Digital Horizons

Maximising E-Commerce Success: Transforming Customer Lifetime Value with Personalized Marketing & Loyalty Programs

• James Walker & Brian Hastings

Share episode

Unlock the secrets to skyrocketing your e-commerce revenue as we promise to transform your approach to customer lifetime value (LTV). This episode is packed with insights on moving beyond generic newsletters to harness the full potential of post-purchase automation. Learn how to craft highly segmented and personalized communications using tools like Klaviyo and HubSpot, and explore the art of strategic remarketing. We reveal how to smartly exclude recent buyers from your usual lists and instead tempt them with irresistible cross-sell and up-sell offers that affirm their purchase decisions and ignite repeat business.

We also explore how loyalty programs can be a game-changer for businesses with diverse SKUs, especially those dealing with replenishable products. Discover the magic of tiered, points-based systems to foster customer loyalty, and see how pampering your top 1% to 5% of buyers with bespoke interactions and rewards can pay off. Inspired by a local energy drink supplier, we demonstrate how proactive customer service and laser-focused communication can elevate satisfaction and loyalty. Whether through personalized marketing, strategic remarketing, or targeted engagement, this episode equips you with the strategies needed to elevate your e-commerce success.

The Digital Horizons Podcast is hosted by:

James Walker - Managing Director WHD
Brian Hastings - Managing Director Nous

Speaker 1:

Welcome back to Digital Horizons. We're the channel for marketers, business owners and e-commerce entrepreneurs who want to know what tactics are working in digital marketing right now and what ones to try and test into the e-commerce store In this part.

Speaker 2:

We're talking about how to, I guess, generate more sales from your current customer base in a way that is, then again, as we've talked about in previous ones. We're just trying to look at each one of these different levers of the four. So we've started with traffic, then we went into conversion rate, then AOV and now LTV, and we're talking about if we can just increase any of these metrics by a small percentage, then overall, in combination, you're going to see a really large scale increase in your overall sales.

Speaker 1:

Let's get started. Yeah, let's get into it. I think customer lifetime value is usually the one people leave to last. They have some customers pouring in, but it is definitely one that small tweaks and changes increase revenue over a much longer period of time than just an addition to traffic in the current month. So it is really important Changes in tactics that you implement now can last a long, long time. Some of these strategies we're going to talk through more long-term nurture flows and programs that, once you implement them, they just continue to keep delivering for you. But let's get into it. We want to work through some tactics that you can implement right now that aren't too niche specific but it is more relevant for an e-commerce store. Yeah, 100%. So let's jump into the first one. Okay, Post Okay. Are we ready?

Speaker 2:

So the first one we're talking about today is post-purchase automation, and the way that we want to do this is make sure it's highly segmented. You don't want to just be sending out blanket stuff to your whole database hoping that it's going to buy unless your solution is for if someone's bought one of X, then everyone is likely to buy Y Then you want to make sure that you've got a segmented database list and you're tailoring your messaging and tailoring your automations based on if people purchase this product and from your data you can see they're more likely, or quite very likely, to purchase this product. Then you're making sure your recommendations are for the next step that makes sense to them.

Speaker 1:

That's right.

Speaker 1:

We need to see businesses move away from newsletter subscriptions where you're sending out a bulk email once a month and hoping that there'll be an offer appropriate to your entire database in there.

Speaker 1:

We need to see customized communications based off the time since purchase of the individual customer, not just when you get around to sending an offer email.

Speaker 1:

Of course you can drop in offers that are relevant to a business sale, but if you can create nurtures that are tailoring the product offer or the cross-sell or up-sell to that particular customer based off what they've purchased in the past, then you're going to get a higher engagement rate. You're going to get a higher conversion rate because you're looking at your data, you're seeing what your other customers have purchased in the past and then what they typically go on to buy or what's relevant to them to purchase next, and then you're offering that at the same time span as the other customers took to buy. So it takes a little bit of time to structure this the first time, but once it's in place and the appropriate communications are there, then it's set and forget effectively. You do need to keep optimising it, but marketing automation tool, whether it be Klaviyo or HubSpot, is going to continually look at each customer individually and send them the right SMS or the right email based on when the best next time is to receive that offer or communication.

Speaker 2:

Definitely. I'm pretty sure. I feel like I've seen that it's either coming or it has already been implemented, but Klaviyo is now using a lot of AI stuff for product recommendations.

Speaker 1:

Yeah.

Speaker 2:

Because all the data is already there in the software and I have a feeling that, where previously you'd have to look through your own Shopify data and start picking all right, cool if someone buys this and recommend this or include this product, but I believe that they've got quite a strong AI model in there now that is allowing you to basically just say, yep, you handle that side of things, working out what fits, when and how long after the email to send them out. If that's not currently already in there, I know that it's coming soon.

