57% of U.S. companies see rising customer acquisition costs as a top risk to achieving their sales objectives. One reason for this is that in 2021, iOS 14.5 limited marketers’ access to consumer databases. As a result, using third-party app data to target new customers has become harder. For businesses, it means that now it takes more money and resources to get noticed online than before.
If it’s too expensive to attract new users, it’s reasonable to focus on the existing ones, namely on their user lifetime value (LTV)—the total revenue a user can bring during their relationship with a company. When it comes to a mobile user, there are three LTV components: average order value, frequency of sales in a given period, and average user lifespan. The more these three components grow, the higher LTV becomes.
In other words, make your customers buy more, buy often, and buy only from you. We wanted to share with you ten ideas that can help you do just that:
- Step 1: Introduce chats with experts to answer customers’ questions efficiently
- Step 2: Add a BNPL service to allow customers to buy products even when they are not ready to
- Step 3: Introduce some in-app services to give customers more reasons to use your product
- Step 4: Use AR to help customers with their purchase decision
- Step 5: Launch a subscription service to boost customers’ loyalty
- Step 6: Gather zero-party data to personalize the shopping experience
- Step 7: Adopt an omnichannel strategy to make shopping more flexible
- Step 8: Visualize your loyalty program to motivate customers to make more orders
- Step 9: Add a video feed to get customers inspired
- Step 10: Simplify in-app returns to encourage repeat purchases
1. Introduce chats with experts to answer customers’ questions efficiently
Chats and chatbots improve customer service and help customers buy more. Most people admit that it’s not only about the product the brand sells but also about how the brand communicates with them. When users get quick answers to their questions, they tend to make their purchase decisions faster as well. Then, having had a positive experience they are more likely to return to the app more often.
An expert is not a usual customer service representative—they are a trusted advisor. Sometimes customers need help navigating a catalog with lots of product categories. If it’s their first time in the store, it gets even more frustrating. In this case, chatting with an expert will feel more like asking advice from a friend, and the user will feel cared for.
This is what Nike is doing in their app—their expert can advise on anything related to sports and answer questions instantly. In this case, a new customer gets help quickly and doesn’t feel overwhelmed while choosing their first running shoes:
Nike uses a person rather than a chatbot for a more personal touch. A chatbot could do that too, but to keep the conversation flowing, it has to be quite smart. We recommend using chatbots for operational questions, like changing the order. To give advice or help navigate the store, it’s better to connect people with people.
2. Add a BNPL service to allow customers to buy products even when they are not ready to
The second thing you can do to increase user LTV is add a Buy Now, Pay Later (BNPL) option to your app. Almost 70% of consumers spend more than they planned if they use BNPL. The main benefit it brings to a business is retaining those customers who want to buy but struggle to come up with the needed amount at a given time. With BNPL, users can buy more and complete the order more quickly.
The easiest way to adopt this service is to let a third-party provider handle installment payments. They have their own recurring payment plans and sometimes take on the fraud risks. In 2022, the most popular BNPL provider was Klarna, and it’s likely to be the one in 2023, so it’s the primary option to be considered.
The largest e-commerce platforms like Etsy have Klarna as a payment option. If someone is not sure what Klarna is, Etsy explains what it is in a description and highlights the benefits:
BNPL helps Etsy reduce cart abandonment rates, because customers have a flexible way to pay and add more items to their carts.
3. Offer some in-app services to give customers more reasons to use your product
Another way to increase user LTV is to give customers more reasons to use your app. Sound product quality is not a competitive advantage anymore—the added value is. If an app gives customers more than they initially came for, they will stick with it.
Think about what in-app services you can provide that will expand your offering beyond products. These services usually come in the form of mini apps—lightweight apps inside a bigger one. A media with expert guides, recycling service for clothes, interior design service, and beauty salon appointments—these are examples that do not necessarily lead to a purchase but help users manage extra tasks.
