Efficiency Leads to Higher Customer Lifetime Value

When a customer makes a purchase from your eCommerce site, a door opens. You now have the chance to form a life-long relationship with this customer through repeat purchases and visits. The tricky part is how to go about building this relationship. In today’s blog, we’ll look at how using a quality enterprise resource planning software (ERP) allows you to be more efficient, ultimately, creating a more enjoyable experience for your customers and increasing their Lifetime Value (LTV) for your company.

The Cost of Acquiring vs. Retaining Customers

The customer is at the foundation of any business. They’re the source of your revenue, which also makes them the source of your site’s livelihood. You can think about your customers in two ways. The first is new customers, which have a Customer Acquisition Cost (CAC) attached. Then there are current customers, which have the potential to help you increase their Lifetime Value (LTV) through the right steps.

But too often, the focus of investors and marketers is placed on acquiring new customers, who spend large amounts on advertising, product placement, and customer analysis to try to bring in new shoppers or generate fresh leads. New customers are important – but retaining the ones you have and turning them into repeat customers is among the best strategies to help your eCommerce business grow. Did you know that on average it costs 7 times more to acquire a new customer than to retain a current one? That’s why it’s key to make sure you’re balancing between acquiring and retaining to maximize opportunity and growth.

How to Calculate and Drive Customer LTV

Ask the Right Questions

Because LTV is a multi-faceted idea, it isn’t the easiest to define. You can start by looking at a few items. What’s your customer retention rate – have you been losing or gaining customers, and at what pace? You can also examine your discount rate used to bring in new customers. How much of that will you have to make up later? Keep your profit margin in mind as well. Are you comfortable right now? Has it been fluctuating, and if so, in which direction? Essentially, you’re finding out how much money a customer gives you throughout their “lifetime” with your company.

Once you have a feel for where your average LTV stands, you can start taking steps to give it a boost. Having modern systems in place, like Acumatica Cloud ERP and Magento Commerce, allows you to quickly add efficiency to your eCommerce site and drive higher customer LTV.


Good eCommerce sites often track both customer purchases and purchase frequency to allow them to advertise specific products to shoppers, and you should too. Quality ERPs store and offer the data necessary to make the shopping experience more personalized for each user; offering them relevant products, potential upsells, cross-sells, etc. In theory, the more personalization you can offer, the more sales you’ll get.

Product and Service Quality

Don’t underestimate the power of your products and services. If you sell a quality product, customers remember that. And if your customer service is rock solid, shoppers will trust you. Making sure you’re doing your best to provide the customer with everything they want and need leads to loyalty.

Multi-Channel Customer Service

Consistency is key to customer service. If someone emails you, will they get a different experience than if they called, or used a messaging system built into your site? For those of you with both digital and physical presences, make sure there’s consistency between the two. If a customer is unhappy with a product they ordered online, they should be able to return products hassle-free at a physical location, and vice-versa.

Social Engagement

Your brand helps define your entire company. Many brands spend years to get a good customer association – for instance, “safety” is often tied to Volvo cars. Use social media to get the word out about who you are, what you’re committed to, and what you offer. Research where businesses like yours should be branding, and what voice you should be projecting. And interact positively with your followers when you can – it helps to humanize your brand.

Loyalty Rewards

People love a good reward. When you create a quality loyalty program that offers worthwhile rewards, customers feel incentivized to make repeat purchases. Quality ERPs are able to pull purchase data and trends to help you target potential rewards relevant to each customer. This personalization drives LTV in customers, who get customized loyalty reward programs sure to keep them coming.

Offers and Promotions

There’s a reason Black Friday is such a big day for eCommerce: people love a good deal. The amount each site can discount is different based on finances, but it’s much more enticing for a customer to buy an item when they know they’re getting a good price, doubly so if it’s only available for a limited time. And using an ERP, you can store customer data to later use toward strategies that turn potential sales into guaranteed ones. For example, a customer abandons their cart. A good ERP can automatically email the customer later to remind them of their cart, and potentially finalize the sale with offers or discounts.

Positive Return and Exchange Experience

Your shoppers should have a positive experience whenever they return or exchange a product. It reflects on your brand and affects the customer’s decision on purchasing from you again. Automate the return and exchange process to keep your customers informed and make your operations fast.

