How to increase your Customer Lifetime Value. There are two ways to grow your business. The first is to acquire new customers, but that takes an acknowledged 6x greater expense. The second is to focus on retaining existing clients and increasing their lifetime value (CLV / CLTV).
Data shows that the second is a far more effective strategy for producing a steady, predictable increase in revenue.Despite this, sources disclose that 44% of companies spend more time and money on acquiring customers, whilst only 16% of businesses focus on reducing churn, putting up front the old wisdom that it’s cheaper to retain and delight an existing customer than to find a new one.
Don’t forget – the longer you can keep a customer, the greater is the provided value during their lifetime relationship with your brand. Here’s where the term customer lifetime value comes forward.
What Is Customer Lifetime Value?
Here’s the simplest customer lifetime value definition – it’s a metric that shows how much net profit your company can make of one customer over time.
So, a high CLV means each customer will bring in more revenue for your company. Since each client becomes more valuable, it means your company can afford to spend more to acquire new users and retain the existing ones.
Let’s say you run a classic, pure-play SaaS service with monthly billing. We’re going to be using a single customer as an example, one who stays with your business for 2 years, and who got a subscription plan priced at $100/month.
The average customer lifetime value of that client would be £2,400 (100 times £24 – the number of months that person has been a customer). That number only gets higher as the client gets to pay more over time, the expansion revenue from existing customers exceeding the churn.
How to Increase Customer Lifetime Value?
Increasing your CLV can be as simple as switching your billing cycle from monthly to yearly, or as tough as overhauling your customer support process. Below, we’ve listed 12 proven tactics to increase your average CLV and generate more revenue from your existing customers.
Improve the Onboarding Process
When it comes to customer success, onboarding is the process you should spare no effort on in order to ensure sustainable business growth. It should be among the top priorities as poor onboarding occurs to be the leading cause of churn, 23% to be more specific.
It’s here that your customer really engages with your product and where you can make the greatest positive impact. This being said, it’s extremely important to put together a strategic onboarding process to encourage new users coming back for more, and thus increase their lifetime value to your company.
The process can be different, depending on the industry, customer needs or desired outcomes. However, there are a few key tips that most businesses use to engage their audience. First and foremost, one must make the onboarding as easy and fast as possible. This can be done by simplifying the process with walkthrough guides, interactive how-to videos, wrapped tutorials and other content that might help customers in fulfilling their goals.
Consider personalising the onboarding sequence by tailoring it to the buyer persona.
Focus on communicating the value of your offering right from the start. Test onboarding approaches and monitor the customer health score based on their behavior. Whatever option you go for, make sure it is straightforward enough to be understood and encourage engagement.
Provide Value-Packed Content That Keeps Customers Engaged
Email marketing is one of the best ways to retain customers, but many businesses go about it the wrong way. Instead of sending value-packed content, they run automated drip campaigns without offering any value.
The best type of emails to send to your customers are the ones that emphasise your product/service value:
- If you provide pet food products, send a weekly or monthly email telling clients how much money you’ve helped them save that month;
- If you provide fashion and apparel, send a monthly email to clients informing them the beautiful items they have bought;
- If you sell cosmetics, email your customers to tell them how much less toxins they’ve produced removed from their selection.
Every product or service delivers value. The key to an effective message is to find that value and present it to your customers in a way that shows your contribution. An email that explains the benefits you bring in goes a lot further – from a CLV perspective – than another promotional email.
Another means to be taken up is educational content. This type of messages is based on the personalised sharing of knowledge. The key here is personalised. This is the moment when you need to get rid of sales pitches, look into specific customer needs, and suggest ways to solve their problems using your service/product.
Your main goal is to map the customer journey, identify the touch points, and, on this ground, send out highly targeted personalised campaigns so that to make yourself visible as a reliable source of knowledge. Be there for your customers, always ready to help, and they will reward you accordingly.
Offer High-End Customer Service
Quality customer service is a necessary investment to help your business grow and increase retention. If your service is below average, customers will defect to competitors even if your product is above average. Data reveals that one-third of consumers are likely to switch brands after a single instance of poor customer service.
As such, it’s important to get customer service right. Better customer service equals a better customer experience. In turn, that will make your existing customers more likely to become loyal long-term clients.
