Do you know what Customer Lifetime Value means?
LTV is a hot topic in retail businesses, implying a greater focus on retaining customers rather than acquiring new ones. Analysts have compared the cost of acquisition with the average profit each customer brings over a period to emphasize the need for an LTV-centric marketing strategy.
But what does it entail for those owning membership websites?
Does LTV have the same impact on revenue and acquisition costs?
Is it better to focus more on earning through existing customers than acquiring new ones?
With these questions in mind, we at TeknoFlair embarked on a journey to identify what LTV means, how it can impact membership websites, and the 16 best ways to improve the lifetime value of a customer in a membership site while keeping the concept of member churn in mind.
If you’re curious about what member churn means, we’ve laid out a detailed and separate guide—make sure to read it.
So, let’s get started.
What is Customer Lifetime Value?
Before we go any further into how to improve customer lifetime value, it’s essential to understand what it means.
Let’s start with a definition—Customer Lifetime Value (LTV) refers to the revenue earned from a customer over a certain period.
Confusing, right?
Let’s simplify it with an example.
Imagine you’re a membership site owner providing insights to your readers, and you have a premium membership tier as well. When a customer buys your premium tier for only a month and forgets about it for the rest of the period, the lifetime value of that customer would be equal to that one-time purchase.
What this means for you is that you’ll have to put more effort into acquiring new customers to generate more sales.
Now, imagine the dreadful process of constantly emphasizing the value of your membership site, only to get one-time buyers—it truly hurts, as you end up burning cash on excessive marketing.
That’s why improving the LTV of existing customers matters more than acquiring new ones.
Still not convinced? Let’s compare them in-depth for a better understanding.
Existing vs New Customers – Why Improving LTV Might Sound A Good Idea?
For a better understanding of why improving LTV matters, let’s do a detailed analysis of what’s better—acquiring new customers or keeping existing ones happy.
We’ve developed two scenarios to help you analyze where to focus your efforts the most. For utmost clarity, we’ll take retail stores as an example.
1st Scenario:
You’re selling athletic shoes and have run ad campaigns costing $700 to reach your target audience. Now, considering the best-case scenario, you’ve successfully generated 100 leads. However, not all of these leads will convert into buyers.
Let’s say you’ve successfully converted 20 out of 100 leads using the TOFU-MOFU-BOFU marketing strategy. This means either burning more cash on ads or putting extra effort into outreach marketing. Finally, these 20 customers buy your product once and then disappear.
What would be your profit?
For example, if your selling price is $50 per pair of shoes, selling 20 pairs would generate $1,000 in revenue per month. But that’s not the net profit, as net profit equals revenue minus the cost of selling your product.
If we consider only the initial marketing expense of $700, plus other costs such as hiring a team to manage your business (even outsourcing to a freelancer for $200), and the cost of acquiring the product (let’s say each shoe costs $20, totaling $400 for 20 pairs), we get the following calculation:
Net Profit Calculation:
Net Profit (NP) = Revenue – CGS
Where:
- Revenue = Total sales in a certain period
- CGS = Total Cost (Marketing + Wages + Product Acquisition)
Applying the formula:
NP = $1000 – ($700 + $200 + $400)
NP = $1000 – $1300
NP = -$300
That’s already a $300 loss, assuming we don’t make additional sales from these customers.
That’s huge! Now, let’s move on to our second scenario.
2nd Scenario:
Assume everything remains the same, but instead of losing these 20 customers after their first purchase, you improve their user experience by implementing LTV protocols and effective strategies to keep them engaged and encourage repeat purchases.
For example, if these 20 customers each buy two additional pairs for their family and friends because you offered a discounted price of $40 per pair, your total sales increase to 40 pairs—without any additional acquisition costs.
Now, your total revenue is $1,600. Let’s calculate the new NP:
NP = $1600 – ($700 + $200 + $400)
NP = $1600 – $1300
NP = $300
Do you see the magic?
Instead of acquiring more customers, you’ve increased your profit by selling more to your existing ones. That’s why focusing on customer retention is more important than constantly chasing new customers.
