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6 Tips on How to Increase Customer Lifetime Value
Acquiring new customers is crucial but do not ignore your existing ones. Target your current customers and increase your customer lifetime value for better business growth and expansion.
Businesses are worthless if there are no customers. After all, the pulse of any business is in its customers. Every company strives to acquire new customers for higher revenues. However, retaining your current ones is equally, if not more important.
Customer retention is highly effective for a predictable and steady income. Chances for an increase in revenue are higher. When you invest in a lifetime relationship with your customers, the value you get is more; this is measured in your customer lifetime balue (CLV).
Your goal is to maximise your CLV. A high CLV grants immortality to your business with consistent revenue growth. Isn’t this the dream of every business owner? So, how do you go about fulfilling this dream?
Keep reading to understand.
Customer lifetime value (CLV) is a measurable metric that indicates the revenue a business can reasonably expect from a customer throughout the business relationship. The higher the CLV, the more you reap from the customer.
CLV = Customer Value (average purchase value x average number of purchases) x Average Customer Lifespan.
You must track your CLV to know where you currently stand to implement the necessary measures; a higher CLV gives you higher revenue in time. Your CLV informs you who contributes the majority part of your revenue. Hence, you’ll know how to serve these customers better to encourage them to spend more.
Your CLV also helps you identify any worrying trends you can promptly address before they escalate.
Increasing your CLV helps reduce your costs. Handy, as it is significantly more costly to acquire new customers than to retain existing ones.
Also, 65% of a company’s business comes from existing customers. So, it makes sense to target your current customers.
Now you know the importance of tracking your CLV and maximising its value. Next, you need to optimise the relevant factors to work for you. The following are some tips to help you increase your CLV to get more out of your customers:
Source: Digital School of Marketing
Your business is all about your customers.
As such, focus on them and get to know them.
Find out their pain points and expectations. Tap into their emotions and gain insights into their thoughts.
You can do this by conducting targeted surveys to collate essential information. Armed with such knowledge, you can then improve and deliver on your promises better.
Regularly interacting with your customers helps keep a pulse on their thoughts on your business. While it is good to do so, be careful not to overdo it. Your intentions can be misconstrued and turn off your customers.
Hence, balance the push and pull factor and proactively monitor your customers. The end goal is a healthy and long-lasting relationship with them.
You want your customers to be happy so they stay and won’t leave. To do this, you have to know what triggers and motivates them.
Nobody knows your customers better than themselves. Pay attention and listen to their voices. It is not simply enough listening and nodding.
Listening with discernment makes the session effective and beneficial to you.
You wouldn’t want to centre your marketing efforts around shallow guesses that drive ineffective strategies that prove futile and useless.
Also, listen with empathy, especially complaints. You want to let your customers know you genuinely care and want to help.
One thing you can do is keep track of customers’ comments across all sales and communication channels.
There are listening tools that monitor your customers’ reviews, mentions, and comments on relevant social media platforms; this helps to give you an overall idea of your business assessment.
If you look at your customer accounts, chances are there’s a section of passive customers that you may have ignored in the past.
It is most unfortunate that after all the effort you have put into acquiring these customers, they no longer actively purchase from you. Instead of acquiring new customers, why not woo these passive ones?
Get in touch with them, listen, and start rebuilding the relationship from the ground up.
Offer enticing incentives and discounts to re-engage them. Consistently pursue them to convince them that you are serious and sincere to win them back. After all, you would not want a business with a negative CLV.
Let’s say the reason behind a customer being unhappy is that your website is too slow. You take immediate action and check your website’s performance for improvement. Then, check back in with the customer.
You now have a mountain of feedback from your customers. This gathered information is worthless if you don’t decipher and analyse it.
Knowing your customer’s pain points is one matter, resolving them is another. So, get down to work and start analysing. Perhaps the first thing you do is to sort out the information into their relevant categories.
Identify the critical and frequently recurring issues, then prioritise them. Alert the relevant departments and give them access to all necessary data.
Also, raise the red flag to them to resolve the issues immediately. After all, every second counts. Left unresolved only contributes to a low CLV.
For example, many of your customers are worried about their security and privacy when doing business with you. You have to ensure you have the necessary security measures to safeguard your customers’ data and privacy. Then, educate and assure them.
Cross-selling and up-selling are two highly effective sales techniques when selling to your existing customers. Your customers already know your products and services. So, it should be a lot easier to sell to them.
Increase your revenue through upselling by keeping track of your existing customers’ usage. If you notice that your customers would do better with an upgrade in service, feel free to upsell an upgraded plan.
Or if your customers are looking for something that pairs excellently well with another, then you can expand your revenue by cross-selling to increase the transaction value. When done correctly, upselling and cross-selling can increase your revenues.
Consider bundling your products at a lower price than when sold separately. Be smart when bundling your products by including products that complement the main product well. Also, give relevant freebies with a minimum order size.
But, take caution to not come off as too pushy. Look for the right time and place to do so.
Source: Financesonline
Your customer service is crucial to getting your customers to stay and be loyal to you.
Positive customer service equates to a quality customer experience.
Your customer retention shoots up, and so does your customer lifetime value. However, if the quality of your customer service is poor, your customers will not hesitate to switch to your competitors.
As such, beef up your customer service to ensure top-notch customer satisfaction for higher CLV.
Regularly train and guide your customer service team; they need to know that possessing the X-factor quality and going the extra distance is a no-brainer.
Ensure you offer omnichannel support. You should identify the most active channels that your customers are on and focus on them. Also, provide round-the-clock customer service. Monitor social media for any complaints or issues and respond immediately.
For example, you notice many complaints about your website being down often. Your team must immediately reply to acknowledge while you work on improving your website’s performance.
A live chat option is good as it gives the customers a means to communicate in real time with you. Finally, maintain a comprehensive knowledge base (articles, tutorials, video guides, and others), as this helps to give quick solutions to your customers.
Also, it helps remove some load off your customer service team so they can focus on other urgent support requests.
Valuing your customers means showing them that they matter to you. Every business aspires to boost its CLV.
Plus it is more cost-effective to focus on existing customers than acquire new ones. Building a long-term customer relationship is the better business strategy. You want your customers to stick with you through thick and thin.
The above can help increase your CLV and build long-term business growth. What you end up doing depends on what works for your business. You are the best judge for this. As such, try out different methods until you strike gold with your CLV formula.
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Beh is the digital marketer at WebRevenue, provides content marketing and digital marketing plans for companies. When she’s not working, she’s out exploring the great outdoors with her family and friends.
