The formula for Customer Lifetime Value: For eCommerce websites, the shopping cart is a key focal point – the lucrative loot bag that signifies a converted visitor and a stream of revenue. Much of our marketing efforts are placed on increasing cart value and reducing abandonment. (And for good reason.) However, the shopping cart should never be put before the workhorse that is your website and the online experience it offers. The formula for Customer Lifetime Value.
Yes, it can be frustrating when your online visitors don’t buy right away. Empty carts don’t bring money into your business, after all. But all is not lost. Someone that doesn’t buy right away might come back, they might keep revisiting your site, and they might spend with you later down the line. If that is, they have an enjoyable experience on your website. The formula for Customer Lifetime Value.
So, why do we fall foul of the folly of putting the (shopping) cart before the horse, and what can we do to stop it?
Putting the basket before the buyer
When a customer proceeds to your online checkout area, it makes sense that you want to give them the best possible experience. But your visitors are valuable before they’re paying customers. Waiting until your online visitors have already bought from you before you’re willing to see their value is putting the cart before the horse. The formula for Customer Lifetime Value.
The problem is, too much emphasis is being placed on your conversion rates. Yes, conversion is important for eCommerce businesses. But focusing on your conversion rates can harm the perception of your performance and lull you into a false sense of success. The formula for Customer Lifetime Value.
Your conversion rates aren’t necessarily representative of how well your website is doing. They operate on the assumption that every website visit is a potential sale – but not everyone visiting your site is going to be ready to buy. What matters, then, is the impression you leave on these visitors. A smooth, memorable online experience could mean a conversion when that customer is ready to buy. The formula for Customer Lifetime Value.
The value of your visitors
Consider customer lifetime value or CLV. CLV is an estimation of how much profit a loyal customer could mean from future or repeat transactions. Customer lifetime value recognizes that customers can make more than one purchase and visit your site more than once – a fact that conversion rates can sometimes seem to disregard. The formula for Customer Lifetime Value.
Recognizing that visitors and customers have a lifetime value shows that every online visitor has the potential for a future transaction. If they click away happy with the service, information, and experience of your site, there’s no reason they won’t come back. Conversions are a game of time, loyalty, and great online experiences. The formula for Customer Lifetime Value.
So, instead of focusing on your conversion rate, the focus might be better placed on making your site as engaging as possible. By making a memorable and enjoyable website experience, you encourage loyal site visitors. And the more often people visit, the more likely they are to eventually convert into loyal customers. In other words, you put the horse before the cart, where it should be. The formula for Customer Lifetime Value.
Okay, but how?
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So, to put the buyer before the basket, you need to make a great first impression, and focus your attention on the experience. Great, but that’s easier said than done. There are several ways to make an enjoyable online experience, from clever UX design to great content and sharing opportunities. Here are three to get you started: The formula for Customer Lifetime Value.
- Make your site simple
If your site is messy or hard to navigate, customers aren’t likely to stay long, and they won’t come back either. So, make sure your menus are clear, offer a search bar, and make your content easy to find – whether that content is product information, contact details, or help. The formula for Customer Lifetime Value.
- Make engaging content
Providing great content on your site gives visitors more incentive to come back. Engaging content could come in the form of a blog about your niche or offering reviews of your products. It could be videos, pictures, or even a community forum. Remember, it also helps to make your content easy to share on social media.
- Allow customization
Some people like big text, some people like lists, and others still prefer tiles. Some people like phone calls and others prefer reaching you through live chat software. So, why not cater to these and make your website layout and service options customizable? You make your site accessible to more people, and you let customers browse and connect with your support teams the way they want.
Optimizing your eCommerce site for usability and offering great content is a great way to show you care about the customer, not the cart.
All good things to those who wait
It’s easy to forget that your visitors are valuable, even before they convert to customers. But all good things come to those who wait.
So, maybe it’s time to put a bit more focus on making a great online experience for your customers. Putting the horse before the cart in eCommerce means recognizing the lifetime value of your visitors, rather than obsessing over your conversion rates. The formula for Customer Lifetime Value.
The article was originally published here.
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