How to Increase Amazon Customer Lifetime Value

The importance of customer lifetime value (CLV) cannot be understated. It is the ultimate method to maximize revenue, increase repeat purchases, and develop customer loyalty. You will want to pay close attention to understanding CLV as well as how to determine your customer lifetime value calculation.

This article is for you if you are among the thousands of business owners struggling to maintain customers. Below, we address all of your questions regarding CLV on Amazon.

To apply this LTV calculation to a company, you can use the following figures:

The customer lifecycle in CLV Marketing is a five-stage process leading your prospective buyer down the funnel of becoming a loyal customer. Understanding this process is essential for knowing the customer journey.

Here are the five stages:

1. Awareness
2. Consideration
3. Purchase
4. Retention
5. Advocacy

Knowing these stages will enable you to select appropriate content for them. Writing content that is aware of a customer’s step in the journey will appeal to them.

Here is how each of those stages applies to your work as an Amazon seller:

The awareness stage happens when your prospective customer discovers your product. On Amazon, the discovery is typically found on a display ad or through the search bar.

Customers at this stage are expensive to attract. Seeing an ad or looking at you on search won’t guarantee a sale, as they have no reason to trust your product.

The importance of having optimized product listings showing the best side of your product is essential. Also, finding the most appropriate target keywords increases your chances of meeting the buyer’s intent.

The buyer’s intent refers to the goal of the buyer when inserting a search term. You know you’ve met this goal well if you have a solid conversion rate on PPC campaigns.

The best way to increase awareness is to try out different things until they work. Work with multiple PPC campaigns targeting various keywords.

You can use an advertising analytics tool to use historical data and see how others are managing their PPC campaigns.

The consideration stage is when your prospective buyer has decided your company is worth their time. At this point, they are reading reviews and collecting information to see if your product is worth it.

The customer won’t stay on Amazon for this, sometimes going to affiliate review websites. At this point, it is essential to note that retargeting efforts through Amazon Advertising are beneficial as a reminder.

Your product listing also should be incredibly detailed to crush any doubts and answer any questions. The goal of your listing is to make your product the most appealing offer available.

You typically see recommendations to invest in a content management system (CMS) for email campaigns and tracking customers. However, Amazon has strict rules against bringing buyers offsite.

So instead, create a social media presence and a website. Once they buy the product for the first time, you can refer your social media through Amazon product inserts. However, you cannot include any URLs or links offsite.

Provided the prior two customer lifecycle stages went well; you will have officially made your first sale (or conversion). Congratulations, but don’t start to celebrate yet; you’ve got a few more hurdles.

First, everything about the sale must go well. This includes having a good customer experience through fast shipping and a quality product.

If the customer returns your product, you will have failed this stage. If you want to avoid returns and reduce your order defect rate, here are some tips:

• Provide instructions for how to use your product, so your customer does not break it
• Request feedback so you can make potential improvements
• Ask the customer to add you on social media and reach out to the customer if they are willing to be on your email list
• Become an FBA seller, so the product gets there fast, preventing any reasons to deny a sale.

Good customer relationships are established through a fantastic first impression. Just like a first date, if you want that second one, you will need to earn that.

As an Amazon seller, this is the most challenging part of the customer lifecycle process. Why? Because Amazon disallows most forms of communication.

The Amazon Terms of Service will inform you that you cannot reach out to any customer unless they request it. So asking them for feedback more than once is disallowed.

The product sales period is a great way to add to your email list. But you cannot provide customers a way to trade a discount for an email.

Retention is best done through onboarding processes with personalized communication. But unless they have made an effort to follow you on social media or go to your website, Amazon discourages excessive follow-ups.

You also cannot encourage sales of your additional products unless you add them to the product insert. But if you add that alongside a review request, Amazon may suspect you of incentivizing reviews.

It is vital to use your resources to encourage people to follow your brand offsite. Otherwise, the retention process becomes much more challenging.

Once you get them offsite, you can encourage them to purchase Amazon products, personalize your communication with them, and provide customers direct support where they need it.

Once you’ve gotten to this stage, you know you’ve done it right. At this point, you have a lifetime customer who would recommend your products to friends and family.

However, most customers won’t do that without a bit of incentive. This situation is another reminder as to why it is crucial to establish an offsite presence.

Implementing a loyalty program is a great way to turn customers into advocates. But Amazon’s customer messaging won’t let you ask to join a loyalty program.

The only loyalty program Amazon is interested in promoting is the Amazon referral program and influencer program. After all, Amazon is a vast company that is pretty good at controlling the large flow of traffic it generates.

So if you want your customer loyalty program or referral program, you will need to bring them to your site and socials. Otherwise, you can continue to rely on Amazon for support on referrals and loyalty.

With any business model, CLV marketing is the exact strategy you use for the user experience. In improving your customer’s experience, all of the content you make must be useful for the customer.

CLV marketing efforts become useless if you stop providing something your customer can use. Here are a few areas you should focus on:

We’ve already mentioned social media in passing, but it is crucial. So many users access sites like Facebook and Twitter, using them to connect with different brands.

If you’ve been on Twitter long enough, you know that customers use that platform to express a poor user experience. If you don’t respond to customer service within minutes (sometimes), the customer will let you have it on a public forum.