For instance, Walmart has a separate tab for services where users can hire specialists for tasks at home, get in touch with an insurance agent, or access their vaccination records. Some services are not integrated into the app, so links lead to Walmart.com. However, they are visible in the app, so it’s still more convenient than searching the website.
Another example is an app we designed for Sportmaster, a major retailer of sporting and outdoor equipment in Eastern Europe. Apart from sporting goods, Sportmaster offers its own digital and offline services for athletes. The company wanted to offer them in the app.
In the Sportmaster super app, we designed a sports hub with online workouts, travel club services, sports news, expert articles, and events. Together with health check-ups and an activity tracker, they became additional reasons for using the app. Most importantly, the new add-ons went hand in hand with the core products, which is why they sparked users’ interests.
The new app helped Sportmaster improve user LTV in all three components. First, the average order value increased by 15%, because people spend more time in the app and shop more. Second, the conversion rate has grown by 14% on the iOS app and by 10% on the Android app, which means the users started to shop more often. Finally, the expected user lifespan has increased, because customers now use the app not only for shopping.
4. Use AR to help the customers with their purchase decision
Adding Augmented Reality (AR) to your app will also lead to a bigger LTV thanks to more informed purchase decisions. People are 94% more likely to purchase a product with AR content compared to products without it. This is because users imagine themselves having the product, which makes it easy to decide whether they need it or not.
Furniture and clothes are typical product categories with AR in e-commerce. For example, Walmart app users can see an article of clothing not just on a chosen model, but on themselves. Once a user uploads their photo, they select the clothing item to try on and see a virtual representation of themselves wearing the item. Etsy does the same, but with furniture, helping the customers understand if a dresser or a rug fits in their room.
Not all the products in Walmart and Etsy catalogs have an AR option, but those that have it attract more attention than others. It means that if you add AR at least to some products in your catalog, it will already give you an upper hand.
5. Launch a subscription service to boost customers’ loyalty
Subscriptions increase customers’ loyalty and LTV because it keeps them with your brand for longer. With subscriptions, users solve a purchasing problem in advance, while a company gets a stable annual recurring revenue.
Managing subscriptions should be available in your m-commerce app. Customers love them for the “set it and forget it” approach, so ease and flexibility are crucial. Make it easy to sign up, and make the terms of the subscription clear.
For example, Chewy, a retailer of pet-related products, offers an “autoship”—recurring orders for pet food. It works as a subscription, although under a different name. With the app, busy pet owners make sure they don’t forget to feed their pets in a couple of taps. The frequency of shipment settings and rescheduling options are also available in the app.
Chewy’s autoship is beneficial both for customers and for the company. Customers get the products regularly at the right time, while the company has an additional source of revenue and a loyal customer for a longer period.
6. Gather zero-party data to personalize the shopping experience
The next step to increase user LTV is to make a shopping experience in the app personal. Customers like to purchase something that a brand recommends uniquely to them, rather than to everyone. With a personalized shopping experience, they are twice as likely to add extra items to their carts and 40% more likely to spend more than planned.
Business owners can derive insights about customers from order history and data from user profiles—this is referred to as first-party data. This data helps personalize product recommendations, offers, promotions, and push notifications.
Product recommendations tailored to user’s search history or saved items work particularly well. This is how Macy’s and Etsy implement them in their apps:
Some go further and say that the future is in the data that customers share with you intentionally—zero-party data. It’s something that people reveal in quizzes, surveys, or preferences. For example, the Saks Fifth Avenue app has a style quiz that offers about 20 questions on the user’s preferred style. Then, based on the answers, it finds the best suitable stylist who’s ready to suggest a customized selection of products.
In this example, the recommendation comes from a person, but it can also be an AI algorithm. In any case, customers get a list of products that would suit them because of who they are, which increases the likelihood of purchasing.
7. Adopt an omnichannel strategy to make shopping more flexible
Integrating different sales channels into an omnichannel strategy is another method of encouraging customers to buy more. An ability to smoothly switch between a website and an app, or between a website and an offline store helps users get the needed info more quickly. Hence, they make purchase decisions faster and buy more often.
