Growth tools for maximizing CLV in digital products & software
What is CLV?
CLV is a metric that demonstrates how much net profit your company can generate from individual customers over the average customer lifespan. The larger the CLV for your customer base, the more each customer will spend with your company.
Enabling CLV growth requires a clear focus on providing an exceptional customer experience, building brand loyalty programs, and earning renewals and repeat customers.
Calculating CLV growth
To determine your CLV growth, you must first determine the CLV. For calculating customer lifetime value for existing customers in your eCommerce business, you’ll need to track four key metrics. Here is what they are and how you can calculate them:
Total Revenue / Total Orders Placed = Average Order Value
Renewal Retention Rate
Simply divide the number of customers who renew at the end of the specified time period by the total number of customers who were up for renewal, then multiply by 100 to convert that number to a percentage.
(Lost Customers ÷ Total Customers at the Start of Time Period) x 100
Average customer lifespan
The average number of years customers continue to purchase from your eCommerce store
CLV = (Average Order Value * Renewal Retention Rate * Average Customer Lifespan) - Acquisition Cost
This provides a baseline number you can use comparatively to track growth over the long term and look for signs of customer churn.
CLV growth by the numbers
There are several key reasons you want to grow and retain customers, not the least of which is to generate recurring revenue and sustainable growth. Loyal customers spend more frequently and spend larger amounts when they do.
The numbers tell the story:
- Returning customers spend 67% more than new customers.
- When you acquire new customers, it costs five times less than attracting new ones.
- Increasing the customer retention rate by just 5% can increase profits between 25% and 95%.
Once you’ve established a relationship with your customer, the probability of selling them additional products or services, such as upsells and cross-sells, grows, too. The likelihood of selling a product or service to a new customer ranges from 5% to 20%, while the likelihood of selling to a current customer is between 60% to 70%.
Despite these benefits, about half of companies focus the majority of their efforts on marketing to new customers and managing customer acquisition costs, while less than 20% focus on retention.
How we help SaaS companies increase CLV
Renewal automation leverages the natural product lifecycle to focus on retention. Using key touchpoints in the customer lifecycle, we spur upsells and cross-sells while ensuring customers stay connected to your brand.
Renewal automation provides a series of auto-reminders and customer notifications about renewal dates based on tested and proven playbooks - no human intervention required. By proactively seeking renewals, you can improve retention rates. When payments are missed, an automated email will also be triggered to try to recapture accounts.
Automating these processes will save significant time, improve your bottom line, and help grow your CLV.
Besides using marketing automation for renewal, retention marketing tools also provide an automated cadence to continue to engage customers at optimal times in the customer lifecycle. Regular communication keeps your brand front and center and reminds customers of the value you provide.
Using AI and machine learning to inform campaigns, we can test various outreach efforts to continually optimize and improve results.
The Cleverbridge CLV Growth Engine empowers our partners to transform their business processes, allowing them to provide the rich, customized digital experience that B2B buyers demand. Without adding costly or time-consuming changes to your processes, we gather customer data and employ AI/ML to help manage the buyer’s journey.
This provides a better customer experience by engaging them with the right message at the right time and targeting the right person. This helps reduce churn and maximize CLV without adding headcount or management headaches.
Every time you lose a customer, it’s costly. Not only do you lose that revenue, but you have to spend additional resources to replace them - or win them back, and that’s just to break even. Reducing churn saves costs, improves your CLV, and grows your bottom line.
Automation helps you avoid losing revenue from churn. Our churn prevention tools have built-in automation, so you never miss a renewal date or opportunity again. Built-in growth tools can automate all of your renewals or prioritize customers to enable your sales team to focus on high-value customers while automating the process for lower-value or low-chance renewals.
You can fully automate renewals by using our self-service tools.
How do we partner up?
Currently, we work with our clients in three different ways.
Merchant of Record
With Cleverbridge Merchant of Record, we sell your digital goods under your brand as a reseller in 180+ countries. All you need to do is tell us what to sell.
Managed Service Provider
With Cleverbridge Service Provider, you are the Merchant of Record owning all customer contracts including payment details. You will have the same platform, just the legals are different.
For some of our clients, we run a hybrid set-up. This means that we looked at their expansion strategy and made a cost/benefit analysis to ensure maximum impact and sustainable market scaling, all the while contributing to bottom-line growth.