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How Authentic Customer Lifetime Value Can Drive Strategic Growth

Opinions of contributing entrepreneurs are their own.

Seamless e-commerce has become the most important thing for consumers. In 2021 alone, e-commerce sales in the US will exceed $870 billion; some economists only predicted this year. Customers not only find brands they love online, but choose to build long-lasting relationships through subscriptions and memberships. The recurring subscription-based business model has experienced unprecedented growth in the past ten years. As of May 2022, over 85% of US consumers are active subscribers.

These trends highlight a changing set of consumer expectations for B2C companies. Organizations hoping to win in the e-commerce channel and stay ahead of their competition must return to a fundamental understanding of their customer. After all, consumers don’t magically buy things from you because you think they should. They buy for a litany of underlying motives.

Companies should actively pursue their customers as partners in the organization, using Customer Lifetime Value (CLTV) as a critical measure of their success.

Related: Meaning good does not equal success: 4 ways to run a successful business

What is Customer Lifetime Value (CLTV)?

CLTV is the amount of money a company earns on average from a customer during the relationship.

This metric is essential to understand and use for several reasons. It shows the impact of customer retention. Investigate through Zippia shows that 65% of a company’s sales come from existing customers, and that more than 70% of customers switch to a competitor after one bad experience with a brand.

CLTV encourages companies to view consumers as partners, impacting the journey of a brand and its products. Bee Really free, we see our customers as family. Let me say that again… we think of our customers as family. These are not just words on a page, but we do our utmost to portray them daily and in every action.

At every step of the customer journey, we ask if we would recommend this to our families. Everything from the prices we charge to the ingredients we put into our products has our customers’ primary consideration in mind. This deep commitment to our customers at every level of the organization directly impacts our Customer Lifetime Value.

Related: These fatal flaws are killing brand reputations

How to improve Customer Lifetime Value

The customer value journey starts with data. As a business, there are several opportunities to collect data to increase your understanding of consumers and their habits. This includes demographic, transactional and buying preference data.

Data should also be collected across all touchpoints of the customer lifecycle. We place a strong emphasis on measuring 30, 60, and 90-day CLTV, as we’ve found that the first 90 days of a customer journey are key to optimal customer satisfaction. This data can then be used to actively engage customers where they are in the buying process with content they care about. Again, think about the customer and their needs in the beginning and throughout the relationship.

When it comes to companies with a recurring business model, accurate data collection and analysis, along with interpretation and action are crucial. Subscription-based business models are built on a cornerstone of relationships. Gaining an in-depth understanding of your consumers’ buying habits and what keeps them coming back is key to making lasting connections.

Be sure to determine your customer acquisition and retention costs. We use unit economic analysis and CLTV to help us determine where to invest our marketing dollars. Therefore, CLTV is at the heart of the marketing budget allocation. This commitment to maintaining and increasing customer satisfaction with our brand (as measured by CLTV) helps ensure that the investments you make to acquire and retain customers are a win for customers and a win for the company (in the form of a positive ROI).

By reviewing current customer data, key experience touchpoints, and acquisition and retention costs, you begin to identify and measure the impact of valuable customers and adjust your marketing investments accordingly.

Related: How Billion Dollar Companies Think Differently About Customer Relationships

How to build authentic customer lifetime value

There are numerous methods to actually calculate customer lifetime value. Whatever your method, I think the most important thing is to make sure your value is authentic. Today, many consumers are turning to brands that prioritize social impact. Yet brands are not yet ready to meet that demand. This was revealed by research by Deloitte only a third of the companies currently see social impact at the core of their strategy.

It’s time for consumers to partner with brands – and for brands to embrace this mindset. At Truly Free, we make sure every consumer knows the power of what they buy. Instead of thanking our customers for buying laundry detergent, we let them do it know their purchase netted $481,000 for local communities around the world, has helped rid more than 230,000 homes of harmful chemicals and eliminate more than 6.2 million single-use plastics so they feel part of a greater mission.

By connecting your customers to a real need and greater purpose, you can build a connection with your brand and ultimately attract a longer-term customer with recurring revenue streams.


Shreya has been with australiabusinessblog.com for 3 years, writing copy for client websites, blog posts, EDMs and other mediums to engage readers and encourage action. By collaborating with clients, our SEO manager and the wider australiabusinessblog.com, Shreya seeks to understand an audience before creating memorable, persuasive copy.

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