Lifetime Value

Using Marketing Automation to boost Customer Lifetime Value


As the digital landscape continues to evolve, companies must be focused on increasing customer lifetime value (CLV) by looking at the entire customer lifecycle to identify the opportunities that Marketing Automation (MA) offers.

Given the importance of CLV and the incredible variety of tactics and strategies made possible by MA, it was inevitable that they would combine to form part of the foundation for successful online marketing.

The specific techniques they make available to ecommerce operations to be used at different touchpoints, when combined, allow retailers to significantly enhance CLVs and deliver a powerful boost directly to the bottom line.

Customer lifetime value: a brief definition

Before we dive deeper, let’s clarify the meaning of a basic component of any marketing strategy.

In the past, companies focused on the product and its promotion. Now, the product has been taken out of the limelight and the customer has become the focus of marketing activities. This has resulted in a situation where the customer lifecycle involves relationship management at every stage of the journey. And relationship management, in the context of the lifecycle, means appropriate communication and continuous responsiveness to the needs of the customer.

We all know that the cost of maintaining an existing customer is less than the cost of acquiring and building a relationship with a new one. It’s a cliche but it’s true. That’s why it’s so important to successfully convert one-time buyers into loyal users of our product, service or platform. To do this, it’s helpful to know what the customer lifecycle looks like, which is the process from the first contact with the brand to retention. The way of treatment, or rather the care dedicated to the customer, determines his participation in the subsequent journeys (purchase of new products, use of the entire range of services) and the willingness to recommend our brand to the people around him.

The customer lifecycle is similar to the product lifecycle. We distinguish individual phases in it:

  • Potential customer – has a need and the opportunity to satisfy it through your offer
  • First purchase – the customer takes a huge step forward and breaks a psychological barrier by making the first purchase.
  • Repeat purchase – a new level of engagement is reached with another purchase. The cost of acquiring a customer goes down because that cost is now divided among more purchases, while the impact and profitability of the store go up.
  • Regular customer – makes regular purchases in the store. Such a customer generates the highest profitability.
  • Outgoing customer – occurs at every stage. The customer reaches this stage when his need disappears, the possibility of satisfying it by shopping in our store or being taken over by the competition.

Customer Lifetime Value formula: How to calculate CLV

To calculate your online store’s average CLV, you will need the following elements:

  • Average order value: total gross revenue divided by total number of orders
  • Average transactions per customer: total number of orders divided by total number of customers
  • Average retention period: how long your customers’ relationship with your store lasts, in other words, the duration between your customers’ first and final orders, expressed in years. This might be tricky to determine, but try to use as much hard data as possible in your projection.
  • Average profit margin: total gross revenue minus total costs and expenses, expressed as a percentage of total gross revenue
Customer Lifetime Value formula

Let’s see how it works in practice using an example. Let’s say ACME, Inc. has an average order value of U$ 110, each customer buys a total of four times over three years, and the company’s profit margin is 20%. What is their average Customer Lifetime Value?

CTV = 110 dollars × 4 times × 3 years × 0,2 profit = U$ 264

CLV should be part of the focus of sales and marketing activities. It’s a reminder to approach campaigns more comprehensively, always with impact on CLV in mind. Customer lifetime value considerations influence our strategies by making us think more broadly and focus not on specific purchases at a specific time, but on building long-term relationships with customers. Thus, user retention is a key concept that we should consider when implementing our marketing campaigns.

Turning data into sales

The nature of today’s digital customer—constantly connected and ready to respond—has opened the door to omnichannel marketing. This means there are now multiple touchpoints where customers can interact with your brand. This is a definite advantage for obvious reasons—more opportunities to engage customers is always a good thing—but it also adds a new and higher level complexity to your communications. Unifying the feedback and data gained from those interactions is a must for effective marketing now. A failure to do so can lead to a fragmented and confusing customer experience.

If, for example, you add an item to your cart from a mobile phone, you expect it to be there later when you check it from a desktop computer. If it isn’t there, you may start to wonder if that particular e-store is really equipped to keep up with you.

The good news is that you don’t have to deal with this right away – you can make changes as you go, building your strategy incrementally and increasing the complexity of your campaign. And remember, diversity is your strength — the MA team shouldn’t just be the marketers, but should include support from sales, product development, and customer service, as the work they do should influence the marketing messages.

Now, you may be wondering, how can companies take a more strategic approach to increase CLV with the use of MA? Well, that depends on what stage of development your business is in.

Tactics for leveraging Marketing Automation into higher Customer Lifetime Value

It’s common for companies to want to automate 100% of their marketing processes, but that’s very difficult to achieve immediately. The trick is to set realistic, achievable goals (is the focus on acquiring leads, retaining existing customers, boosting cart value, etc.) and then see how marketing automation can help you achieve them.

