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The 6 Best Customer Retention Strategies to Maximize Customer Lifetime Value




Improving customer retention should be at the top of every company’s to-do list. After all, it’s much easier to keep existing customers satisfied than it is to find and attract entirely new ones. Customers who’ve already taken a chance on your company are a valuable asset and smart companies leverage that existing relationship. 

If you’re ready to explore how customer retention strategies can increase your company’s profits, Kissmetrics has all the information you need here. 

What Is Customer Lifetime Value?

Customer lifetime value or CLV is a metric that measures the amount of profit your company makes from a single customer. To estimate a customer’s lifetime value, you’ll need to do a few calculations. The first one is to average customer expenditure per visit. Then, calculate the average number of visits or purchases per year. Multiply those numbers together to get your customer revenue for one year.

You’ll then need to predict the number of years you expect your customer to stay with your brand. Multiply that by your original number. Depending on what you’re selling, those purchases will ideally continue for many years to come.

Why Is Customer Lifetime Value Important?

Studies have shown that it is more cost-effective to retain existing customers than to attract new ones. The higher your CLV is, and the more customers you retain, the more profitable your company will be. 

Ideally, you would want a customer to purchase your products for the rest of their life. That’s unusual, but not unheard of, depending on your industry and the products you’re selling.

How Can Customer Retention Help Maximize Customer Lifetime Value?

Your CLV is innately tied to your customer retention. If customers only use your services on average for around a year before churning, your CLV will be lower since it only encapsulates purchases made within that year. 

However, if you increase your customer retention and see people staying loyal to your company for longer, they’ll have longer to purchase your products. 

How Can Companies Increase Their Customer Retention?

Increasing your customer retention is crucial for saving on customer acquisition costs and optimizing your profit. There are various ways for companies to increase their customer retention, as we address in the sections below. 

Increase Repeat Customer Rate

If you’ve noticed most of your customers only use your service for a few months, you’re likely losing money since that won’t cover the customer acquisition costs. However, if you can encourage customers to pay for an annual subscription instead of a monthly one, you’ll likely increase your repeat customer rate since your customers will have more time to experience the benefits of your service.

One way to entice customers to sign up for an annual payment plan is to offer a discount when compared to the monthly plan. Even with the discount, ensuring that customers stick around for longer and decreasing your churn rate is still more profitable than having customers churn every few months. 

This is especially true if you’re constantly introducing new features or offer a comprehensive service plan. Often a few months isn’t enough for a customer to fully experience everything your company has to offer. Still, by staying in the plan for a full year, customers will be more likely to renew when their subscription expires. 

Increase Purchase Frequency

Another way to increase CLV is to require a customer to purchase your products or services more frequently. An example of this is rolling out your software in pieces and delaying the pieces. By separating services or features into separate packages, your customers will have to purchase your updates as they come out which increases purchase frequency.

Your company could develop and release a new version of your product each year. If you can improve upon your product, you’ll entice some existing customers to upgrade whenever you release something new, instead of waiting for their old product to break. 

Increase Average Order Value

Upselling is one of the oldest tricks in the book, and if you can routinely upsell your customers, their CLV will naturally increase. For example, if your company provides a streaming service, you could pre-set the boxes checked for additional channels. A customer would need to physically uncheck the box in order to not have extra channels bundled into their channel package.

Since the box is pre-checked, the customer may opt to pay the additional cost and complete the purchase. By increasing their average order value, streaming services increase a customer’s lifetime value. 

Use Email and SMS Retargeting

While many companies engage with their existing customers via email or texting campaigns, you’ll want to ensure that your messages aren’t regarded as spam. To do that, you should create valuable content for your customers. This can come out of customizing or personalizing your messages. 

It doesn’t have to be completely personalized, for instance, simply reminding customers how much they’ve saved by subscribing to your loyalty program might be an incentive to stay loyal to your company. Use the opportunity to explain the benefits of your company that your customer has already gained, instead of simply advertising your next big hit. 

With Kissmetrics’ email tracking tool, you can monitor the number of customers who open your email and click through to the URL you provided inside. That way, you can see whether your current email campaign is successful or if you need to tweak some things. 

Use Customer Accounts

When you offer customer accounts, you enable a personalized experience with your company. Whether that means offering occasional promotional discounts on products, adding them to your email list, or saving their information for faster checkouts in the future, the majority of customers will feel more engaged with your website if they can log in to their account. 

Customer accounts are also the perfect place to add recommendations based on previous subscriptions or purchases. Although some products are fine on their own, many require additional components. For example, if you are selling clothes and a customer has a shirt in their cart or has recently bought a shirt, your website could recommend matching pants or a jacket. 

Improve Customer Support

One of the reasons that customers churn is due to poor customer support. Depending on your industry, customer support might not be crucial. But if you offer SaaS or are in the tech space in any way, you should ensure that your customers have plenty of ways to contact customer service/success. 

Waiting on hold for several hours and having someone answer questions quickly and efficiently through a Live Chat can be the difference between a customer churning and staying loyal to your company. 

Additionally, ensure that your support team is knowledgeable and knows who to contact if they can’t solve a customer’s issues. Apple is well-known for having excellent customer support in the form of the Genius Bar in their stores, and that makes a big difference to customers who are already frustrated with something going wrong. 

How Do I Measure Customer Retention?

Kissmetrics can measure customer retention by monitoring churn rate, the opposite of customer retention. You can also look at the number of active users in a given timeframe and subtract the number of new users to see how many users are returning customers. 

You can also measure customer satisfaction through surveys like the Net Promoter Score or NPS. It asks customers a single question: How likely are you to recommend our company to a friend or family member? They’re given the options of one through ten, with one being the lowest score and ten being the highest. 

Anyone who rates your product one through six was likely dissatisfied with your product and is classified as a detractor, while anyone who ranked nine or ten is a promoter. Promoters are most likely to become return customers. After subtracting the detractors from the promoters, you should know the percentage of customers who plan to purchase again. 

How Do I Know Which Customer Retention Strategy Is Right for My Company?

Depending on your industry and whether you’re selling a product or a service, any or all of the suggestions above might be appropriate ways to increase your customer retention. With Kissmetrics, you can learn more about your customers, see what they want from your company, and rise to meet those expectations. 


Determining the right customer retention strategy requires you to know your customers and understand what they want. When you know your customers’ needs, you can work to fulfill them and continue to appeal to those users by reminding them periodically that you value their purchases. By retaining your customers, you’ll see an increase in company profits and decreased customer acquisition costs. 


Check out our website for more information on the metrics for monitoring customer retention and how we can help you improve. 



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