How To Optimize LTV To Improve Shopify Subscription ARR?

The COVID-19 pandemic affected businesses worldwide. However, the crisis also created many opportunities for businesses, especially online ones. Subscription-based E-commerce businesses skyrocketed, becoming more popular and gaining significant traction.

Shopify is the leading E-commerce service provider that most online businesses use. But you’ll probably need a Shopify subscription plugin if you want to manage subscriptions on the platform.

This article will detail how a Shopify membership subscription app can help you optimize LTV to improve Shopify subscription ARR.

LTV is an abbreviation for lifetime value. It’s an important metric every business uses because it helps predict how much value a customer will generate over time. Calculating lifetime value is also important because it provides valuable insights that help predict net profit.

ARR is an abbreviation for annual recurring revenue. It’s particularly important for subscription-based business models because they operate differently than regular businesses. Most traditional businesses will sell a product or service to a customer. The customer might like the service they’ve received and return every few weeks or months to purchase a product or service from the business again.

However, that’s not how subscription-based business models work. Their customers pay a monthly subscription fee to access a product or service. Therefore, these businesses must determine annual recurring revenue from subscribers because it allows them to determine net profit and maximize cost savings.

Here’s how to optimize LTV for better subscription ARR, especially since they’re correlated.

A robust loyalty program is crucial for cultivating better relationships with customers over time. Such programs also allow you to incentivize customers, ensuring their loyalty and repeat business. Moreover, a loyalty program also allows you to encourage customers to spend more on recurring payments and new product offerings. It can significantly boost LTV and result in better ARR.

Customer feedback is important for any business. But it’s even more crucial for subscription-based business models. Subscriber needs and satisfaction levels can change over time. Regularly obtaining customer feedback can help you devise strategies to optimize LTV.

Simplifying recurring orders also helps optimize lifetime value, resulting in greater ARR. You must ensure customers can manage their subscriptions easily. They might want to skip an order or reschedule it. Designing a recurring order portal can simplify things for customers. However, that’s expensive. Use a Shopify recurring payments app instead, like Appstle.

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