This is also backed up by an incredible insight from Bain, “A 5% increase in customer retention can lead to a profit increase ranging from 25% to 95%”.
Now, if you compare Customer Acquisition Cost (CAC) with the revenue earned from a particular customer over a period, you’ll get the same results.
This establishes that retaining and profiting from existing customers is a far more valuable strategy than exhausting your efforts on acquiring new ones.
Let’s explore why LTV is crucial for your business growth.
Why is LTV Important To Your Business Growth?
We’ve already discussed how LTV helps you measure the economic benefits a customer provides. Now, let’s explore why it’s so important for your business.
In general, LTV has proven to be one of the best strategies for increasing sales. Whether you’re a retailer, SaaS service provider, or membership website owner, improving LTV can skyrocket your sales without incurring additional costs.
But here are other factors that make it a crucial metric for your business:
- Predictable Future Revenue: Data analysis is a critical aspect of any business. By analyzing customer behavior and buying patterns, you can easily estimate or predict future revenue. With an LTV strategy, you can forecast future revenue without adding recurring costs, helping you streamline your expenses over time.
- Profitable Customer Retention: While acquiring new customers might seem like an attractive option at first, engaging with existing ones and increasing profits by retaining them through effective programs can yield greater benefits for your organization. Additionally, retained customers can become loyal advocates for your brand.
- Better Allocation of Resources: Once you identify what brings in the most profit, you can allocate your resources accordingly instead of spreading them across your entire business. This allows you to cut down on excessive and unnecessary spending on ads or hiring teams to manage customer acquisition.
- Improved Customer Experience: As we’ve established, LTV revolves around engaging with existing customers, understanding them better, and identifying what aspects they dislike the most. This holistic approach helps you refine your offerings, leading to an improved overall customer experience.
Okay, I get it—LTV is important. But how do you calculate it?
Thinking about this right now?
No need to worry—the next section will extensively cover the best formula for calculating LTV and how to interpret it for better results.
LTV Formula & Interpretation
You can find dozens of LTV formulas on the internet, but most of them are just confusing mathematical equations.
If we’re going to guide someone, why not make it simple and effective? That was our original thought when we began writing this article, and that’s why we’ve simplified the formula for you.
Formula To Calculate LTV
LTV = Total Revenue From a Customer * Lifespan of the Customer
For retail brands, it’s straightforward.
If a customer buys 20 products in a year, assuming each product sells for $20, here’s the LTV of the customer:
LTV = $20 * 20
LTV = $400
Interpretation?
It means that one customer has provided you with $400 in revenue over a certain period.
The same applies to membership websites. Take Netflix, for example—if one customer buys a membership at $15/month and renews for a full 12 months without canceling, here’s what the LTV looks like:
LTV = $15 * 12
LTV = $180
Now, what’s better—gaining $180 from 12 different customers or from just one? Let us know in the comments below!
How Can You Use LTV Metric For Your Business?
That’s an interesting question. While researching LTV online, we mostly found generic definitions and formulas that apply broadly across industries.
In reality, it’s much more complex than that.
Every business operates in a unique environment, and what constitutes a “good” LTV varies significantly. For some businesses, acquiring new customers isn’t very expensive, so focusing on LTV might not be a major concern.
But if you run a membership website, here’s what you should do:
- If you’re just starting out, research industry benchmarks and set goals based on them. Without data at hand, this is the most logical way to move forward.
- If you have 12 months of data, analyze your Customer Acquisition Cost (CAC) and compare it to your LTV. This helps you determine the economic value each customer brings to your business. If your CAC is high and LTV is low, it signals areas that need improvement.
- Segment your LTV into three categories—low, medium, and high. This allows you to prioritize your marketing efforts effectively. For example, if you have three customers in the low LTV segment and one in the high LTV segment, your focus should be on improving engagement with the lower-tier customers.
16 Proven Strategies to Increase Customer Lifetime Value (LTV) for Membership Sites
We’ve established that Customer Lifetime Value (LTV) is a critical metric for membership sites, indicating the total revenue a customer generates over their engagement period. Here are 16 actionable strategies to help you increase LTV effectively.
