How personalisation can improve your Customer Lifetime Value

Customer Lifetime Value

As a retailer you will be worried about a whole plethora of KPIs and metrics. You will have your merchandisers, marketing teams and agencies all driven to be looking to improve everything from conversion rate on site, to dwell time to number of product views. But there is one metric which you should look to focus on, almost above any others and that is Customer Lifetime Value.  If you’re not already aware of it, you should be.

In this article we’ll tell you all about Customer Lifetime Value and why it’s so important as well as explain how intelligent merchandising and personalising the online experience for your customers can impact CLV positively.

Why is Customer Lifetime Value so important for retailers 

We know that acquiring customers is both difficult and expensive, so once you have done that, it is hugely important to retain them. Obviously continually driving acquisition of new customers is vital to your business, but if they are constantly dropping out the other end, growth will prove extremely difficult. It is the archetypal leaky bucket effect.  

Even though it sounds obvious, the majority of eCommerce businesses still dedicate a whopping 80% of their marketing budget to acquisition! That leaves very little for retention, which as you’ll see is vitally important, if not as equally important.

It is proven that repeat customers and more loyal customers will generate more revenue for you. For example, if you get a customer to come back there is a 60 – 70% chance that they will convert again. And repeat customers are 9 times more likely to convert than a first-time shopper.

Customer Lifetime Value

If you can both acquire and then retain your customers your revenue will grow, and you can more confidently plan for the future knowing that you are not so reliant on acquisition.

What impacts CLV?  

If CLV is so important, what impacts it and what can you do to improve those factors?  As you can imagine, a variety of things will have an impact but we see the following as being the key contributors to a healthy CLV:  

Conversion Rate 

We know the conversion is the holy grail in eCommerce, if we can increase a customer’s likelihood to convert when they visit, revenue will increase and their value to your business will increase as well. 

Average Order Value  

The more each customer spends every time they make a purchase, by definition the more valuable they will be to you over time. 

Re-visit Interval  

If you reduce the time between visits from a customer, they will visit the site more often over time, increasing the chances of them converting to a purchase each time that they do.  

Likelihood to churn 

Ensuring customer’s want to come back again and again after they have purchased from you is vital. If they have a good experience they are more likely to come back and spend again, and not look elsewhere, increasing their long-term value to you. 

Customer Lifetime Value

How can intelligent merchandising and personalisation help improve your CLV?  

The impacts on Customer Lifetime Value might seem like common sense; get people to come back to your site more often, make sure they convert more and that they spend more on average when they do. But ensuring those things happen is easier said than done. So how do you actually ensure that you affect the factors that contribute to Customer Lifetime Value? And how could a personalization engine like ours help?

Improve your conversion rate 

Shorten a customer’s path to discovery through the dynamic reordering of products and 1 to 1 personalisation. 

How to increase A.O.V 

Utilise intelligent personalised product recommendations to encourage up-sell and cross-sell both on product pages and in the basket area.  

Reduce re-visit interval 

Increase the frequency of a customer’s visits through integrating engaging content and relevant products into their journey. 

Reduce the likelihood to churn  

Increase the likelihood to repurchase through journey optimisation and intelligent identifying a customer’s journey stage.

Customer Lifetime Value


Ultimately, It’s all about the experience 

It’s clear that a whole range of different factors can impact the Customer Lifetime Value of a customer, and not all of them can be affected through an intelligent merchandising tool. But one thing holds them all together; a good experience and an ecommerce personalisation tool like The Filter can significantly improve the experience your customers have on site.  If you ensure that your customers receive a great experience the moment they land on your site to the moment they receive your product through their door, then you stand a very good chance to ticking all the CLV boxes; get them coming back more often, get them converting more and spending more when they do.

Contributor: The Filter

To find out how you could improve your Customer Lifetime Value with an intelligent merchandising platform, please get in touch with us at The Filter. — The Filter is a highly configurable, but cost-effective merchandising platform for eCommerce which will allow you to personalise your customer experiences, optimise customer journeys on site, improve product recommendation relevance and create intelligent merchandising strategies for eCommerce sites. An industry-leading provider of AI software solutions for eCommerce and media; they specialize in increasing your revenue and customer experience through intelligent merchandising, recommendations and personalisation. Working with clients such as BT TV, Liberty of London and Menkind they have over 10 years’ experience of developing machine learning software and supporting businesses in developing personalized experiences and communication for their customers.