Speaker 1:

Yeah and I think that same data leads nicely into the next recommendation, which is remarketing to existing or past customers.

Speaker 2:

Definitely and I mean everybody. We've talked about this before I think it was in the first one for increasing your conversion rates. But you want to be sure you are remarketing, but then being a lot more strategic about it in terms of how you're segmenting your remarketing lists to make sure that your messaging is consistent with what stage of either the purchase journey they're in for your pre-purchase or post-purchase. And I feel like a lot of brands are probably not catering their remarketing as strongly or putting enough budget or thought into post-purchase remarketing. So that way you can be focusing messaging to bring customers back, make sure that they are purchasing again from your store, because they're going to be the easiest ones to convert.

Speaker 1:

And a very obvious tip is to make sure you're removing those who purchase from your remarketing for that product that they purchased and putting them into a remarketing list of cross-sell or up-sell for relevant products. You want the customer to know that you know they've already purchased. There's nothing worse than seeing continual ads from a brand for the product you've already bought. Thinking, don't you know?

Speaker 2:

Yeah, and I do think there are some ads that work right through. So your confidence, your trust, ads, shit like that. You want to confirm that they've made the right decision, so you want to make sure that, all right, you've shown them all these cool ads going hey, we're five stars, look at all our reviews. But don't stop that once they've purchased, because once they've purchased, you still want to give them the confidence that they made the right decision in completing that purchase.

Speaker 1:

So having that run through, but then obviously you don't want to be recommending that product again to that person who's already purchased because it makes you look stupid about the product and brand and then potentially promoting it on through continued remarketing, but knowing that they're an existing customer and advertising as such.

Speaker 2:

Yes, On to the next one, so adding a subscription service to your website. Now, not all products are suitable for this, Like I mean, if you're selling beds, you're not going to sell a bed on a subscription item. Our bed's going to break in a year so you should-.

Speaker 2:

It probably doesn't send the right signal that you will need a replacement in a short time frame, but there are going to be products on your website. If you're selling beds, you could sell bedding and that could be on a subscription, because that is something that is a replenishable product, and so I guess it's looking at. What is it? What is your customer base doing? Are they reordering? If so, why not get them onto a subscription? That way you can count on the revenue coming in. You can offer incentives for them to sign up for your subscription. It could be free shipping or a discount, but this is a good way to get locked in future revenue as well.

Speaker 1:

Absolutely, and I think those products that do run out in a period of time and that you know, after a certain two or three-month period it's time to push the reorder. One of my clients, who I've mentioned before, has an e-commerce store selling beard products, beard grooming products like beard oils and butters. They're cautious about doing a subscription model because a lot of their customers come back and buy different scents, different products that they don't particularly need. They haven't run out of the first one yet and he's concerned if he sets it on a set and forget subscription model that they won't particularly need. They haven't run out of the first one yet and he's concerned if he sets it on a set-and-forget subscription model that they won't get that sort of the average order value that they get from a customer because they'll know I've bought it once.

Speaker 1:

Every six months I get a new beard oil. So there are those factors there that if you are going to introduce a subscription model that you make sure you don't reduce your average order value by just getting the bare minimum offered. If you're going to introduce a subscription model, it needs to be suggesting additions to their subscription continuously and new scents to try or new products to add to their subscription, but it is going to be a good way of getting someone connected via convenience to your brand and just knowing that it's there and I can increase it or decrease it as time goes on, definitely.

Speaker 2:

Next one, which we don't. I mean, we get them and they probably annoy a lot of people, but SMS is something that can be used as a strategy to increase your lot and value, because it is another touch point that you are having with your customer base.

Speaker 1:

Yeah, my emails, especially in Gmail, are filtered between promotions. Actual emails I should be looking at and I think there's like the other one is junk or whatever. Updates yeah, updates, junk or updates. It takes a lot for me to look into that section. I sort of have to know what I'm looking for. But text message I need to see the notification get removed off my phone.

Speaker 2:

I need to press that and open it.

Speaker 1:

So, yeah, I'm definitely opening those a lot more than the others.

Speaker 2:

Yeah, and when done well, they can be used as a really good sales tool. I mean, for example, we're just talking about Domino's, they're great at it. I mean they must have so much data in their system as to when to send out a message to buy a pizza, and so when you are getting the message that that is the right time for you to purchase, it's definitely going to be a lever. But I think it's also something that you don't typically look back at, like when your emails. You might go back into your emails. You might see it might pop up again when you go back into your emails.

