use customer lifetime value to grow your brand

 How to grow your business with CLV

  1. Understand your business
  2. Get to know your customers/target market
  3. Calculate your CLV
  4. Use marketing strategies
  5. ­­SMS
  6. Push notification and mobile apps
  7. Popups
  8. Social media
  9. User Generated Content (UGC)
  10. Email
  11. retargeting

Understanding Your Business

In the business world, retaining, recognizing and rewarding your customers are very important for the growth and stability of your business.

Today, the market place is teeming with a myraid of brands. There’s a lot of information on how brands can reach and keep their target market. People switch brands as awareness, services and information needed are provided. The real issue isn’t merely attracting new customers but retaining them.

Knowing Your Customer/Target market

Statistics show that ‘repeat customers spend on average 67% more than new customers’.

It’s not new knowledge to marketers how expensive it is to bring in new customers. It is known that it’s easier and cheaper to build and maintain a current customer base than to go fishing for new customers who bring in less revenue. After all, the growth of a brand isn’t defined by the customer base alone but by the actual amount of revenue being generated.

Customer lifetime value is a highly underutilized and unappreciated metric. It’s a tool that proves very useful in building loyalty for brands among customers, bringing in new customers and even more. Most new businesses and brands shy away from CLV (Customer Lifetime Value) because of its seemingly complex nature and calculations. Not all business owners have business degrees but all wish for their brands to grow.

Customer Lifetime Value is used to calculate how much your business can make over the lifetime of your customers. In the textbook Marketing Metrics: the definitive guide to measuring marketing performance (Farris et al 2010), the authors defined CLV as:

‘Customer Lifetime Value is the dollar value of a customer relationship based on the present value of the projected future cash flows from the relationship’.

Simply put, the Customer Lifetime Value is a prediction of how much businesses can make, over the entire future relationship with a customer.

There are some key points to note about the Customer Lifetime Value.

  • CLV summarizes the total revenue and total cost related to a customer per time.
  • It is usually calculated per customer within a particular market segment.
  • It provides a net profit and loss summary of the customers’ total relationship with the firm.

Calculate your Customer Lifetime Value

Now we know what the Customer Lifetime Value system is. The next obvious questions are:

  • How do I calculate it?
  • How exactly will it help to grow my brand?

Let’s talk about the easiest way to calculate the Customer Lifetime Value of your business. One of the easiest infographics I have come across in understanding CLV calculations is from Kissmetrics.

If you take a minute to look at it, you should be able to do basic calculations on CLV.

understanding customer lifetime value
Source: Kissmetrics

If you thoroughly understand the diagram above then you will notice the basic rudiments of the Customer Lifetime Value. CLV basically ropes all the necessities stated below into an equation.

  • Average order value per time
  • Average purchases in a period of time
  • Average customer value over a period of time

These basic rudiments are very vital in growing your brand. This is because they direct you to the assumed weak areas and strong areas of your business.

The first step in using the CLV to grow your brand is carrying out a customer survey using information from sales.

You need to discover your most relevant customers. You can easily do this by separating customers into what is called POOLS. Your pools could be dependent on how much revenue your customers bring in or how often they make purchases.

It should be noted that both revenue and loyalty are important. For example, you can divide your customers into three categories;

  • Customers that spend over 1000 dollars weekly
  • Customers that spend 500-1000 dollars weekly
  • Customers that spend less than 500 dollars weekly
  • Customers that spend less than 100 dollars weekly

Your pools can go on and on. In doing this you are able to determine your loyal customers, those are the ones you should aim to maintain. It also helps you determine the customers who aren’t likely to come back and those that may need more incentives if they are going to become loyal. If you need to provide incentives you should do so.

Some great incentives are using loyalty programs whereby people get points for making purchases or even get points for inviting other customers. Getting enough points earns them a loyal status which comes with certain preferential treatments like discounts.

It’s also quite important to look for ways to connect with your customers on a deeper level. Usually you’d find that the customers who are willing to check on the website or even use the helplines are loyal ones and are willing to engage in future relationships. It’s essential that you make these platforms exciting enough for people to enjoy and interact with.

Use marketing strategies

During the customer survey, if your business relies solely on the internet or social media, you may discover that your social media platforms are not exactly reaching out to your target audience or your physical platforms such as flyers, billboards and one on one interaction are not reaching out to enough people.

The result of these surveys usually helps in understanding the method of approach to take, changes to be made, inclusions and where and who to invest in. Make the online platforms interactive and engaging; make every customer feel special and deserving of the utmost attention which you would give.

