In today’s business market, customer loyalty seems like a thing of the past. Research has shown that roughly 65% of consumers have switched brands either “often” or “very often” within the past three months. This number is influenced by things like lower prices from competing brands and more targeted marketing.
With that said, now is the time to make the most of your current customers, and increasing your customer lifetime value is a great place to start.
Increase customer loyalty, encourage repeat business, and watch your bottom line grow by investing in ways to boost your customer lifetime value. Here are five ways to do just that.
First things first, what is Customer Lifetime Value (CLV)?
Customer lifetime value is how you measure the value of a customer throughout their relationship with your business. It shows you the total revenue your brand can expect to earn from customers throughout their lifecycle.
CLV helps determine how much each customer is worth to your business. Let’s say you have 100 customers, and 5 of them are only worth $100 per year. If this is the case, you’ll want to look at ways in which you can increase your customer lifetime value from those 5 customers.
Some of the factors that go into calculating CLV include:
- The customer’s purchase history
- Average purchase frequency
- The value of each purchase
- Time between purchases
- Anything that may impact future spending habits
Once you’ve calculated your customer lifetime value, you can start looking at ways to increase this metric. Here are 5 tips to get you started:
1. Leverage Your Loyalty Program
Loyalty programs are an excellent way for brands to reward their best customers. By offering exclusive offers and discounts, customers have an incentive to make repeat purchases.
However, the work doesn’t stop at getting your customers to sign up for your loyalty program. There’s no guarantee they’ll use it. The average customer is only active in less than half of their loyalty programs. And when they go unused, they don’t get renewed.
So, how can you get your loyal customers to use your program and spend more money with you, without annoying them? Here are some ideas that may help:
- Remind your customers of the value your program brings with a personalized reminder of what perks are available to every member.
- Make it extremely easy for customers to sign up.
- Offer different types of perks, services, and rewards to customers.
Another way to make the most out of your loyalty program is by collecting member data to help you better understand your customer base. You can use this information to improve operations in areas where your customers aren’t happy so they’ll have a better experience next time.
2. Take Advantage of Referrals & Word of Mouth Marketing
Referral marketing is as simple as rewarding a customer with a future discount for encouraging a friend to spend money with your brand in some way. This is just one example of this type of marketing, and it’s an excellent way to increase lifetime value.
When it comes to word-of-mouth marketing, the only difference is that this strategy is organic. Step up your content marketing strategy by creating blogs, infographics, and other valuable content that your customers will want to share with others.
No matter which marketing strategy you choose here, acquiring new customers with the help of existing customers is highly effective. You really can’t go wrong. You encourage your current customers to spend more and gain new customers at the same time – a win-win.
3. Personalize Upselling & Cross-Selling Efforts
Upselling and cross-selling are key strategies in increasing customer lifetime value. Think about when you buy a new phone – you can almost certainly expect an offer to upgrade your phone plan or add on extra accessories. This is a very good example of the upselling/cross-selling strategy at its finest.
These strategies are effective ways to increase customer lifetime value and can be even more useful with personalization. This is how you let your customers know that you’re paying attention and see them as individuals and not just another consumer.
The goal here is for each brand interaction to feel like it was created specifically for that particular customer.
4. Go Above & Beyond With Customer Support
Your product or service might be the reason you gain new customers but your customer support can make the difference in retaining those customers. It’s not uncommon to find that your customers need you more post-purchase. Don’t let them down with things like long wait times and unhelpful answers. As good as you think your product or service might be, you can’t rely on it to keep your customers around.
To keep your customers happy, consider omnichannel support. Give your customers easy access to a live chat that offers 1:1 support whenever and wherever they need it. And make sure you’re replying to questions on social media to keep customer satisfaction high.
5. Track & Analyze Data
Collecting data is a key component of improving your CLV. Not only should you be measuring your actual customer lifetime value, but you should also start tracking the following:
- Retention Rate: How many customers is your brand retaining over time?
- Net Promoter Score (NPS): Look at your customer feedback – where can you make improvements?
- Customer Acquisition Cost (CAC): What is the cost of bringing in a new customer?
- Average Customer Lifespan: How long does someone typically remain a customer of your business?
Once you’ve collected this data, you can analyze it and identify trends that can help you make improvements.
Are there any patterns in how customers who buy one product also end up purchasing additional products? Do customers who come back regularly spend more than those who visit occasionally? Use these metrics to determine where your brand is performing well and where your pain points are. By being able to identify what helps and hurts your business, you can start making the necessary changes to help boost your customer lifetime value.
Don’t Wait: Start Improving Your Customer Lifetime Value Now
Start investing in your customer lifetime value with the help of these tips to increase both customer loyalty and revenue. Plus, you’ll gain a better understanding of your customers and their relationship with your brand, which will in turn help you make smarter decisions. Only good things can come from taking advantage of the tips mentioned in today’s post.
As always, our team is here and ready to help. And if you aren’t sure where to begin when it comes to boosting your customer lifetime value, then let’s get connected!