Optimize the Onboarding Experience
Onboarding – the nail in the coffin.
Many membership website owners take it very lightly while crafting their onboarding process, they create complicated signup processes and zero-valued onboarding processes.
The science is simple, if you’re going to keep a new customer, make your customer welcome home.
Nowadays, the retention period is low and no customer finds it intriguing to get out of their comfort zone.
If your membership website keeps challenging a customer on that aspect, you’re going to lose the customer without even making a profit.
Thus, focus on UX – make it compelling, keep the sign-up process as simple as possible, emphasize the value you provide in the beginning without waiting for the customer to reach the dashboard, and use tutorials/walkthroughs to guide customers.
Deliver Exceptional Customer Service
Customer service isn’t just a department—it’s the backbone of retention.
Customers expect instant, effective support, and a poor experience can drive them straight to your competitors. Slow response times, robotic answers, or unhelpful support reps? That’s a retention killer.
Instead, focus on building a high-quality support system. Invest in well-trained teams, integrate AI chatbots for instant responses, and create a robust self-service knowledge base. The goal is simple: make sure every interaction leaves the customer feeling valued and understood.
Implement a Customer Loyalty Program
According to Annex Cloud, once offered a reward 69% of customers have higher chances to become a loyal customer.
A great loyalty program is more than just generic discounts. Customers need a reason to stay, and exclusive perks, early access to products, or VIP treatment can be game-changers.
Make your rewards program meaningful. Think beyond basic point systems—consider tiered memberships, special incentives for referrals, or surprise gifts that make customers feel appreciated. The more personalized and valuable your loyalty program, the stronger your customer retention.
Personalize Marketing Efforts
Mass marketing is dead.
Today’s customers expect tailored experiences. They don’t want generic emails or one-size-fits-all promotions—they want brands that understand their preferences, habits, and needs.
Use data-driven insights to personalize your marketing. Send targeted emails based on past purchases, recommend products that fit customer interests, and craft personalized offers that make customers feel seen. When done right, personalization doesn’t just increase engagement—it builds loyalty.
Engage Customers with Valuable Content
Content isn’t just for attracting new customers—it’s for keeping them engaged.
A blog filled with fluff won’t cut it. Your content needs to educate, entertain, or solve problems. Webinars, how-to guides, and insider tips keep your customers connected to your brand, positioning you as a valuable resource rather than just another seller.
Give customers a reason to stay engaged with your content, and they’ll keep coming back.
Facilitate Community Building
Customers don’t just buy products—they join communities.
A thriving brand community builds loyalty like nothing else. Whether it’s a private Facebook group, a dedicated forum, or an exclusive Slack channel, creating a space where customers can connect, share experiences, and interact with your brand fosters a deep sense of belonging.
Loyalty isn’t just about the product—it’s about the relationships formed around it. Build a strong community, and you’ll build long-term retention.
Simplify Repeat Purchases
Reordering should be effortless.
If customers have to jump through hoops every time they want to buy again, they won’t. Simplify the process with one-click checkouts, saved payment methods, and auto-renewal subscriptions.
The easier you make it for customers to buy again, the less they’ll even consider switching to a competitor.
Solicit and Act on Customer Feedback
Feedback is a goldmine—if you actually use it.
Customers appreciate when their opinions matter, and businesses that actively listen and implement changes based on feedback stand out. Send surveys, monitor reviews, and engage in direct conversations. But most importantly—act on what you learn.
When customers see their suggestions making an impact, they’ll trust your brand more. And trust fuels long-term loyalty.
Upsell and Cross-Sell Strategically
More sales don’t mean more spam.
Customers don’t want endless upsell pop-ups or irrelevant product suggestions. They want recommendations that make sense.
Use customer behavior data to offer upgrades or complementary products that genuinely enhance their experience. If upselling feels like a natural next step rather than a hard sell, customers will buy more—without feeling pressured.
