The Most Practical and Actionable Guide To Increasing Your Customer LTV You’ll Ever Read

(PS: You can also read this in Google Docs instead by clicking here)

One of the questions that Ron and I have been asked the most times during our Mentorpass calls or just generally on the podcast and newsletter is “How do I increase my LTV” or “How do I retain more customers”

That’s why we made this guide, which will take you through everything we’ve done to increase our customer’s LTV at Obvi, and our exact mental models around LTV and customer retention.

The document will start with a set of questions / mental exercise that can help you evaluate where you’re own store is lacking, and then we’ll jump into more practical and actionable content on how you can increase your customer LTV through:

- Community building
- Your mobile app
- Product launches and customer co-creation & co-innovation

- Rewards & loyalty programs

- Offline marketing

- … and lastly, email personalization that’s not vague like everybody else

Ready to dive in?

Let’s go!

Mental Models for Thinking About Retention/LTV

Ask yourself these questions to understand which levers to pull and whether you would come back if you were your customer

Building community

Most of you probably already know that building a strong community is one of the key levers to increasing the LTV of your customers.

However, surprisingly few actually tell you how you can get started on building your community if you’re starting from scratch - so that’s what we’ll do in this section.

Figure out your incentive-structure for joining the community

The incentive-structure for joining your community can be translated into what we call an “offer” in sales-terms. It’s the WHY.

For us, the incentive for people to join our community of now +60K people has been the following;

• Exclusive deals

• Pre-access to new product & flavors

• Join other people who are looking to solve the same problem(s) as you

• Get help, support, and guidance from admins + other members of the group

• Help in co-creating new products

If done correctly, these can all be very valuable things for your customers, as it’s an added value-adder outside of the product. As a result, they’ll feel more attached to your brand, and hence order more.

Drive people to join your community both through paid and organic - but also both online and offline

Alright, so after you’ve built your community - and your customers have bought for the first time - then what? How do you funnel them into your community

There are of course different ways to Rome, but these are the ways we’ve used to get people into our Facebook Community.

• Have a Evergreen Facebook retargeting ad running to existing buyers, thanking them for their purchase and asking them to join the community

• Include a sign-up button your post-purchase emails and explain to them what benefit they get out of joining the community

• Have a sign-up button on the thank-you page

• Have a QR code on the product inserts where they can easily scan and join the community

• Together with the product, we send a thank-you card where we also tell them about the community and ask them to join

Some crucial learnings we’ve gotten from operating a community

Building a community is one thing, but operating it is another thing. One of the key principles we’ve built and operated our community upon is transparency and trust.

Here’s what that means:

1) Whenever someone posts a negative comment or experience, we’ll let it be there - because it helps in showing that our community is not an echo-chamber where there’s only die-hard Obvi fans. No. We also want it to be a place where customers can tell us what they don’t like about our product, or where we can help them with any issues they may experience with our product. Oftentimes, we’ll also see that other community members help people who’ve had a negative experience out before our customer support rep gets to it.

This helps build authenticity, trust, and transparency within your community

2) We share everything we’re working on with our community. This means new products, new flavors, new retailers we’re opening in etc. If we have a problem with let’s say shipping, we openly go on camera and tell our customers. The key principle here is: People buy from people - so even though we as founders may not be the target demo ourselves, we can still show our faces and give the brand some personality. People love that

3) Give 10x more value than you receive, on a consistent basis: Even though you’re a DTC brand, there are still plenty of ways you can add value to your customers' lives outside of the products you sell. For example, we sell collagen - but we still provide our community with recipes and how-to-guides on a consistent basis, so they basically get a free “info-product” by being part of the community. Whether it’s a cook-book or a calorie-tracker or a sleep-guide - there are ways you can increase the perceived value of your product and community by leveraging “info-products”

The Obvi App: Everything our community gets + more

If you’ve followed us on Twitter and LinkedIn, you already know how bullish we are on the role of Apps in DTC.

… and one of the core reasons why is because your app can be one of the biggest LTV levers you can pull.

First, we’ll give you some stats so you know we’re not kidding. When we look at the Cohort of customers who buy through our app, we see a 10% higher AOV and our conversion rate on our app is approximately double of what it is on our online store

Not only that, but our price of re-marketing and re-selling to these customers are also close to none - because push notifications are free, unlike email / SMS.

Some of the reasons why having an app is crucial for increasing LTV is

• It’s the easiest and fastest interface to re-order products from. It’s literally 2-clicks, boom, and they’ve made their order.

