5 Proven Ways To Increase Your Customer’s Lifetime Value

Posted by Kameron Hurley on August 5, 2021 at 2:22 PM     Strategy
5 Proven Ways To Increase Your Customer’s Lifetime Value

The longer a customer does business with you, the more valuable they are. While customers may come and go, customers who leave because of a negative experience or because a competitor served their needs more effectively represent lost potential revenue…and you could have prevented it!

To really understand the lost revenue of a single customer, it helps to understand a customer’s lifetime value - and why you should make it a priority to increase that value by transforming customers into super fans.

What is a Customer’s Lifetime Value? 

Do you know the lifetime value of your most loyal customers? 

If you haven’t taken the time to figure it out yet, here’s a simple formula for determining a customer’s lifetime value or CLV: 

Customer revenue per year

(multiplied by)

Duration of the relationship in years 


Costs of acquiring and serving customer



So let’s say one of your most loyal customers, Lisa, visits your sandwich shop twice a week for lunch. On average, she spends about $25 per week with you, and has been doing so for three years. The costs to serve her are about $10 per week, including things like overhead.

Lisa’s CLV would be: 52 weeks per year multiplied by $25 = $1300 per year. This is how much a year Lisa spends at your sandwich shop. Not bad, huh? Serving her costs you 52 weeks multiplied by $10, so $520 per year.

Now, apply the formula:  

($1300 x 3) - ($520 x 3) =  $2340

Lisa’s lifetime value to you as a customer after just three years is $2,340. 

This is a pretty good lifetime value, but Lisa is also one of your most loyal customers, and as the adage goes, 80% of your revenue comes from just 20% of your customers. 

So how can you get Lisa and people like her to buy more of your products and/or services over time? Here are some proven methods to achieve just that.

How to Improve Customer Lifetime Value

     1. Stay in regular communication with your customers.

Some customers may sign up for regular email updates from you to stay on top of news related to your product or service. Ensure that you are providing regularly scheduled content for them. Most importantly, if a customer ever reaches out to you - in an email, on social media, or a phone call - respond as quickly as possible. 

Invest in a customer management system like HubSpot that can help you keep track of which customers have contacted you and how often. Systems like this can even let you know which contacts opened an email and tie that action back to their unique entry in the database. When the customer calls or emails, you or a member of your service team can instantly view all of the data you have on file for the customer, making it much easier to deliver an excellent customer service experience. 

When contacting customers, always provide something of value, entertainment, or interest. Let them know about product sales, new services, or new articles and video content that may be of interest to them. 

     2. Reconnect with inactive customers. 

Your inactive customers are those who haven’t purchased a product or service from you recently. There are many reasons that inactive customers may no longer be engaged with your brand. However, it’s easier to make a new sale or upsell someone who has bought from you before than to spend the time and energy converting a non-customer into a customer. 

Consider segmenting your mailing list into active and inactive customers (if you have a customer relationship management database like HubSpot, you can do this with a few clicks). That way you can tailor specific marketing messages to inactive customers. This could be a special offer for inactive customers or simply more personalized language with a survey that asks what types of products or services they might be interested in, or simply ask them why they haven’t purchased recently. You’d be surprised how much customers will tell you if you just ask them! 

A simple postcard or telephone call can also go a long way toward re-engaging inactive customers. Sometimes all it takes is a simple reminder about your business and the value you provide.    

     3. Deliver more than you promise. 

It’s a common mantra for success across industries: “Under-promise and over-deliver.” Unfortunately, many organizations and institutions do the exact opposite of this! We tell a customer something will be done or delivered by Thursday because the customer says they want it by Thursday… even though we know we can’t get it done before Saturday. Did we make a quick sale? Sure. But that’s likely the only sale we’ll make to that customer, because we just over-promised and under-delivered.

Instead, consider under-promising. Don’t think you can have it done before Friday? Tell them Monday is the soonest you can do it… then deliver on Saturday. This is also known as the “Scotty” rule ― you know, from the original Star Trek. Scotty the engineer was always telling the captain that repairs would take days ― and then Scotty would get them done in a few hours. Scotty looked like a genius, and the captain was impressed to have such a great guy on his team. 

Also consider what else you can deliver above and beyond what you’ve promised. If someone orders a T-shirt from your online store, throw in a free bandana. Did they order one scoop of ice cream? Give them two, and tell them it’s free of charge, just for being a great customer. This is an exceptional way to build loyalty with your customers and keep them coming back ― and telling their friends. 

     4. Show your appreciation for customers.  

We all like to feel appreciated ― at our jobs, in our personal relationships, and by the businesses we frequent. While we can say, “We appreciate your business” over and over, there’s nothing as powerful as showing a customer how they are appreciated. 

This goes back to the above point about over-delivering. How often do you think about sending your most loyal customers a reward “just because”?

Consider keeping in touch as we’ve just discussed, with letters, postcards, newsletters, and small appreciation gifts such as: movie passes; gift certificates for department stores, book stores or dinners at local restaurants; special arrangements with other local professionals such as accountants; for free consulting services; or other no or low-cost products or services.

     5. Turn customers into super fans. 

We all have that one friend who keeps recommending a favorite restaurant, a favorite product, a favorite bank, a favorite book. They bring it up so often in conversation and on social media that finally, one day, we give the brand they’ve been evangelizing a shot for ourselves. And hey, it turns out we like it, too! 

Word of mouth is the greatest marketing tool in your arsenal, but it doesn’t just happen. Referrals come to you because you’ve earned the trust of your customers by serving them and their needs in a truly exceptional way that wows and delights them so much that they have to talk about it. And when they do refer business to you… shouldn’t you reward them? 

Rewarding your biggest fans with a rewards program is one of the best ways to truly show your appreciation for customer loyalty. Consider how much more time and effort you would have spent getting that customer on your own. Giving a portion of what you would have spent acquiring that customer as a gift to the referrer is just good business.

These rewards can be something as simple as a free product or service that you offer, a big discount on said product or service, or gift cards. Ensure that whatever you offer, it’s in proportion to the amount of business you have received from them. 

For instance, if a loyal customer refers a friend who purchases $100 from your online store, maybe the referrer gets a $10 gift certificate they can use at your store. If a customer refers someone who makes a more substantial purchase ― like $30,000 in office equipment ― they get a more substantial reward or discount.    

Fans for a Lifetime

Your goal with every customer interaction should be to nurture customer relationships that last a lifetime. The longer you retain a customer, the higher their lifetime value to you, not only in what they purchase, but in the number of other customers they refer to your business. 

Great businesses and brands have super fans ― think Apple, Zappos, Lululemon ― and by employing these five proven ways to improve a customer’s lifetime value, yours can too! 

Strategic Marketing, Remarkable Results

At Marketing Essentials, we’ve worked with hundreds of small business owners just like you to achieve remarkable results. If you’re not seeing the results you want from your current marketing efforts, consider a complimentary marketing consultation.