Adhering to Precise Delivery Times

Great shipping is now the standard among the top eCommerce sites. When customers expect a package to be there by a certain date, it needs to be there. Never underestimate how much a late shipment can change a customer’s view of your brand. Give the customer accurate shipping prices, real-time tracking data, and email updates along the way so your customer is in the know.

Fast Shipping and Order Tracking

Getting a package is one of life’s little treats. How many times have you ordered something you’re excited about and then spent the next few days checking shipment tracking and keeping an eye on the door for the delivery person? Having these features allows customers to know you can be trusted to deliver a quality product on time.

Communication About Status

One of the best things any brand can do is to have an open dialogue with customers. If a product will take longer to ship than normal, customers should know about it. If you have a great new product coming out, customers should know about it. If you’re implementing new personalization features, customers should know about it.

Use An ERP To Drive Efficiency And LTV

When you’re running an eCommerce business, efficiency is one of your closest friends. Keeping your front and back offices connected saves money and time, hence why Acumatica Commerce Edition has become so popular. But let’s look at how ERP can create further efficiency, and in turn, raise your customer LTV.

Inventory Management

One of the big advantages granted by ERPs is easy inventory management. To drive LTV, connect your eCommerce site with your ERP to make sure inventory is accurate and predictable. The right ERP can tell you important details about purchasing trends, allowing you make calls on what to stock and how much to order. It’ll help you make sure inventory level is in the right place – you don’t want to go out of stock on popular products, but you also don’t want to tie up capital in storage.

Returns and Exchanges

When looking at how to go about returns and exchanges, you need to focus on customer ease. Return processes can be frustrating for a customer, especially if they feel like your business isn’t on the same page as them.

You can create this ease by making sure your return process is consistently strong among all your channels. Customers should get an easy experience returning products no matter what avenue they take. And make sure you’re using your ERP to carefully watch inventory management – damaged and malfunctioning products can take up warehouse space and company funds.

Your ERP can also help with all the different kinds of returns businesses see, whether that’s cash refund, store credit, partial refunds, product replacements, and/or the exchange of refurbished products.

Order Fulfillment

There are three big components that go into efficient order fulfillment: the Order Receipt Window, the Order Processing Window, and the Transportation Window.

The Order Receipt Window is simply how late you fulfill orders each day, and this can be a real advantage. If you and another company or operation are selling the same product, but your window closes at 5 and theirs closes at 6, that’s an extra hour of profits for the other guy.

The second component, your Order Processing Window, plays into the first. When a customer places an order, gears are set in motion to get that product on its way. But how long does it take to get the product ready to ship? With a great ERP, you can significantly shrink your Processing Window, which widens your Receipt Window.

The last component is the Transportation Window, which is the length of time it takes after the order is processed for the product to reach the customer. When you shorten your Order Processing Window, this also allows for you to potentially save on bulk shipping costs, because you’ll be able to get more packages on each truck. For those that don’t need much hands-on with their inventory, look into a Third Party Logistics (3PL) provider that can handle that end of the business for you – this can often save you money by decreasing your Process Window even further.

The more items moving out the door, the less you’re spending on storage. ERPs can take care of this for you, monitoring your inventory stock and using purchasing metadata to track what you should stock up or down on. It can then automatically order items, saving you the time, money, and hassle of inventory management. By connecting your front and back offices, nearly every step of order fulfillment is automated for you, ultimately leading to a fluid, faster customer experience.

Customer Service

This may be the single most pressing thing facing your customer LTV. Did you know 89% of shoppers stop buying products from a site after having a bad customer service experience? Juxtapose that against the 70% of customers that continue to shop with you if you resolve their complaint in their favor – 50% of those customers even go on to refer your business to their friends. So take the time to evaluate your customer service experience, and look to see if a Customer Relationship Management (CRM) solution in your ERP could help optimize your customer service process. Good ERPs will also allow you to keep track of how your customer service is actually doing by measuring customer performance and complaint escalation.

Customer LTV is directly tied to customer treatment. Having top-notch quality customer service, an easy return process, an automated and visible fulfillment system, etc. are all afforded to you by connecting your eCommerce site to a quality ERP. These tools drive your LTV by creating efficiency, leading to happy customers that return to your site.

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