If you’re caught up on HBO’s Silicon Valley, you know how misleading app downloads can be as a measure of success. Active users, or as we like to call them, loyal customers, are what it’s all about when it comes to app commerce (aCommerce – you heard it here first).
Don’t get me wrong; getting customers to download your app is a huge win. A download not only enables your brand to claim valuable home-screen real estate, but also grants you the opportunity to communicate directly with your customers anytime you want, on a device that they look at 50 times per day, on average.
What happens after the download is where app marketing’s #1 KPI comes into play – usage. Depending on the industry you’re in and what type of app you’re offering, usage can mean a number of things, and can be measured in a number of ways. In the case of aCommerce, usage means purchases and, more specifically, repeat purchases from loyal customers. So in terms of measuring long-term success, or usage, the best way to do so is by calculating your LCV, or Lifetime Customer Value.
Let’s talk about how to accurately measure LCV, and how you can go about increasing that value through effective app marketing.
I hate math, so luckily this isn’t too tricky of an equation:
LCV = Average app transaction amount x number of repeat transactions per month/year x average customer retention time in months/years
So if you’re a coffee shop and the average app transaction is $5 (I wish), your customers buy from you 10 times per month and usually stick around for an average of three years, calculating your customers’ LCV would look something like this:
LCV = 5 x 10 x 36, or $1,750
Being able to to calculate your customers’ LCV gives you the ability to determine how much you’re willing to pay in order to acquire a new customer. This information is crucial for any retailer whose business relies on repeat business, especially through apps.
And perhaps more importantly, speaking of apps, this also allows you determine how much you’re willing to offer in terms of discounts. This comes in handy when planning for things like coupons, daily deals, seasonal promotions, etc. Since these types of promotions encourage app usage and repeat buys, you’re essentially able to create a long-term, measurable, revenue-generating circle of customer life.
Increasing LCV through App Marketing
Based on the equation above, there are a few ways you can increase LCV: 1) get your customers to spend more per transaction 2) get your customers to buy from you more often, or 3) get your customers to stick around for a longer period of time. Sure, that may seem obvious but, when looking at the advantages of apps in terms of direct communication with customers, there are several specific tools that can help significantly improve one or more of these variables.
Push notifications allow you to send offers and special events directly to a customer’s smartphone or tablet, which creates a direct, limited-touch path to checkout. If used correctly, push messaging has proven to be incredibly lucrative conversion tool. In fact, according to a recent Localytics study:
- Push notifications boost app engagement by 88%
- 65% of users return to an app within 30 days when push is enabled
- 50% of users opt into push and find push messages useful
Keeping a consistent cadence of Daily Deals, which are featured on your app’s home screen, is a way to not only increase conversions, but also keep your customers coming back to your app. Consumers tend to get FOMO when it comes to deals they may be missing out on and, if they know your app features a daily deal, they'll have a reason to consistently open your app and hopefully buy.
An effective reward or loyalty program will help you address the third piece of the LCV equation: Getting your customer to stick around longer.
To build a successful reward program, be sure to keep in mind a few best practices:
- Communication is key - Beyond making your consumers aware that you have a loyalty program, be sure to clearly communicate the benefit and rewards that come with it, while also ensuring you’re driving customers back to your app.
- Make your reward program actually rewarding - What you offer to loyal consumers should be complimentary, impactful and reasonably attainable. In other words, don’t make your incentives too far out of reach or too worthless to care about.
- Personalize when possible - These are your best customers, so treat them as such by adding a personal touch to the reward experience. This could be as simple as using their name in your “Thank You” message or offering a shoutout on social media. Sometimes it’s these little things can make a big difference.
Start Paying More Attention to LCV
Lifetime customer value is probably the most important KPI to consider when measuring the long-term success of your app, and your business in general. It’s one thing to gain new customers, but quite another to keep them coming back for more.
With that principal in mind, apps serve as the perfect channel for customer retention. Given that people are constantly on their phones, the ability to communicate directly with them through things like push notifications and daily deals will only improve conversions, build loyalty, and ultimately increase your LCV.
If you’re interested in learning more about Shopgate’s marketing tools and services, which are designed to significantly increase LCV, request a personalized demo below.
Author: Andrew Chase
Marketing Communications Manager | Andrew is an experienced ecommerce marketing professional, with a background in content writing, event management and social media. Andrew is passionate about fitness training, live music, and Boston sports.