How to win at Lifetime Customer Value (LCV)

Published: October 2024

Music fans at a concert. — Don’t let your business be a one-hit wonder—turn customers into lifelong fans!

Is your CRO strategy stopping short?

Some people wrongly believe that CRO stops when a customer places an order. In fact, increasing repeat purchases is one of the easiest ways to grow your business. Another is to enthuse customers to tell their friends.

In this article, you’ll learn some techniques to turn visitors into raving fans who love your company, spend a lot, and tell their friends to do the same.

A diagram of a conversion which reads: Ad impressions > Ad clicks > Landing Page > First Purchase > Subsequent Purchases > Tell Friends — Your conversion funnel extends to the whole customer experience—and beyond.

To win at conversion, you must win at LCV. The most successful companies can outbid their competitors in advertising—not just because they outconvert their competitors, but also because their customers keep returning to spend more. That way, the cost of acquiring a customer can be recouped over the total lifetime of the customer.

Furthermore, existing customers are easier to convert—provided they had a good experience the first time around.

So how can you get customers to spend more, and more often? We have worked with many companies, and have noticed commonalities in the ones that have become most successful. Here are four things that we’ve observed.

A mindset to maximize Lifetime Customer Value

The internet has made it far easier for consumers to find great products and services (and avoid bad ones). Here’s an example. In the past, a bad restaurant in a hotspot could prosper by preying on an endless supply of uninformed customers. Now, thanks to websites like TripAdvisor, prospective diners can find out the truth. So, more diners go to the best restaurants and avoid the bad ones. The top-rated restaurants earn a larger and larger share of the money.

An empty restaurant. — Bad restaurants can no longer rely on uninformed customers to fill their seats.

If we ran a restaurant, we’d focus on delivering value—by cooking great food and making customers happy—in the firm belief that everything else would look after itself, because the truth would get out.

If your core value isn’t high, you’ll get almost no rewards until you become the best available option for your target market—at which point the rewards come rushing in. Because everyone wants the best. No one goes shopping for their second-best option.

So if you were running a restaurant, you’d want your food and service to be not just good but the best, and you’d want your employees to be not just happy but the happiest, because being best is disproportionately more fruitful than being second, third, or fourth. (Of course, the definition of best requires you to niche to a particular target market and a particular offering; a fast-food restaurant is the best at satisfying particular needs of particular customers.)

So we advise our clients to “become deserving of what you want.” To build a company that deserves to be hugely successful because it’s the best in the world at delivering value. To focus their efforts on delivering and improving every aspect of their service.

This isn’t just nice-to-hear fluff. Many marketers are attracted to short-term hacks and black-hat secrets. (If you ever go to a conference where one of the talks has a title that mentions sneaky tricks, notice how full the room is.)

Companies that win at conversion tend to be those that aim to build something great.

Use Net Promoter Score to improve customer happiness

How can you measure whether you’re turning visitors into raving fans? Net Promoter Score (NPS) can be simple and effective. To measure your raving-fan-ness, simply ask your customers the following question:

“On a scale of 0 to 10, how likely are you to recommend us to a friend or colleague?”

You then calculate the percentage of respondents who gave scores of 9 or 10 (NPS calls those people “Promoters”), and then subtract the percentage of respondents who gave scores of 0 to 6 (NPS calls them “Detractors”). The theory is that Promoters will grow your business via word of mouth and that Detractors will shrink your business via word of mouth.

Yellow balls with a wide variety of expressions. — Once you know your NPS score, you can track how your efforts translate to happier customers.

An NPS of +100 would mean that every customer would be a raving fan, evangelizing you wherever they go. An NPS of –100 would mean the opposite, that every customer is out there complaining. NPS isn’t just useful as a metric; it’s useful as a concept. An NPS of +100 is a guiding star that every team member can envisage and strive for.

Your raving fans are likely to make subsequent purchases, and they are likely to recommend you to their friends.

Upsell and cross-sell

In addition to selling more of the same thing, you can also increase Lifetime Customer Value by satisfying additional needs. In our article on gaining an unfair advantage over your competitors, we described a process to identify what your customers will buy from you, and how to explore which of those opportunities will make the biggest impact.

Let CRO permeate every aspect of a business

One of our clients sells sheds online. As we method market every new client, one of the team purchased a shed and set it up in his garden. We had many ideas during the buying process. One of the more interesting insights came once the shed was delivered to the front of the house. We discovered that the shed’s components would not fit easily through a standard doorway. They scraped the paint off the house’s door frame. Based on this feedback, our client redesigned all its sheds so that no component was too large to fit through a doorway. This improved the client’s customer feedback rating, which was already high.

Our co-founder with his finished shed. — In buying and constructing this shed, we made an observation that led to the manufacturer redesigning its entire range.

You might think that shed-testing is outside the remit of CRO, but you can apply your CRO skills to every aspect of your business and customers’ experience. We’ve applied CRO to offline advertising, explainer videos, product design, sales scripts, recruitment funnels, training programs—you name it, we’ve optimized it.

Boosting Lifetime Customer Value is a win for everyone

When you focus on delighting your customers at every turn, they’ll repay you with loyalty, recommendations, and repeat business—and you’ll likely have a better time too. (Celebrating happy customers is way more fun than placating grumpy ones.)

In the end, boosting Lifetime Customer Value is about making your customers feel right at home—so much so that they keep coming back (and bring their friends along for the ride).

There are few easier or more rewarding ways to grow your profits.

What winning looks like: “It’s well into the millions of dollars”

To see the impact of CRO on customer lifetime value, listen to the CEO of Earth Class Mail talking about working with us:

“If you measure CRE’s impact on lifetime value of a customer … it’s well into the millions of dollars.”

Doug Breaker, CEO of Earth Class Mail: The impact was “well into the millions of dollars.”

You can also read a full transcript here, or see our Case Study: How we more-than-doubled the leads for a SaaS company.

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