Social media is a great way to provide tips and tricks about your niche online. It also enables you to announce upcoming promotions and give discounts to loyal followers.

It is also an excellent way to increase awareness of loyalty programs for later-stage customers. Offering commission (in the form of free products or literal money) is a great way to incentivize people to sell for you.

Good business owners understand the importance of establishing an email list. For some marketers, emails come with dollar signs in response. So if you want to make some money, it is on the list.

Getting into someone’s inbox is a remarkable feat. It means someone trusts you enough for you to become a staple of one part of your customer’s day.

You can respect that through personalized content that addresses them by name. People like to see their name in an email; it catches their attention.

When sending out a marketing email, it is essential to try and avoid being too hard with the sales—instead, focus on providing your customers with value.

Much like social media, this value comes from giving your customer helpful tips and providing free stuff. The free stuff can include things to buy, but those can be entirely optional.

Sending a customized letter to your customer might seem a bit old-fashioned, but it sticks out. Some emails get lost in the mix, while social media is easy to forget.

If you want to impact your customers, you sometimes have to think outside of the box. Direct mail can be a great way to remind people of your products and services.

You can tell a story or offer some advice in your niche. You can also thank the customer for buying your product, which sometimes gets lost in the mix.

If you want to shock the customer, you can include money. Having a $1 might seem counterintuitive (after all, you are trying to earn money), but you don’t want to be that brand that gets lost in the mix.

It doesn’t necessarily have to be money, but try and think of ways to get your customer thinking about your product. A good brand does memorable stuff.

If you manage to get them on your social media and eventually your website, you have an excellent opportunity to ask for a phone number. Being given a phone number is an admission of trust, so don’t ruin it.

Phone calls should be for a few reasons. You can check up to see if they enjoy any recently purchased product or see it as an opportunity for a sale. Bear in mind that you need to be blatant on what you plan on using the phone number for.

You might have broken the law if you say it is for a service call and offer to sell something to them. The US has a Do Not Call Registry that prevents people from calling in to solicit products.

You might also ruin the customer experience if they don’t want to talk to you. So schedule any calls around lunchtime or during the afternoon.

You cannot ask for phone numbers via Amazon. Doing so is a bannable offense. You also don’t want to share your number, as it is a great way to get incredibly busy.

Just because CLV has heavy benefits for an off-platform focus doesn’t mean you cannot leverage Amazon’s excellent tools. Here are some tips you can use to improve CLV directly on the platform.

The power of subscriptions hits on two aspects of customer behavior:

• The convenience of receiving regular subscriptions
• The ability to gain a discount

Subscription boxes provide proof of this, offering consistent growth with auto-delivery services. Having a subscription box takes the effort out of the customer’s hands by allowing them to get your product monthly.

Having a consistent subscription also reduces the chances that the customer may try similar Amazon brands.

Instead of creating a new product listing that includes multiple ASINs under one roof, you can now develop bundles of appropriately associated products. Bundles air relatively new on Amazon but remind us of the success of upselling.

You can consider them similar to the sales funnel example we used earlier when you upsell through bundles. The whole “if you are willing to buy this, how about this” situation.

Not everyone will go with the bundle, but including it as an option is an excellent method of increasing CLV through multiple purchases wrapped into one.

Amazon Seller Central has a section for display ads, brand ads, and video ads. These are great for targeting keywords on Amazon and should be used to get your first few sales.

However, Amazon also allows for offsite advertising on affiliate sites or other owned sites. For example, if you want to buy a new movie and go to IMDB, you might see an Amazon ad for that movie on the website. Amazon owns IMDB.

The power of retargeting is something like dangling a carrot. It is a reminder that the product is there but not so annoying that it overtakes their browsing.

The simple reminder increases your odds of selling. After all, they have already expressed interest in your product by reaching stage two and doing research.

Amazon Posts is a method of creating blog-like content on search results and competitor pages. The creation of these posts is accessible to all members of the Amazon Brand Registry, making it an excellent way to draw attention to your products.

Because these posts appear directly under competitor listings, it is one way you can poach products from your competitors. Because of the lack of control behind the post system, it isn’t suitable as a primary strategy.

Still, anything that enables you to take competitor customers for free should be utilized.

Another feature of the registry is Amazon Stores. These storefronts create a unique URL that enables you to provide a unique storefront on Amazon. Other than clicking on your brand name, Amazon does not usually drive traffic to your store.

The follow button located at the title section of the store enables people to track changes to your store. In this way, you can finally announce the release of new products through Amazon.

However, this is the only thing you can do with the follow button. There is no promotional opportunity here, making it less useful than using a personal email list.

Ideally, you will be able to use the CLV process to keep customers forever. While it might seem complicated, the overall process provides a clear picture of what you need to do to keep your customers.

While you can rely entirely on Amazon for this, it does limit your ability to engage with people. Not having a social media presence on a personal website is one way to ruin your CLV chances.

Using formulas will also help you understand how data applies to this. However, the limitations of CLV formulas are that they are static situations.

If you want a more dynamic dataset, DataHawk has an AI-enhanced Amazon report and automation tool tools that can provide you with real-time updates and changes. While CLV is helpful, our complete set of data will give you actionable information with little effort.