A built-in barcode scanner and a shared shopping cart are two features that you can use to connect different sales channels. 74% of U.S. consumers use their phones to look up information on the product they’re about to buy in-store. That’s why a good m-commerce app has a barcode scanner, for users to scan the products and find the details quickly. As for a shared shopping cart, its main benefit is allowing users to start and complete an order wherever they want.
Here is how it’s done in Macy’s. A customer—let’s say it’s a woman—comes to a local Macy’s store and tries on a pair of jeans. Although they suit her well, she wants to read more about the fabrics and check the reviews. After scanning the barcode, she finds the jeans in Macy’s app and the info she needs. All looks good, but she’s still not sure. She comes home, gets her laptop, and goes to macys.com. Voilà—the jeans are in her cart. Looking through the details again, she finally makes up her mind, chooses the right size, and places an order.
In this case, there’s no need to log in again or search for an item by an SKU number—the customer data is shared among all the touchpoints. Not all customers are that hesitant, but those who do have some doubts, will appreciate the convenience and buy from you more frequently.
8. Visualize your loyalty program to motivate customers to make more orders and earn more rewards
Your loyalty program should be clear and always at hand in your app. This way users will understand how to get rewards and how many points they need for the next level. The goal of loyalty programs for businesses is to increase brand loyalty, which often translates to more frequent purchases. Visualizing the loyalty program can enhance this process.
Visualizing users’ rewards is a good way to motivate them to earn more and buy more. Some companies make a separate tab dedicated to the loyalty program, others show it on the home tab. Ulta Beauty does both, which is also a great option.
The status in the loyalty program is the first thing a user sees when they open the app. The progress bar shows what they need to do to achieve the next level. The relation between points and discounts is clear, which also helps the user figure out what this program is about.
This way Ulta Beauty motivates users to spend more and take advantage of the rewards offered. The beauty of it is that these rewards are always visible to the user, so the motivation is greater.
9. Add a video feed to get customers inspired
Implement an endless TikTok-like video feed with product videos to keep customers in the app. 88% of people admit that videos convince them to buy products or services, so it makes sense to focus on video content. A dedicated tab in the app makes users spend more time and purchase items right after watching a video.
The videos can range from product demonstrations to fashion shows, giving users an engaging way to discover new products and ideas. Amazon, for instance, added the Inspire tab where shoppers scroll through the video feed with products and links to the catalog. If they like a product, they can buy it straight away. Another app with similar mechanics is Etsy, where users can watch their personalized feed or dive into the product categories.
A video feed is an upgraded version of shoppable videos, a recent social media trend. Using social media is a beneficial option since you get to be where your customers spend most of the time. Still, if you want to keep them in your app, having your own feed to grab their attention is a better option.
10. Simplify in-app returns to encourage repeat purchases
Last but not least, enhance your m-commerce app with easy returns to get larger orders and more repeat purchases. 92% of customers say they are ready to buy something again if they don’t have issues with returning a product. Making this process as simple as possible in the app converts into easier future purchase decisions and a higher customer lifetime value.
The best practice is to add a “Return an item” button in the app and make the return policy easy to find. This way the users will know that to initiate a return, they won’t need to call your representatives—it can be done in a couple of taps in the same app where they make an order. We found a successful example of in-app return functionality in the ASOS app:
ASOS added not only a visible return button but also a drop-down menu for choosing a reason for a return. This way the company shows the users two things. First, returning an item is easy. Second, the company wants to know the user’s pain points and improve the quality of products, to avoid new returns.
We’ve covered ten ways to increase your mobile user LTV. There are many more, but we think that in-app chats, returns, additional services, VR, subscriptions, BNPL, and other things from our guide are the best ones to create value for your users. That, in turn, will make them stay with your brand for as long as possible.
Thinking it through might be overwhelming, but you don’t have to do it on your own. We can help you figure out which one of these ten methods will suit your m-commerce app best and bring it to life. If you are interested, feel free to give us a shout.