A blog about relationships

CLV, or customer lifetime value, quite a mouthful. If the customer lifecycle describes the different stages of your relationship with a customer, then CLV is simply how much revenue a customer generates for your business over the course of that relationship.

It is an important metric. It helps you recognise the real value of nurturing and converting customers, maintaining those relationships, and building loyalty. It is also a useful frame for building your email marketing strategy.

The terminology feels impersonal, though. Your clients should be more than a revenue figure attached to a time period. In email marketing especially, the goal is to build an almost intimate relationship with your subscribers, hence the push for personalisation. So let's put the marketing speak aside for a moment and treat this like an actual relationship.

Remember: it is not the size of your database, it is how you use it.

There are five stages in the customer lifecycle. Here is what each one looks like when you treat it as a relationship.

Reach, Putting yourself out there

Reach is step one: getting noticed. It is tough out there, and staying in every night is not going to cut it. Dozens of brands are competing for your potential subscriber's attention, and you need to stand out if you are going to stand a chance.

Your website and social media are your most important tools here. Search engine rankings and paid ads matter too. Anything that gets the face of your brand in front of the right people extends your reach and earns that first flicker of interest.

Acquisition, Get their digits

Once you have their attention, it is time for step two: acquisition, getting the digits.

They have made it to your website or social page. They have browsed around, read the "about us", maybe liked a post. Things are going well. Now you need to pop the question. You want to keep the conversation going, which means getting them into your database. How do you ask? More importantly, how do you get them to say yes?

Sign-up forms on websites and social channels are nothing new, but what often gets overlooked is the hook, the thing that gives someone a reason to hand over their contact details. You are asking for something personal, so there needs to be a good reason to say yes.

An initial discount on products or services for new members works well. A pop-up sign-up form on your website can also grab attention, but tread carefully, it should never feel invasive. Make the copy on those pop-ups genuinely engaging.

The example below from PipCorn is a good illustration of a non-invasive pop-up with confident, to-the-point copy.

Conversion, Make a lasting first impression

Conversion is where the real work starts. You have the email address, now it is time to slide into that inbox and make it count.

Subscribers need to feel valued. They trusted you with their inbox, and you need to earn that. Engaging content is not enough on its own; it has to be relevant, targeted, and consistent. You need to balance promoting your brand with actually adding value to your subscriber's inbox.

Conversion is where email marketing earns its keep. It is about getting the right content to the right people at the right time. Your subscribers should look forward to seeing your name in their inbox, and a solid welcome campaign is one of the best ways to convert a good chunk of new sign-ups quickly.

This welcome campaign from Under Armour, offering free delivery, is a strong example of content that nudges a subscriber towards a first purchase almost immediately.

Get the content right, promote your products and services with some tact, and your conversion rates will follow. From landing in their inbox to processing their first order, a modern love story.

Retention, Nurturing and building the relationship

It is official: you are in a relationship. You have an engaged subscriber who is also an active customer. The honeymoon phase will not last forever, and successful relationships take work. If you want to maintain and grow this one, you need to put in the effort.

Value-adding content becomes especially important here. Regularly take the focus off your products and services, and remind your subscribers why they connected with your brand in the first place.

A good way to do this is to highlight how your brand operates responsibly, whether that is socially conscious manufacturing, charitable work your organisation leads, or genuinely useful content like blogs or industry tips that land directly in their inbox.

Retention is also the right moment to bring in cross-selling and upselling. By anticipating what your subscribers want and need, you increase purchases and make your customers feel like you are actually paying attention to them.

Loyalty, In it for the long haul

Loyalty is the final and most rewarding stage of the customer lifecycle. In relationship terms, this is the "meet the parents" moment.

If you consistently deliver great customer experience and keep adding value, you will earn lifelong brand advocates.

At this stage, your subscribers are enthusiastic about you and will tell people. Give them opportunities to do that. Competitions and promotions that encourage social sharing are a great way to activate your most loyal customers. The campaign below from Youfoodz is a strong example of a referral programme that a loyal customer would actually want to use.

Here is where the metaphor starts to break down. The customer lifecycle is best understood as a cycle, not a straight line. The loyalty stage feeds back into greater reach, and the process starts again.

That said, not every customer relationship goes on indefinitely. Most have a finite lifespan and a finite amount of revenue attached. So how do you calculate CLV?

The basic formula: take the average revenue a customer generates over a given period and multiply it by the average time a customer stays with your business. Subtract the cost to acquire that customer, and you have your CLV. We will look at this in more detail in a separate post later this month.

In practice, calculating it accurately is not straightforward. You have to factor in marketing, sales, and the cost of getting your product to market.

Email makes this easier. You can track the revenue your database generates directly against the cost of marketing to them. That gives you a relatively clean way to measure CLV and plan your lifecycle strategy around it.

So put your brand out there. Just keep in mind that your subscribers are more than their CLV. Building relationships that genuinely add value to their lives is the most reliable way to move someone from reach to loyalty.

If you need help with CLV and email, get in touch and one of our account managers will be happy to help.