Speaker 2:

But I find with SMS, it's basically you get a lot of texts throughout the day Once it comes in and out.

Speaker 1:

yeah, unless you're going to take action right now, it's unlikely that you're probably going to think about it and go searching back through your SMS to go back and find that thing. Yeah, that's right, I have found another one using it. Well, as BCF. I don't really have a need for a portable battery-operated fridge. I don't go camping that much, but I'm so close to buying one. I'm just sort of three more text message offers away from getting one and I don't reply opt-out because I might convert soon.

Speaker 2:

Yeah, okay, from getting one and I don't reply. Opt out because I might convert soon. You like the reminder that you might want to buy this at some point?

Speaker 1:

I might want to get this stuff and I kind of like the BCF product. So I do want to be on that text message in case it's an offer that no one else is getting, but have you ever bought from one yet? No.

Speaker 2:

But I mean still, it's kind of working. Yeah, it's close.

Speaker 1:

It's getting me there. I'll have a fridge by the end of the year.

Speaker 2:

Next one is loyalty programs. So this is, I mean, everyone's familiar with them. If you shop at a lot of different brands, I've got them set up on their websites. Where you purchase things, you get more points, you get access to different things, and there's all different ways to set these up. But again, the whole goal of this is to increase, well, first of all, your average order value, because we talked about that. This can be a lever for increasing what people are spending on a single transaction. But I think the stronger part of it is building that customer loyalty to come back and shop from your store in the future, because if they're weighing you up versus a competitor, they've already got some points or there's some incentive there for them to come back and purchase from you versus somebody else, and that's going to potentially be the thing that brings them back to your store and helps them buy.

Speaker 1:

And I think it is going to be some product-specific platforms. Say, if you're selling a $400 pressure washer, someone's probably going to buy one, maybe two. Having a points-based loyalty program, you're unlikely to keep coming back and buy four, five, six or seven. It may not work there, but For those, you know, multi-purchase Replenishables yeah, replenishables and smaller value stuff.

Speaker 2:

Yeah, and then you've got like Meyer and shit like that as well. I think you need a lot of SKUs. Like if you've got a very wide range of items in your store where people do tend to come back and purchase, it can be valuable there.

Speaker 1:

That's key. Yeah, it's the wide range of SKUs and the potential, like you can have the points-based offer for BCF. Yes, and they've got really expensive stuff down to really, you know, low-cost stuff, but they've got a lot of options.

Speaker 2:

Yes, Whereas if you're looking at, say, a lamp shop, you're probably not going to spend that much throughout the year on lamps.

Speaker 1:

Yeah, like you might just be.

Speaker 2:

That's a good example. Yeah, like you might buy two or three, but it's not like, yes, I'm going to elevate to the top tier purchasing lamps from the shop.

Speaker 1:

Once I get a triple platinum at Lamps for Us, I can finally get the lamp haul I've been wanting.

Speaker 2:

So I guess it is obviously industry specific and depending on your customer base, but making sure that you are implementing something like this to bring people back and increase your customer loyalty there.

Speaker 1:

And look, we're not recommending multiple platforms here. There are plenty of options, especially in Shopify, for both the tier-based loyalty programs and the post-checkout automatic subscriptions. Shopify has one called Checkout Switcher. There's multiple options. You can test and try what works for you, but they do make it relatively straightforward to set up and add to your store. But they are tools that, once installed, you just go through the setup process and organize what offers and what things are delivered within that platform. It's quite straightforward. You don't need an external developer to do this.

Speaker 2:

Yeah, on to the final one that we're going to be going through today and this is one that I feel is definitely not used enough. Enough, but it is creating to further extend your loyalty program is looking at who your sort of top 1% to 5% of your customer base is, making sure you've got this segment identified and then having targeted messages that's being sent to them.

Speaker 1:

Yeah, absolutely. I think having the loyalty program with the tiered base point system from our last recommendation can help you easily identify that super top tier. But we're suggesting really lasering in on that top 1% to 5% in that top tier and coming up with custom offers, maybe more tailored ways of connecting with the brands handwritten notes in their packages that are sent out to them, asking them for feedback on new product development, early access to new products or new offers that others aren't getting, to really make them see that they are special and they are important to you as a brand.

Speaker 2:

Yeah, and an example of this is a buddy of mine. We both purchased this drink that is quite I don't think it's very well known in the market. It's one of those natural energy things and it's from a local supplier here. But the volume that we purchase, I feel we would have to be in that top 1%, if not the 1%, and we've been getting delays in shipping and so we put a buddy, sent an email out saying, hey, is there a better way to get this faster? Because it's not. This is like I'm waiting for two to three days to keep running out.