For starters, it’s a good idea to set up triggering messages like welcome and thank you emails, as well as any emails that can be automated through form submissions. This is the simplest form of marketing automation.

Here’s a short list to make sure you’re taking full advantage of the specs in your MA strategy:

  • Acquire leads by targeting similar users. Similar audiences can be a cost-effective way to increase brand awareness and fill your funnel with leads. Use Similar Audience Groups on Facebook, IG, Twitter, and Google to easily reach users similar to your current contacts and customers, website visitors, or even those who follow your social media activity. Increase awareness of people who can benefit from your offer and get better quality traffic to your website.
  • Prepare email communication. This step is an often overlooked opportunity. When someone is added to your database as a new subscriber, the first email can be the most important — because it’s read by four out of five new subscribers. But don’t leave it at just one email. Create a welcome series, and tell a story about what your brand can offer your audience. Also, get comfortable with dynamic content and start using names.
  • Focus on call-to-action content (and its automation). Bounces are simply something that you have to learn to live with but they can be minimized. By adding relevant content, an invitation to a webinar, announcing an ebook, promoting a special offer of whatever best applies to your situation, you can lower that bounce rate and drive more engagement. Most marketing automation platforms offer tools to display customized forms and pop-ups on your website.
  • Create a landing page for each segment of your audience. Once you’ve managed to attract recipients to your website with content or offers, you’ll need to create a landing page to further profile them and add them to your mailing database. After designing the layout, remember to A/B test different versions of the same page — because even the smallest details can deter visitors from reading further.
  • Don’t ignore abandoned forms (and shopping carts). Reminders sent closer to the bottom of the funnel are very effective – especially when you consider that customers abandon about 2/3 of all shopping carts. Fortunately, the same rule applies to registration completion reminders, which can be supported by an additional promo code.
  • Set the appropriate metrics. While click-through rate and the number of open offers show whether the audience found the campaign engaging, the number of repeat buyers shows that the campaign was successful in improving retention rates.

Advanced techniques

Going further, a natural step is to use segmentation to send personalized emails to specific groups based on demographic and transactional information based on where your prospects are located. Finally, with the introduction of more advanced web data, Marketing Automation can leverage all available data across multiple aggregation points such as email, web, and mobile to report on click-through rates, cost-per-lead and conversion rates.

At this stage, we recommend moving from external marketing to inbound marketing, which uses behavioral targeting to identify potential customers early in the customer lifecycle and link them to marketing automation techniques.

Simply put, by analyzing responses to content such as blogs, magazines, and newsletters, marketers should be able to identify who their potential customers are, what they like, and how they communicate so that companies can deliver an automated, highly personalized, customized experience.

Here’s a quick list to make sure that your MA strategy specs are being used to their full potential:

  • Start using lead scoring. Lead scoring is especially useful when the customer spends a long time comparing different vendors before a sale is made. Lead scoring requires rules about which interactions are worth how many points and when a certain threshold is reached. When that ceiling is reached, the salesperson is notified to contact the potential customer. Automation can help identify people who have repeatedly interacted by clicking on emails or viewing certain content.
  • Build relationships through personalization. When someone visits your website for the first time or subscribes to your newsletter, you can use marketing automation to deliver tailored messages to them on the page to get them to buy or build a relationship with new content.
  • Use remarketing. Remarketing uses ad networks or large platforms to deliver tailored content based on cookies that tell you someone has visited the site. It’s a popular solution because targeted ads are profitable and you can further optimize your budget by focusing only on those who actively engage with your content.
  • Use automation to re-engage and reactivate. With marketing automation, you can identify when recipients or customers are becoming less active and encourage them to re-engage with interesting content or discounts. If they’re not interested, you can treat them differently and reduce the frequency of emails, which in turn can have a better effect.
  • Tailored communication. Personalized communication must follow the consumer. So a tailored message must not give the customer the impression that the company knows everything about them. The trick is to plan the time, content, and channel so that they harmonize perfectly.

Creating an effective marketing automation strategy takes time, planning, and requires data from multiple departments. Marketers often forget, but marketing automation is used to build awareness as well as generate leads and increase customer sales. The good news is that with a successful strategy, you’ll have more insight into your customers than ever before.

Increasing Customer Lifetime Value has never been easier, thanks to Marketing Automation tools at the fingertips of every creative marketer.
Want to learn more about taking your CLV to new heights through the use of MA tactics? Get in touch with us today and let’s talk about how edrone can help.


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