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Top 6 Ways to Increase Your Customer Lifetime Value (LTV)

Top 6 Ways to Increase Your Customer Lifetime Value (LTV)

2023 is the year of LTV! Here are 6 strategies to optimize your subscription program for customer lifetime value.

2023 is the year of LTV! With customer acquisition costs at an all-time high, pivoting your strategy to retention by weaving in more LTV touchpoints across the customer journey will be crucial in creating a superior, seamless subscription experience. 

We dive into 6 key LTV best practices to help Shopify merchants kick off the new year right with a subscription program fully optimized for customer lifetime value.

Tailor Your Subscription Program

Go beyond the standard ‘Set it & Forget it’ subscription models and tailor your subscription program to provide an elevated customer experience. From customizable bundles to sequential subscription models, there are numerous ways to align your subscription program to your target customers’ needs. 

With 71 percent of consumers expecting brands to deliver more personalized interactions, there is truly no better way to deliver these experiences than through an interactive, customizable bundle experience. Offering bundled products or build-a-box style subscriptions is a great way to gain exposure across your product line while also creating a memorable experience for customers.

Another great way to tailor your subscription program is to offer a seasonal subscription model using anchor dates. Shops can easily offer seasonal subscription drops by using anchor dates to set a day where billing interval calculations should be made and product ship dates are scheduled! 

Merchants can also implement a sequential subscription model should your product demand a first-order one-time purchase. One of our favorite brands, Jolie, does this beautifully. The purchase of the Jolie showerhead triggers a subscription to receive a filter replacement every three months, ensuring that customers never forget to change their filter!

Ensure a Seamless Brand Experience at Every Touchpoint

Ensure a seamless brand experience at every touchpoint by designing your customer account portal to match your brand aesthetic, making it look and feel like your PDP. Studies show that PDPs had the biggest influence on purchasing decisions for close to half of consumers, making it essential for merchants to create a seamless brand experience from the PDP to the account portal. Set expectations high for your subscription program by overcommunicating the details and value of subscribing. Align your brand’s voice with marketing banners directly in the customer account portal to double down on key messaging and communicate all the benefits of your subscription program once more.

Use recurring upcoming subscription orders as an opportunity to strategically engage your customers via email and SMS. Using a subscription-led email and SMS strategy gives brands more reasons to check in with customers, ultimately increasing their lifetime value. Further build trust by communicating with subscribers about their upcoming subscription orders, new product launches, subscriber-exclusive promotions, and even if their credit card on file is about to expire.

Give Subscribers Flexibility and Exclusivity

Treat subscribers like VIP members by creating an elevated subscription experience that gives them control over their digital customer journey. Grant subscribers limitless flexibility to adjust the frequency of their subscription orders and equip them with the ability to expedite, delay, and swap their next order however they see fit. This level of flexibility builds trust between merchants and their loyal customers while also delivering a membership-like experience.

To continue crafting a true VIP experience, roll out the red carpet for your subscribers with exclusive member-only benefits. For example, offer subscribers special discounts, exclusive gifts, and early access to new products to reward them for their loyalty. In addition to delighting your most loyal customers, member-only benefits also aim to increase Average Order Value (AOV) and overall LTV!

Create an Engaging Subscriber Experience 

Go beyond the status quo account preferences by offering the most engaging customer account portal experience to give subscribers a reason to stay and engage with your brand. Equipping your subscription program with features like giftable subscriptions, in-portal Instagram feeds, loyalty programs, and more is the best way to increase customer loyalty, brand engagement, and lifetime value. 

Specifically, introduce a wider audience to your products and subscription program by adding an option for customers to gift their next subscription order to a friend, or offer a 3-month giftable subscription! Studies show that 65.5% of consumers are likely to gift a subscription this year, and 82% of people who were gifted a subscription box ended up also subscribing themselves! 

Further turn your subscribers into micro-influencers with a seamless referral option in the customer account portal–a great way to build from your most loyal customer base and introduce a wider audience to your brand. Customers acquired via referrals have a 37% higher retention rate and a 16% higher customer lifetime value. Not only that, but customers who were referred are 4x more likely to refer their friends.

Complement Your Subscription Program with Loyalty Rewards

Couple your subscription program with a loyalty rewards program built directly into the customer account portal to reward customers for their loyalty. Incentivize customers to spread their love for your brand by rewarding them with credits for gifting their next subscription order to a friend or making a successful referral!

Let customers exercise their loyalty credits how they see fit, with options such as a percent off their next order, discounts on a new product, complimentary add-on products, and more! Offering a loyalty program with rewards that customers truly value helps further cultivate mutually beneficial relationships between brands and their customers. 76% of consumers believe that loyalty programs strengthen their relationship with brands and studies show that customers spend 67% more when they are part of a loyalty program!

Loyalty rewards can also be leveraged to increase retention rates. For example, if you are seeing a dip in churn after a certain amount of time, offer subscribers loyalty credits after X month to ensure that they do not cancel their subscription order completely. Studies show that offering customers an incentive to stay at the cancellation point reduces churn by more than 50%

Listen to Your Subscription Data

It’s crucial for merchants to analyze subscription data in order to make key decisions about their subscription program. As a best practice, keep an eye on how often people are skipping their next order to adjust the frequency you are offering. If you notice that a majority of subscribers are choosing the 60-day delivery frequency versus the 30-day option, make that the default option instead. 

Your subscription data can be leveraged to identify which products are frequently bought together for bundle opportunities. If you see two or three products consistently purchased together, make it easy on customers by bundling them together! 

Dive into a cohort retention analysis to mitigate any areas where there may be a drop in subscribers. If you are noticing a trend that customers are unsubscribing after a certain number of months, consider prompting subscribers with a special offer or discount prior to that month to incentivize retention.

With as many as 75% of DTC brands offering a subscription-based offering by the end of this year, focusing on creating a superior subscription experience to differentiate yourself from competitors will be key for LTV!