Speaker 2:

And this is obviously. It's a drink, so you're on a subscription and then the owner called and then put it on a four hour service to get to it so and so I think, from looking at that like just but I mean I guess this was reactionary, this was something that he had to send an email and say, oh look, hey, you know, can you do something about this? But I mean, he did place an $800 order for $4 cans, yes. So he was like it was getting a bit what is this stuff?

Speaker 1:

Licking cracker.

Speaker 2:

I will have to look a little bit addicted to it Haven't had a coffee in a while. This. I've actually switched from this from coffee to this about three to four months ago. It's called Savvy, if anyone wants to check it out. This is not an ad, it's just drugs in a can.

Speaker 1:

It pretty much basically is. But that's a great example. He could quickly identify you guys are top customers and then you need to react quickly, 100%.

Speaker 2:

And so he was and jumped on the phone and put it on a four-hour service for delivery, which I thought was really impressive, so actually taking that step to then, you know, it wasn't a great experience in terms of the slow shipping, but because he has a good product, he kept buying it anyway, and so being able to provide better service to your top customers, I guess, was just a good outcome, and imagine if you were identified as a top customer earlier.

Speaker 1:

Exactly, and that's what I was thinking.

Speaker 2:

Proactively 100%. And so if we looked at it and go, hey look, these guys are buying a shitload of my product, Maybe I could put this onto a better service. So that way they're telling everyone about it it we already are anyway.

Speaker 1:

You can even offer those top 1% to 5% of customers rewards for being advocates, like go and recommend this, or here's a promo code or here's a gift you can give others of trying this thing and you get a bit of a kickback as well, like a gym promotion subscription. Plenty of options you can offer them. But they're the five recommendations for our customer lifetime value, which is post-purchase customer communications through your marketing automation tool with personalized recommendations, remarketing to your past customers with best recommendations of what they should purchase next, subscriptions, sms, loyalty programs with the tiered base point system and identifying that top 1% to 5% of your customers and really connecting with them in different ways to the rest of your customers.

Speaker 2:

So I guess, if we are looking at the overall, so we're sort of here wrapping up everything that we've gone through over the last five weeks well past four and then this week is we are looking to increase our overall revenue coming through our e-commerce store. It started with our traffic and then we had our conversion rate and then our AOV and finally we are at our lifetime value. So the way we've been positioning this is we want to see a 10% increase of a traffic as a minimum is what we should be focusing on as a first point a 10% increase in our conversion rate, 10% increase in AOV and 10% increase in our lifetime value. Now, if you're a store that does all of these things and if you're only making, say, $100 a month, you're going to see a 46% increase in overall revenue. So, based on that, your $100 is now worth $146 per month. Now, if your conversion rate, a 10% increase that's not hard. Any of these things that we're talking about, that's a simple feat.

Speaker 1:

That's not going to be hard to do yeah, it's sometimes possible just within normal fluctuations, but if you can consistently keep it at 1.1 Exactly I mean this is not a day-by-day.

Speaker 2:

We're looking over, say, a 30-day, 90-day period. But if you can look at that and go, all right, cool, one percent to one point, one percent, I mean that's fucking. Anyone could do that average order value same thing. You were doing a hundred dollars, now it's 110. We've got some pretty strong strategies in place that we've talked about to get to the 110 lifetime value they're just again only going to spend. If your average order value is 100 bucks or 10 bucks, you need to add an extra dollar to this like. This isn't big numbers that we're trying to change, but a 46 increase in overall sales as a combination. That's big. That's going to have a massive impact on your overall sales. Obviously, you're not doing this with $100 sales. If you imagine, if you're doing $100,000 in sales, these small incremental changes are going to have massive impact on your overall sales.

Speaker 1:

And they don't negatively impact the customer. It's almost imperceivable. A lot of these tactics are supporting and helping and improving the engagement your customer has with you, so they won't be overly noticeable other than improving the experience for the customer.

Speaker 2:

Yes, so a lot of quick and easy incremental wins that improve the overall position 146% increase in revenue from 0.1 or 10% metrics is really compelling, and I'm starting to think I've forgotten what I'm talking about. All right, well, we might just leave it there. So, I mean, we've covered off a lot of content throughout the last five weeks. We are going to get back to our regular, I guess, scheduling of content, which is going to be more of a mix of content for, I guess, all types of businesses. We have had quite a strategic focus on e-commerce, especially leading up to this time of year, being that Q4 for many e-commerce businesses, the absolute most important time of the year for them to be performing. We felt that this was coming in, was going to be a strong time to do it, but check in next week and we'll have a new episode. Thank you, that's been Digital.

Speaker 1:

Horizons for this week. We'll be back with brand news later in the week. Thank you.