• You have your loyalty-points inside of the app, and can use them to buy products. Likewise, we can send out personalized push notifications saying “Hey, you got $50 worth of rewards points - shop with us now”

• You basically get all the benefits of our community, but without having to see other peoples posts on your newsfeed too.

• When you push new product launches (which is another LTV play we’ll talk about in this doc too), then your app is the most important thing you have for building hype around the new product.

If you don’t have an app yet, then we’d urge you to put it on your most-important to-do list ASAP.

In the beginning, we thought building an app would be very expensive and time-consuming, but we actually built our app ourselves, within a week. And the price is $300 dollars per month - which is pennies compared to the value we get from it. Our app is made through Tapcart, which we believe is the most preferred option for Shopify merchants. If you’re not on Shopify, then I don’t know the best app provider for you

Increasing LTV through product launches

Last year, we launched 26 new products at Obvi. Yes - that’s a new product every 2nd week.

This alone helped us increase our customer LTV by double-digit percentages.

Why?

Because it fundamentally answers the question of “Why should I buy from you again” by offering them new and exciting products. In other words, we give them a good reason to buy from us again.

As mentioned, we want this doc to be the most actionable guide you’ll ever read on LTV, so below - we’ve outlined our exact process for launching new products.

Co-Creating with your customers is a cheat-code

Have you ever noticed how, when you cook food yourself - it just tastes so much better than if somebody else were to cook it?

It’s the very same thing that happens if you let your customers co-create with you.

… and that simply starts by asking them “Hey, what do you want? What flavors do you like, what products do you want, and what do you absolutely not want”

It’s a simple process, yet it’s still so overlooked - because too many founders can’t put their ego aside and just LISTEN to what their customers actually have to say.

… but, we promise you - if you can just ask your customers what products they are willing to open their wallets for, and you can deliver that too them - then you’ll make money

Involve existing and new customers in the process of building the product to create hype around the launch

When people have the feeling they are co-creating a product with you, they also want to be involved in the process as much as possible. So that’s what you have to do: Involve people in the product development process.

Also, build hype and excitement by telling them when the new product that they’ve co-created is launching, and how they can be the first ones to get it before it gets sold out.

Allow existing customers to sign up for exclusive offers or pre-access to the new product through the app and then push those push notifications to them

This is what we referred to earlier in the document when explaining how crucial an app is for launching new products. Owning your audience and being able to communicate with them at no incremental cost (through push notifications) is a massive game-changer

Rewards and loyalty programs

This is a slightly more adapted strategy, but nevertheless still super important to have in place if you want to increase your LTV.

It’s a basic point, so I won’t go too in- depth here, but the idea is simple: Build a reward/loyalty program where you incentivize loyal customers with free gifts, free shipping, discounts, or something else.

Offline marketing is a thing too

Sometimes, we think people actually forget that there’s such a thing as offline marketing too. Like, you can actually get your message across to your customer on the product or packaging too.

To give you an example, we’ve seen results from using inserts in product boxes where we include a flyer with a voucher for X amount off their next purchase.

We also write a thank-you letter where it’s either asking them to join the community (if it’s their first order) or asking them to check their loyalty points and use them (if it’s their second order)

In this way, we’re either directly or indirectly asking them to buy from us again

Another offline marketing strategy we’ve seen great results from is direct mail through PostPilot.

It’s super effective, and we’ve literally seen a 1000% ROI from sending flyers to our existing customers who haven’t bought from us in a while, to reactive them.

How to NOT do generic personalization in email marketing

When people think about retention and increasing LTV, they immediately think about email/SMS.

That’s also why we’ve put this section in the bottom of this doc, to prove to you that retention is not synonymous with email/sms. There are many other levers you can pull too.

… that being said, personalization in your email and sms marketing is a fundamental lever you can pull in order to increase your retention rate.

BUT…

Personalization doesn’t just mean including someone's name in an email.

Instead, personalization means tailoring the unique experience of the email-flow to the specific customer that is receiving the email. That means; showing them products based on their past purchase history, talking about problems that they have based on the product they’ve purchased (for example, Weight Loss product) , and also just leveraging other data-points to make them feel like the email is as personalized to them as possible.

With some brands this is relatively easy, and with others, you need to be a bit more creative.

At Obvi, we’ve created completely separate email-flows for each different type of customer so if you’ve bought a weight loss product, you are in a different flow than if you bought a collagen or a protein bar, or a multivitamin.

… because we know that these people buy the products for different reasons. Therefore, we can’t allow ourselves to give them the same generic experience.

Another prime example of personalization done well is this email from EasyJet (See it below), who included other data-points such as total miles traveled, first destination, number of destinations, etc to make the email 100% personalized to the recipient.

That’s personalization