How to Grow Your Customer Lifetime Value Through Strategic Acquisitions

What’s the one thing all business owners strive for?

Rapid growth.

Do you know how to achieve it?

If you had to think about what you’d need to keep your online business growing, the first things that might come to mind are increased revenue, more traffic, and adding more products, among other things.

These would all be true. Yet, there’s one metric that many business owners tend to neglect — customer lifetime value (LTV).

If your business was a bank, increasing your revenue and traffic would be like adding more employees to get more work done. Sure, you’d be able to process more customers, but these are add-ons to your existing business model.

You could use another money-making engine to increase your LTV.

If you bought another business that helped your customers make more money, they’d want to visit the bank more often: a win-win situation for you and your customers.

But what is LTV, and what does it have to do with your business’s growth?

LTV — the Lifeblood of Your Business

“Woah, LTV sounds like it’s pretty important — why have I never heard of it before?”

Don’t worry, a lot of startups don’t focus on LTV unless you run a SaaS business. So what is LTV?

LTV is the average value of a customer during the time they engage with your business. When you first start your business, you’re probably focused on getting as many customers as possible and increasing your brand awareness.

While there’s nothing wrong with that, this approach gives you a low LTV since it expects your customers will only be good for one purchase or one use of your service.

A higher LTV means you can focus on generating a few loyal customers who are willing to spend $5,000 each, which is much more valuable than 1,000 customers who spend $5 each. A higher LTV lets you be flexible in the way you grow the brand and explore different marketing channels.

With each customer having a higher net expenditure, this means you can afford to spend more on marketing to target valuable customers. When you prioritize LTV, it gives you a new perspective of budgeting and expense.

But how do you increase your business’s LTV?

You could tweak a few processes to try and improve your customer experience. However, there’s a high chance that these minor adjustments won’t have the effect you’re looking for.

Instead, you could introduce a complimentary service completely separate from your primary business that works in tandem with each other to improve your customer’s journey.

Buying the right business does just that.

Buy a Business to Inject Growth in Your Current One

Why not just start a business from scratch? After all, you’ve done it before.

Well, as you know, it takes some time to build a great business. You need time to find a product or service that meets a need, target a customer base that’s a product-market fit, and build a brand that stands out from the competition.

Making a strategic acquisition skips that startup phase and allows you to head straight to the product-market fit phase. When you buy a profitable business, you’ve got an in-demand product, access to an addressable audience, and a reputable brand in a profitable niche.

Buying a business could potentially save you up to three years of months and months of testing and brand-building. With your new acquisition, you can start promoting your original business to this new audience through different marketing channels. Now, your original customer base has extended their LTV because they’ve discovered a product or service that solves another problem or the same problem from a different perspective.

The key to acquiring the right online business that will increase your customer LTV is making sure there’s synergy between the new business and your primary one.

What Perfect Synergy Looks Like

Spinning a cog with your finger only goes as fast as you spin it, and it quickly loses momentum when there’s no more input.

When you have another cog that’s also spinning, it becomes much easier to generate and maintain speed. In the same way, scaling a business is much easier when you have a profitable business spurring the other on. The positive influence one business has on another goes beyond just increasing the monthly net profit for each business.

Both brands benefit from the two audiences being exposed to new products and services. What’s even better is that very diverse businesses often complement each other.

Let’s look at some examples of what a strategic acquisition looks like.

Supercharge LTV Through Positive Branding

Amazon FBA is a great business model with a lot of room to scale. Buying the right business could drive your LTV up without you making any adjustments to your FBA business.

For example, if your primary business is an FBA business that sells fitness equipment, you could buy an info product business that sells courses teaching people how to perform certain exercises. You could also edit your video content to feature the fitness products sold by your FBA business.

By recommending this fitness equipment, you’ve extended the LTV of your FBA business’s customers. Research shows that 88% of consumers trust reviews left by other customers, meaning that subscribers from your new info product business will be much more likely to buy something from your FBA store after seeing all the positive reviews.

The same benefits can be transferred in the opposite direction. Your FBA business can direct customers to the fitness course as a reliable source of information on how to safely use the equipment.

When you exercise alone, you’re relying on demonstrations in videos and tutorial guides. A customer who sees high positive ratings left by subscribers who’ve used the fitness course will feel more assured that it will help them get the most out of their new purchase.

The result? An easy cross-sell.

You’re now top-of-mind for both customer bases. You’ve extended the LTV of the customers for both your FBA business and your new acquisition, resulting in growth all around.

But what if running a video course is not really your thing?

Maybe a blog better suits your skill set. Yet, even a simple blog can form a powerful business partnership with your FBA business.

Let’s say you bought a content site that reviews fitness products and innovative tech that improves well-being, and the site is monetized through the Amazon Associates affiliate marketing program and gets most of its traffic from organic searches.

Your FBA business will benefit from updating the affiliate links in the relevant articles that recommend your FBA products. Your primary business will gain a brand new channel of free traffic, which means you’ll receive even more sales from this new audience who may have never heard of your products.

People often pay hundreds and even thousands of dollars in PPC campaigns to get this kind of exposure. Yet, you’d get this massive boost of organic traffic for free.

On top of the benefits that free traffic brings, this partnership gives your product research a huge boost. You can use the Amazon Associates report to see what kind of products are selling from your website.

Now that you’ve got a much wider audience, your future product launches can be sent to many more potential customers. You can send an email blast to subscribers from your content site on top of your usual list of subscribers from your FBA customers.

You can create a product review of your new product, which is a great way to further demonstrate its benefits outside of the product listing page.

Amazon’s algorithm detects how much traffic comes from outside of organic searches in their marketplace search engine. This means your product’s best-seller rank will go up even more thanks to this surge of traffic outside of Amazon’s search engine.

Let’s not forget the benefits for your content site.

For every purchase a customer makes on your FBA store after clicking an affiliate link, Amazon pays you a commission for every sale made. Your LTV extends for both businesses since visitors arriving from your content site make more purchases from your FBA store, and your reader base on your content site will be interested in seeing future product reviews.

In fact, you can adjust your content marketing strategy to include new content featuring your FBA products.

You can use the content site as a magazine of sorts for your FBA business by providing helpful tips on how to use the fitness equipment optimally.

Your content site becomes more reputable because it provides great advice on maintaining good healthcare while recommending reliable equipment. Your FBA business gains even more revenue thanks to increased sales from this new source of traffic, which also gives you another source of information for future product research.

And both businesses enjoy increased LTV all because you made one smart purchase.

Buying a Business is Good for Business

As we discussed, these types of strategic acquisitions can seriously increase the value of your businesses.

Another benefit of increasing the LTV for your primary business and your new business is that it sets you up for a large profitable exit when you decide to move on.

We’ve sold a fair few of these types of businesses as described above for six- and seven-figure sums. An online business with a high LTV as a result of good synergy with another brand is high in demand because not many people expand by increasing their LTV in this way.

Improving your business’s brand with a smart strategic acquisition skyrockets the sale premium. While you’re growing your primary, you’re also boosting your LTV, which means more revenue, profits, and greater room to scale. Register for our marketplace for free to put yourself in the best position to sell when you’re ready.