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How to increase customer lifetime value in eCommerce

The good news is that many customers are buying online instead of in retail stores. The bad news is that e-commerce competition is becoming overcrowded and more prominent. The strong growth of the eCommerce market itself and the competition in it can be easily seen in recent print-on-demand eCommerce stats.

Buyers have hundreds of options in front of themselves. Hundreds of other eCommerce companies like yours. So, if they bought from you once, why should they do it again?

They will forget what the name of your store was the minute their order arrives.

At that point, once they need something else from you, your competitors can easily catch their attention, and you’ll be losing customers.

But that’s not the worst part. Statistics show that acquiring new customers is 5 to 25 times more expensive than retaining existing ones.

Getting someone to buy from you once is not a problem (it’s not hard to do that, but it’s expensive). The challenge is retaining them as your customer.

That’s where customer lifetime value (as a metric LTV), and re-engagement campaigns come into place.

The critical part of this article is that you will learn how to make people buy from you again.

So, let’s get started.

Why should brands focus on customer retention and lifetime value instead of acquisition?

Don’t get me wrong here. Customer acquisition is an essential part of every eCommerce strategy.

It’s the first thing you need to do. It’s the foundation of your business regardless of whether it is a single-store or a multi-store eCommerce platform.

But if you are constantly just looking to acquire new customers, you will always be in the loop of uncertainty. Acquisition channels (eCommerce platforms like Adobe Commerce or social media channels like Facebook) that you’re currently using might be shut down overnight.

Not to mention the cost of continually looking for new customers.

On the other hand, customer retention and improving customer lifetime value helps us have a predictable revenue stream. In this matter, Yates Jarvis, marketing consultant for e-commerce business, advises:  "Remember that your LTV efforts do double duty. Improving LTV improves customer acquisition because LTV is all about customers who know and love your offering. Those same customers help lift brand awareness within their circles and every time they buy, they reduce your ad cost per order (increasing ROAS), giving you more profit to spend on acquiring new customers.

Lifetime value

When we have a proper implementation of different Facebook re-engagement campaigns that improve our CLTV, we no longer depend on uncertain customer acquisition strategies.

Once you acquire a customer, and they’re satisfied with your product, why wouldn’t they buy from you again?

What are re-engagement campaigns?

As mentioned in the beginning, re-engagement campaigns have only one goal in mind – to make your customers buy from you again.

A re-engagement campaign is a kind of retargeting campaign. But instead of offering the same product over and over again, your job is to provide complementary products that your existing customers might need.

Think about it this way:

If your customer already bought shoes, they won’t need them again for at least six months. So why run campaigns offering the same type of product?

It doesn’t make sense at all, right?

Instead, you should offer them other, complementary products, such as:

  • Jackets
  • Bags

and so on.

Sport clothing ad examples

These are the products that your customers might pair with your shoes.

For example, Noelle is a make-up brand. Once someone buys a specific make-up product, they will start seeing re-engagement campaigns prompting them to buy different make-up products, such as brushes:

Now, don’t be mistaken in thinking that re-engagement campaigns are the same thing as upsells or cross-sells – they’re not.

Upsells have the purpose of selling additional products to your customers during the checkout. By doing that, you’re not improving your retention or CLTV. You’re just selling more expensive products.

On the other hand, re-engagement campaigns aim to earn you repetitive purchases from your customers over and over again.

In short, re-engagement campaigns on paid social are made with the goal of selling complementary products to your existing customers and hence improve your customer retention and CLTV.

4 essential pillars of successful re-engagement campaigns

In a nutshell, in order to create successful re-engagement campaigns and improve your e-commerce customer lifetime value, you need to satisfy certain conditions:

Let’s go through each of these factors, one by one.

1. Knowing your audience’s interests

It’s essential to know who your customers are, why they need your products, and what other items will come in handy or ease their pain.

So, as we mentioned, you should not be forcing your customers to buy something they already bought from you or something they don’t need at all.

Instead, like in the Noelle example above, prompt them to buy products that are complementary to the ones they’ve already bought.

2. Know your products in-depth

What products are complementary to each other?

What product is a great fit for some particular purpose?

What products are great for some specific uses?

It’s always the best practice to divide your products into different categories and make your re-engagement ads based on that.

For example, let’s say that you’re selling sports apparel.

You could have the following categories containing the listed products:

  • Hiking and camping
  • Hiking shoes
  • Backpacks
  • Tents
  • Athletic gear
  • Running shoes
  • Water bottles
  • Active underwear

Someone buys hiking shoes. What would be a complementary product? Backpacks, of course.

Someone buys a tent, would they need a backpack? Yes, they probably will.

If they plan to run, would they need active underwear?

You get my point.

3. Having happy customers

There’s no point to run re-engagement campaigns if you don’t already have existing customers that are happy.

People who are not satisfied with your products will not buy from you again. There’s no point in wasting your ad budget on them.

4. Making your brand recognisable

In order for re-engagement campaigns to work, your ads must be aligned with your brand.

If someone ordered from you once, and they’re happy with your product, you need to unleash those emotions by highlighting your brand within your ads as well.

Use colors, fonts, and logo design and make your band associated with pleasant feelings.

Once someone sees an ad from a brand they liked, they will probably be more likely to buy from it.

For example, this ad from Ralph Lauren is using their well-known shirts and brand color scheme:

Ralph Lauren ad example

Examples of successful re-engagement campaigns

Now is the time when we’ll take a look at some of the best practices for creating re-engagement campaigns.

Are you ready?

How Rumag used the power of Dynamic Creatives to re-engage their customers

Dynamic creative ads are the ads with updates done automatically and in real-time, based on the top-selling products from Google Analytics.

They’re relevant, eye-catching, and most importantly, converting.

Rumag is an apparel brand, similar to the ones that you normally see on the internet.

However, the re-engagement campaigns they’re creating have the power to create a loyal customer base, over and over again.

Here’s what one of their ads looks like:

Promote Best Sellers automatically

How G Adventures uses the power of localization sell more tours

This is a mind-blowing Facebook ad, a great example of re-engagement campaigns. The logic behind this ad is that depending on the country ad is shown in different languages with different currencies and different prices.

Here’s how the ad looks like:

Be Creative When Selling Complementary Products

When it comes to dynamic re-engagement campaigns that improve your e-commerce customer lifetime value, creativity is your superpower.

This ad by Telenor, mobile network operator, is targeting their existing customers who’re approaching the end of their 2-year contract. With this “irresistible” offer, they’re able to convince more people to stay with them for another 2 years.

Telenor ad example

The bottom line

There are five things you need to pay attention to when improving customer lifetime value in eCommerce through Facebook ads:

  • Getting to know your customers’ needs
  • Maintaining a relationship with existing customers instead of always looking for new ones
  • Creating more personalized content
  • Using analytics to find the best ad variants
  • Improving creatives by learning from previous stages

Want to improve your eCommerce customer lifetime value by creating automated journeys, while saving your coins?

Get started with a Hunch free strategy call and let us discuss this topic further.