How Digital Payments Can Boost Customer Lifetime Value in E-commerce

E-commerce businesses strategizing for long-term success and financial stature focus on Customer Lifetime Value (CLV) as one of the prime metrics.

CLV is the total revenue or business a company can expect from a customer for the entire time they remain a paying or loyal customer.

It isn’t just about how much money a company can make from a customer but also acts as the foundation that can shape the success or failure of a business.

Businesses aware of their CLV get the chance to understand customer behavior, optimize marketing strategies, and foster loyalty.

The higher the CLV of a business, the higher its revenue and customer loyalty, and it sheds a positive light on product-market fit.

While there are several strategies to boost customer engagement and retention, this post discusses how digital payments help improve CLV in the long run.

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How do digital payments enhance CLV?

There’s so much digital payments can do beyond processing transactions. They can be a powerful tool for businesses that know how to use it. They are equipped with the capability to impact customer experience, loyalty, and ultimately customer lifetime value. Let's see how:

1. Enhanced Convenience for Customers

With all the options available in the market, convenience is the top priority of customers. One friction point can make or break the customer-business relationship and digital payments often elevate convenience.

Customers can seamlessly pay for a product in their preferred method - credit cards, mobile wallets, or even one-click payment options. Each of these methods is quick, easy, and effortless, elevating customer experience.

As a business owner, you must take all necessary steps to offer your customers an unmatched digital payment experience with fewer steps. By ensuring there are no unnecessary steps involved in the payment process, you will reduce friction, and encourage your customer to keep purchasing from you.

2. Accelerated Checkout Processes

Imagine having to manually enter every detail or dealing with a lagging payment interface. Both of them are a big ‘no’ in the books of user experience.

Fewer steps to complete a transaction alone wouldn’t satisfy a customer. An amazing payment process does not just end with reducing the checkout steps, every step in the process has to be efficient.

This means, less manual work, reduced wait time, a cleaner and simpler interface, and speedy checkouts. Merchants must improve the efficiency of the checkout process for successful transactions and encourage repeat purchases that directly contribute to CLV.

3. Boosting Customer Retention Rates

Businesses have to stand out of the crowd to be able to retain customers, so an unmatched digital experience is non-negotiable.

Quick, secure, and hassle-free experience from the beginning to the end of the checkout experience creates an unmatched overall experience and binds customers to the brands. Such a relationship is rooted in trust and fosters loyalty, keeping your brand at the top of customer’s minds, and encouraging them to return for future needs.

Business owners can come up with unique e-commerce payment strategies to increase customer retention rates.

4. Leveraging Data for Personalized Offers

Digital payments rely on data transfers and capture valuable insights and findings about customers. Business owners can use these unique findings to strategize their product offerings and customize products according to the choices and preferences of their customers.

Customized products that are in line with customers’ unique needs and interests can never disappoint customers but rather lead to unplanned purchases. The result is increased spending and retention.

Merchants can take a step ahead and craft personalized offers, promotions, and loyalty rewards and increase CLV with digital payments.

5. Building Loyalty Through Rewards and Incentives

If you want to create a stand-out experience, you may integrate payments with loyalty programs. When you reward your customers with points, discounts, or other benefits for making a purchase, you give them another reason to make more purchases in the future.

Loyalty programs in payments incentivize repeat purchases, keep your customers engaged, and turn them into brand advocates for life.

6. Driving Recurring Revenue with Subscriptions

Another way of creating personalized payment experiences is to use digital payment solutions to implement seamless subscription models.

Subscription models are designed for recurring billing which ensures predictable revenue streams for your business. It also strengthens your brand’s relationship with customers by constantly being at the forefront of their routine.

7. Reducing Transaction Costs and Fees

Traditional payment methods like wire transfers and other legal credit card systems have a higher price tag for transaction costs and fees.

Digital payments in comparison to the traditional methods bear lower transaction costs and are super cheap. Your business can use the saved costs to come up with strategies to enhance customer experience like better loyalty programs or exclusive discounts, which result in higher CLV.

8. Simplifying Return and Refund Processes

Another component of trust is an easy return and refund process. Digital payments play a huge role in the return and refund process by automating refunds to ramp up the process.

You have to offer your customers the simplest refund process they have ever come across and you can leverage digital payments to make the refund process a breeze for your customers. Such a positive experience increases the likelihood of future purchases.

9. Expanding Sales Through Cross-Selling and Upselling

Digital payments-backed data insights are a superpower for your business, not just to create a personalized experience but because they offer the means to enable upselling.

If you have visibility on your customer’s purchasing habits and patterns, you can use them to make further recommendations and create demand. Recommending complementary products or premium upgrades during the checkout process is a great strategy to increase the average order value and encourage customers to check out more products.

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Conclusion

CLV or customer lifetime value has a direct impact on a business’s revenue and profitability.

Research by Harvard Business Review shows that increasing customer retention rates by 5% increases profits by 25% to 95%. It is always better to find ways that retain customers than try to acquire new ones. CLV validates that customers are making repeat purchases, upselling, and are our brand advocates.

Digital payments experience is one of the proven ways, tools, and strategies that businesses can use to increase their CLV score. If you can make the most of the digital payment options available in the market and bring them to your ecosystem, you will create a seamless, personalized, and rewarding shopping experience that drives customer loyalty and long-term growth.

We also recommend choosing a payment solution provider that integrates well with both online and offline commerce tools your business makes use of. This will help you run integrated functions that can help fuel other strategies to boost CLV.

At Payby, we are equipped with the means to execute your CLV boosting strategies right from streamlined checkout experience to unique subscription models and loyalty programs.

We incorporate and upgrade our products and solutions to the latest innovations and advancements to be able to provide a payment experience that is second to none.

Boost your CLV and achieve sustainable e-commerce success with Payby. Get in touch with Payby today.