Marketing platforms which can be used

To gain the audience of your target market, you must understand each personality and how to approach them. Some of the useful marketing strategies that has proven useful over the years include;


As ancient as this might sound, it is one of the most effective marketing strategies. It has been proven that 90% of SMS messages are read within the first three minutes of receipt.

That is a large percentage that gives the assurance that the message you wish to pass across has been delivered. Even if so many people might not respond you are assured of delivery.

If your message is appealing enough, you would attract the loyal customers (those who did not just read the message sent but also replied within the first three minutes of receipt).

Push notifications and mobile apps

Mobile apps help in making it easier for customers to patronize faster and better. This is also a great way to make your customers react positively towards push notification.

Push notification is simply allowing your favorite site/ sites you approve of to send you notification when they have any news to pass across. According to the words of Anthony Blatner;

“our generation is now comfortable not only paying online but with mobile as well. Mobile eCommerce is exploding”.

Mobile apps now account for a third of all eCommerce transactions at a whopping $104 billion. And its growing more than 30% every year.

Mobile app has such a huge market and if properly utilized can bring in enormous profit.


So many people find web popups so annoying. What exactly makes it annoying?

If your popup is boring, unreactive and demanding, it would definitely be a turn off to anyone who visits your site. It can in turn make you lose customers rather than gaining them.

Popups help to curate emails which can be used for email marketing. Over the years people have developed creative ways to use popups. Websites such as and have interesting short quiz as their popups.

This helps them analyze their customers and visitors to know the type of people vising them and understand their needs better.

Source: Groupon
Source: Wayfair

Social Media

Social media helps any brand reach a wide variety of people for less. Understanding how to interact with your audience and making them see the need for you is all the convincing that needs to be done.

Once this is established, not only would you have acquired customers but you would have acquired a number of loyal customers. Sadly only a few succeed at achieving this.  Calvin Wayman, the founder of Cobbesmedia and author of the book Fish Out of Water, said the secret of social media is the four C’s: Content, Context, Consistency, and Connection.

Basically, you need to consistently produce high-quality content at the right time to the right people with the purpose of building relationships. 

Most businesses simply post about their businesses and expect everyone to listen, even though they are not engaging with others or giving before they try to take.

Investing in your social media strategy means investing time and/money in connecting with people you can help and truly care about building those relationships.

User generated content (UGC)

As much as you need to create awareness for your brand, it is important that you learn to appreciate those who already patronize you and talk about your brand.

User-generated content is simply when your users/customers generate your content for you. You can simply repost, retweet or reply their content. Big brands have come to realize the importance of UGC.

When you repost or show appreciation to your customers for talking about you, you make them feel extra special, and a customer made to feel special is a customer for life.

Coca-Cola implemented this perfectly when they came up with their name bottles. It increased their sale greatly and even made up for the decline they had in sale for eleven years. Does that not speak enough volume about the power of UGC to your sales?

Source: Digitaldoughnut

Email Marketing

Email marketing is one of the oldest means of reaching out to your customers. It is also one of the most effective and outstanding ways to reach your target audience provided it is done excellently. It has been proven that relevant emails drive in 18 times more revenue. And for every $1 spent on a well created email, you get back $38.

The sad thing is so may people fail at email marketing. As much as email marketing can help, it can also be a big flop. If your email is basically demanding and does not include engaging and enlightening content, it is likely to be a flop.

One important thing to note when creating content is it must continuously appeal to emotions in as much as it is highlighting its importance and need.


Retargeting is a marketing tactic where you display your product again to people who have visited your eCommerce store before.

Have you ever visited an online store to look up some items and their prices, only for you to keep seeing the ad of products you looked up on the previous website on another website? That is retargeting.

Understanding that when people see what they like over and over again, they have the tendency to buy the product. Retargeting helps to bring back people who visited your store previously but did not purchase anything.

People who are shown retargeted app are 3 times more likely to visit your site that people who have not had any form of encounter with your business.


In conclusion,

Go overboard with all the platforms but make sure you target the right audience and the right customers. Don’t spend too much money on customers that the CLV has shown are not reliable.

Customer complaints systems are very helpful too. Customers find that brands that are willing to listen to them and attend to their needs are reliable.

So keep your hotlines, websites and other social media platforms active especially for complaints and attend to them too. In no time your brand would become the one stop for reliability.

 It is highly important that you benchmark your efforts.

After focusing on the right advertising and the right customers, you need to know the progress you’ve made. It’s highly important that you benchmark your efforts. Experience has shown that tastes change over time.

People change and certain things never remain in vogue. This is another reason why you need to calculate your CLV regularly.

Most times CLV predictions go wrong because brands forget that people aren’t stagnant. Needs change, people change and as such brands must keep evolving to remain relevant.

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