May 17, 2022
How to Increase Your Customer Lifetime Value
By Alex Cramer
In the battle of old vs new, new pretty much always wins, right? New is fun. New is exciting. New is cutting edge and promises fresh experiences and adventures.
However, when it comes to your customers, old has one distinct advantage:
Old is profitable.
While every brand is obsessed with attracting new customers, they shouldn’t lose sight of the fact that on average, it costs 7x more to attract new customers than it does to keep old ones. That means that any business interested in long-term success would be wise to keep Customer Lifetime Value (CLV) at the top of mind.
CLV is a pretty self-explanatory KPI. It’s a measure of how much revenue a single customer generates over the course of their relationship with your business.
Obviously, a high CLV means that you’re generating a lot of sales, but it doesn’t just happen because you offer a strong product or service. It’s the result of several conscious choices that keep your customer loyal and engaged with your brand year in and year out.
These are some of the key steps you need to take if you want to drive up your CLV.
Remind them of Your Value
If the only time you reach out to your customers is when you want to sell them something, you’re doing it wrong.
If you want to keep a customer engaged for the long term, it’s just as important to remind them of your value as it is to offer a discount code or early sale access.
One of the most effective ways to do this is through personalized email marketing. This is as easy as picking a metric that you know will resonate with your customer and sending them a reminder of the value that you’ve created for them.
For example, if sustainability is a focus of your brand, let them know how many pounds of CO2 they’ve saved or how many natural resources they’ve conserved by shopping with you. Or if you provide a service, emphasize everything you’ve delivered for your customer over the lifetime of their relationship with you. The key is to make it personal and speak directly to what they value.
Top-Notch Customer Service
You know that feeling of dread that wells up inside of you every time you pick up the phone to dial customer service? Your hands shake as you contemplate how many different automated menus you’ll have to wade through as you smash the zero button and shout “human!” in a desperate attempt to speak to an actual person.
Your customers feel the exact same way, and one of the fastest ways to lose one is to provide them with a bad customer service experience.
High-level customer service is key to holding onto your customers for the long term and more than ever, they prefer live chats. A study by JD Power and Associates found that by a large margin live chat was the #1 way customers preferred to contact brands.
Customers like live chat because it’s an easy and direct way to ask questions without tying them to a phone for hours or making them endlessly wait for an email response.
Even better is if you’re able to offer 24/7 live chat so customers can get ahold of you at any time of the day or night regardless of where they live.
Leverage Data to Create Personalized Experiences
The most valuable thing your company collects besides revenue is your customer data because it will let you create a personalized and individual experience for your buyers that will make them feel valued.
A study by McKinsey and Company shows that fully 71% of customers expect some type of customer personalization when they interact with a business.
That means more than just adding their name to the subject line of an email. Instead, take a deep dive into your data to create customer profiles that can help you predict customer behavior and give you insight into the kinds of experiences they’re looking for.
For example, make sure that your customer service reps have easy access to your customers’ data, so they can speak to them from a place of knowledge about their history with the company.
Ultimately, personalization is how you demonstrate that you know how to create value for your customer as an individual, based on their specific wants and needs, which will, in turn, make them feel a greater sense of loyalty to your brand
New is fun, but when you’re considering your customer acquisition strategy, don’t forget about the old.
After all, old friends are better than new ones, vintage cars are cooler than new models, and long-term customers can deliver more for your brand’s bottom line than new ones.
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