The importance of customer lifetime value in e-commerce

Nakoa.Digital – The importance of customer lifetime value in e-commerce

Customer lifetime value is critical to the success of e-commerce businesses. It helps drive long-term profitability through customer loyalty, personalized experiences, upselling/cross-selling, data analytics, and excellent customer service, both on owned webshops and marketplaces.


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What is Customer Lifetime Value?

In today’s competitive e-commerce market, it is critical for companies to maximize the customer lifetime value (CLV) of their customers. CLV is a metric that indicates how much revenue a customer generates over the course of their entire relationship with a company. By keeping CLV in mind and aiming to increase it, companies can achieve long-term success and increase their profitability.

Customer Lifetime Value and Customer Retention

An important aspect of focusing on CLV is the importance of customer retention and repeat business. By maximizing customer lifetime value, companies aim to build long-term customer loyalty. This enables them to generate recurring purchases from existing customers. This is more cost effective than acquiring new customers. By building strong customer loyalty and creating a positive experience, companies can encourage customers to buy from them regularly, recommend their products or services to others, and possibly even become brand ambassadors. This not only increases the CLV of these customers, but can also lead to increased customer acquisition through positive word of mouth and recommendations. Companies should therefore consider long-term customer retention as a key part of their CLV strategy and continuously work to improve the customer experience and delight customers. By understanding and responding to their customers’ needs and wants, companies can build long-term relationships and increase CLV over the long term.

Improving Customer Lifetime Value

To maximize CLV, e-commerce businesses should consider the following tips:

  1. Encourage customer loyalty: Even a small increase in customer loyalty can have a significant impact on CLV. Companies should focus on increasing customer satisfaction to build long-term loyalty to the brand and the company.
  2. Provide Personalized User Experience: Personalizing the customer experience is an effective way to build strong relationships and strengthen customer loyalty. By targeting customers individually and providing relevant content and offers, companies can increase customer loyalty and ultimately boost CLV.
  3. Use upselling and cross-selling: By offering relevant upsell and cross-sell opportunities, companies can increase the value of each customer transaction. By offering additional products or upgrades to their customers, they can increase the average cart value and thus increase CLV.
  4. Data is king: Understanding customer behavior and preferences is critical to product development and marketing strategy. Companies should collect and analyze relevant customer data to better tailor their offerings and communications to their customers’ needs. This also helps to increase CLV.
  5. Customer focus as the top priority: excellent customer service builds trust and promotes long-term customer relationships. By ensuring that their customers are well looked after at all times and that their concerns are taken seriously, companies can increase customer satisfaction and thus increase CLV.

The Customer Lifetime Value in Marketplaces

While capturing customer lifetime value is generally easier when selling directly through your own web store (D2C) due to the better customer database, there are also ways to increase CLV on marketplaces. Through strong brand and product presentation, top-notch customer service and the targeted use of remarketing opportunities, companies can also increase customer lifetime value on marketplaces and build long-term customer relationships.


Overall, Customer Lifetime Value is an indispensable tool for e-commerce companies. CLV can be used to measure success and increase long-term profitability. By using CLV to guide their strategic decisions and continuously working to improve CLV, companies can strengthen their customer relationships, increase revenue, and achieve long-term success.

Need help?
Patrick is our Head of Retail Media. With many years of experience in selling on marketplaces, he advises you on marketing and content. He also supports you with the right marketplace setup to accelerate the growth of your business. Contact him by mail or by phone at+49 89 215 276 60.