6 tips on how to increase SaaS customer lifetime value (CLTV)

SaaS customer success

6 tips on how to increase SaaS customer lifetime value (CLTV)


In an online business, you can easily pick out all types of numbers through which you can analyse your brand. You can calculate bounce rates, CTRs, conversion rates, and micro conversion rates – all of which are immensely important.

There is another metric, however, the importance of which far outweighs that of all the others. It’s called CLTV— the customer  lifetime value.

The following article is going to highlight the factors required to improve customers’ LTV for an ecommerce business.

The value behind customer retention

While there is nothing wrong with increasing your consumer base, it is essential to remember the real value behind customer retention and brand loyalty. A research by social analytics platform SumAll suggests:

“25% to 40% of the total revenues of the most stable businesses in the SumAll network come from returning customers. Even better, steady customers help businesses weather lean economic times; businesses with 40% repeat customers generated nearly 50% more revenue than similar businesses with only 10% repeat customers.”



Attaining brand loyalty is one of the most difficult assets for a company. Or at least, it used to be. We used to depend on customers having a good experience with our service or with our team. Now, brands can give them a great experience, even though most businesses still haven’t figured out how to do it.

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Why Lifetime Value (LTV) matters

LTV is the total amount of money you will receive from a buyer throughout their entire lifetime as a consumer. Let’s say you have an online store. If the average visitor spends $100 per year and does so for an average of three years, then the average customer’s LTV is $300.

Here are some of the reasons discussing why this is of such a significant value:

  • LTV affects every area of business

LTV matters because it affects all areas of business. Take a closer look at how the customer’s lifecycle virtually impacts every section of an ecommerce business.

customer lifetime value

Image source

In the diagram above, what do you see beyond the labels? Strategy outreach, development, product, customer service, management decision-making – basically everything that makes an online brand viable. LTV is part and parcel of it all.

  • Increasing LTV means higher profits

LTV shows you the path to achieve higher profits. The Marketing Metrics suggest the possibility of selling to a new prospect to be 5-20%, but the probability of selling to an existing customer is 60-70%. By maintaining focus on existing consumers, you are focusing on a strategy that gives your business much higher profit margins.

An ecommerce store provider, BigCommerce, writes;  to ensure a high profit, it is important to ‘influence your customers to keep coming back to purchase.’ This means that you would want your churn to lessen once you get a customer. Lower churn means higher LTV and a healthier business overall.

As a marketer, what can you do to level up your customer’s lifetime value? The following six ideas will get you there:

1. Publish engaging content to increase CLTV

A newsletter may sound like an old-school trick, but it is also a great method of improving LTV.

How so, you may ask?

Firstly, a newsletter keeps your company front and centre in a customer’s mind. How can they forget about you when you keep sending them regular offers via email? They can’t. And when they remember, they are more likely to return and buy.

Second, you can gain even higher value from each letter by segmenting customers. A targeted email to customer segments is way better than a generic email sent to a huge mailing list. Just having a newsletter, however, isn’t enough. Here is how you can make your messages truly valuable:

  • Make your emails worth reading

Few emails make it to the junk pile faster than a boring newsletter. Therefore, keep your emails interesting if you want to use it as an LTV growth strategy. “People will open good emails no matter how often you send them,” says Kevan Lee from Buffer app.

  • Test your subject lines

The best emails are those that begin with an attention grabbing subject line. By testing my email subject lines, Brian Kelly, the CEO of Kissmetrics, said that he was able to improve his open rate by 203%.


2. Focus on your SaaS customers to increase CLTV

SaaS CLTV cohort analysis


The Cohort Analysis chart shown above is a marketer’s new best friend. This script has a really useful function with an aim to expose which specific months in your customers’ lifetime are at the highest risk for churn. To instantly identify where you have a problem, you can examine the churn rate per cohort, and take immediate action by focusing on customer success efforts in that particular period (or before it).

Let’s say, if compared to other days, month-3 has a much higher churn rate, try talking with your consumer base entering month 3, and understand the problems they’re facing with your services. Fixing this may require product enhancements, or a better on boarding and support process.

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3. Send your fans an unexpected present

If your fans take an interest in what you’re selling and what you care about, it’s only fair for you to do the same. Take a look at their social profiles to see what kinds of things they really enjoy, and then send them something you know they’ll like. They will definitely talk about it on their social media platforms as well as in person with their family, friends and anyone else willing to listen.

General electric sent a batman book to one of their buyers, with the latter referencing the gesture in three widely shared articles.

SaaS customer success case study


Remember to not pick out something obvious when it comes to the gift you send. Do a little research and find something unique from what most people are talking about. (Unless they flat-out said, ‘I really wish to have…’)

4. Be wary of your rivals

One of the essential factors that determine the strength of your consumer bond is their view of your competitors. If they don’t perceive any of your rival brands to be better than you, there is a lesser chance of them churning.

Keeping an eye out for your competition is another important part of the SaaS marketing ideas. See what they’re doing right and wrong to figure out where you stack up against them. By calculating your rival’s next move, you’ll be able to adapt your SaaS marketing ideas accordingly and find something different to offer to your customers.

5. Add sticky features to your product

This one always brings up some conversation, including a term that is usually avoided in product discussions: User lock-in. The idea of adding metaphorical prison bars to your product makes it hard for them to leave, going against everything we have learned about making a great service experience.

Build features in your product that allow consumers to create their own data and add further value to your platform, making them reluctant to leave. For example, if it’s a service app, an automation testing tool like accelQ could enhance product features, with consumers building their own segments inside the platform.

Result: Adding sticky features equals lower churn rate, thus, increasing customers’ LTV.

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6. Solve a consumer problem

Go beyond your actual services and provide your customers something that makes their life easier on a regular basis. Portent did this with their content idea generator and Neil Patel did it with his website analyser on QuickSprout.

Try to understand your customer, find out what product would simplify their lives, and build it. When you are able to pull this off right, you make your buyer dependent on you for more than just your service, and that makes you almost irreplaceable.


Customer lifetime value (CLTV) is a mysterious beast…

The ideas above represent some of the most common yet effective ways to extend the length of customer lifetime and the amount of money each one is willing to pay.

The only difficult part is having a solid hold on LTV estimation, carefully tweaked to the characteristics of your company, and being able to achieve highly reliable, measurable results from the above ways to grow your consumer lifetime value.

About the author: 

Audrey Throne is a mother of a 2-year old and a professional blogger by choice. Throne is passionate about health, technology and management and blogs frequently on these topics.

Find her on Twitter: @audrey_throne.

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