Offer Subscription Services
Subscription models aren’t just a trend—they’re a retention powerhouse.
Whether it’s a monthly membership, a replenishment service, or exclusive perks for subscribers, a well-designed subscription keeps customers engaged. Predictable revenue, stronger customer relationships, and reduced churn? That’s a win-win.
Enhance Post-Purchase Support
According to Zendesk – A happy customer with issues resolved in a shorter period becomes your brand promoter.
Still, many brands focus so much on getting customers that they forget to support them afterward. But strong post-purchase engagement—like follow-up emails, proactive check-ins, and easy return policies—turns first-time buyers into lifelong customers.
Make sure your customers feel supported long after they’ve made a purchase. It’s one of the simplest ways to keep them coming back.
Leverage Data Analytics
Data tells a story—if you know how to read it.
Customer behavior, purchase patterns, and engagement metrics offer insights that can transform your retention strategy. Use AI-driven analytics to refine your marketing, improve customer experience, and anticipate needs before they arise.
Brands that leverage data effectively don’t just keep customers—they keep them happy.
Implement Retargeting Campaigns
Missed sales aren’t lost sales—if you know how to bring customers back.
A visitor who abandons their cart or browses but doesn’t buy isn’t necessarily uninterested. Maybe they got distracted, weren’t ready to commit, or needed a little push.
Retargeting campaigns—through personalized emails, remarketing ads, or special incentives—remind customers why they were interested in the first place. Done right, retargeting can be one of the highest-ROI strategies in your retention toolkit.
Provide Exclusive Access and Offers
Everyone loves VIP treatment.
Making customers feel special isn’t just good business—it’s a retention strategy. Early access to new products, members-only deals, and personalized discounts keep customers engaged and excited about your brand.
The key? Make exclusivity feel valuable. Give customers something they can’t get anywhere else, and they’ll stay loyal.
Maintain Consistent Communication
Silence kills retention.
If customers only hear from you when you’re trying to sell them something, they’ll disengage. Regular, meaningful communication—through newsletters, SMS updates, and personalized check-ins—keeps the relationship alive.
Stay in touch, provide value, and remind customers why they chose you in the first place.
Focus on Customer Experience
Experience is everything.
Every interaction—whether it’s navigating your website, speaking with support, or receiving an order—shapes how customers feel about your brand. A frustrating experience? They’re gone. A seamless, enjoyable experience? They’ll stay.
Make every touchpoint easy, enjoyable, and memorable. Happy customers are returning customers.
By integrating these strategies, businesses can transform one-time buyers into lifelong customers. Retention isn’t just about keeping customers—it’s about building relationships that make them want to stay.
Unlock the Full Potential of Membership Websites with TeknoFlair
Building a thriving membership website requires the right strategy, tools, and execution.
At TeknoFlair, we specialize in crafting powerful membership sites that engage users, drive conversions, and generate recurring revenue. Whether you need seamless LearnDash LMS integration, advanced membership management, or customized growth strategies, our expert team is here to help.
Let’s turn your vision into reality—contact TeknoFlair today and take your membership website to the next level!
Final Thoughts: Elevate Your Membership Site with LTV Strategies
Customer Lifetime Value (LTV) is more than just a metric—it’s the foundation of a sustainable, thriving membership site. By shifting the focus from acquiring new customers to maximizing the value of existing members, you can improve profitability, enhance user experience, and build a loyal community that stays engaged for the long haul.
The 16 strategies we’ve outlined provide a roadmap to boosting LTV effectively. From optimizing onboarding and customer support to implementing loyalty programs and personalized engagement tactics, every approach contributes to higher retention and increased revenue. The key is consistency—analyzing your LTV regularly, identifying gaps, and making data-driven improvements.
Remember, a satisfied customer is your best advocate. By prioritizing long-term relationships over short-term gains, you not only reduce churn but also create a brand that members trust and return to.
Now, it’s time to put these strategies into action. Evaluate your current LTV, implement changes, and watch as your membership site flourishes with loyal, engaged customers who contribute to your long-term success.