But how do you offer top-notch customer service that boosts customer retention and increases customer lifetime value? Well, here are a few recommendations you should consider:
Offer Omni-Channel Support
As a business, it’s important to be active on as many channels as possible. Most people own more than one device – in the US alone, 98% of people switch between devices on a regular basis. Not to mention that around 66% of customers use at least 3 different communication channels to contact support.
Ideally, you should look into which channels your clients use the most. Maybe they’re more active on Telegram and Twitter while you only offer email and phone support. Once you know, make sure your support team is properly trained in using all those channels, or – if money allows it – put together different teams responsible for each channel.
Provide 24/7 Support
It’s no secret that people (be they B2C or business buyers) expect a fast response to their questions and support requests. One of the best ways to offer that is through round-the-clock customer support. While it’s expensive, it’s also worth it. Yet, if you can’t provide 24/7 support, make sure your team can respond as fast as possible to customer requests.
And needless to say, if you are able to offer 24/7 support, you should still instruct your team to respond to customer tickets as fast as they can. Don’t forget – customers will be especially expecting that in this case.
Overall, you should make sure you have a well trained, responsive, and dedicated support team for the most traffic-heavy channels.
Monitor Social Media
When customers reach out on social media, be it to ask for support or leave a complaint, they’re doing it first and foremost because they expect a fast response.
As it stands, approximately 84% of customers expect a response within 24 hours.
if they post complaints on social media. On Twitter, things are even more tense, as 72% of people expect a response within the hour.
If they do not get a timely response, users will most likely share their dissatisfaction with your brand to friends on social media. Platforms like Facebook make it even easier for them to monitor your average response time.
Bearing in mind the risks, your team must have at least one employee focused on tracking and replying to social media comments. Prioritising those complaints would be a good start.
Offer Live Chat Support
Around 80% of business buyers want companies to respond and interact with them in real-time. The best way to offer them that is through live chat – client-company communications that take place in real time on the company’s website or app.
The statistics don’t lie – live chat is extremely useful for businesses. About 79% of customers say they prefer using live chat because it offers immediate responses. Also, website visitors who use live chat on your website are worth 4.5 times than the ones who don’t, so there’s plenty of room to increase conversions with them.
What’s more, live chat allows working remotely which makes it easier for your team to provide 24/7 support.
Maintain a Knowledge Base
A Knowledge Base is an important part of your support infrastructure where you must offer access to self-service articles, tutorials, video guides, and other supporting documentation. While putting one together will take some time, effort, and money, it will all be worth it.
According to research, around 91% of consumers would rather use a Knowledge Base if it is available, and 70% of them prefer to use a company’s website to solve their problems instead of using email or phone support. Plus there’s also a chance that by 2020, no human interactions will be involved in the client-company relationship.
Furthermore, a knowledge base will take some pressure of your support team. For instance, a customer can be automatically redirected to a relevant knowledge base article or tutorial when they submit a request (or even before they do it), using automated bots. This might keep said customer happy by offering them a quick solution or answer, while allowing your support team to work on other, potentially more urgent support tickets.
Fostering good customer relationships is critical to the ongoing success of your business, weak relationships accounting for 16% of the average customer churn. Throughout the customer journey and during all your interactions with a client, it’s important to nurture a healthy bond. They key is to make them feel listened and appreciated, knowing they’re dealing with a proactive and professional team.
Get to know your audience and tap into their feelings and expectations. Surveying your customers would provide you with a handful of insights in this respect, helping you to better deliver on your promises. Be proactive and monitor customer health by connecting with your audience on a regular basis and not only when you have something to sell. Keeping a pulse on customer satisfaction will also allow you to take immediate action in case of a sudden decrease.
Pay proper attention to building relationships with the top segments of your customer base, key contacts, and executive staff. Conduct quarterly business reviews to make sure you are on the same page and ask for feedback on existing processes and on what’s coming next. Make them feel granted with the individual attention they deserve.
Offer Your Clients a Personalised Experience
Service, product, and experience personalisation are paramount nowadays if you want customers to be happy and spend more on your business in the long run. After all, 81% of consumers say they expect businesses to both understand them and know when the right time and moment to approach them is.
Also, around 77% of consumers have apparently spent more money on or recommended a brand that has offered a personalised service or experience.
B2B buyers definitely want a more personalised experience, and half of the US B2B marketers who tried website personalisation said it was effective.
Here are a couple of ways personalisation can help you enhance your customer lifetime value in the long run:
- When it comes to B2B buyers, personalisation can help you deliver your messages through the right channel at the right time. Those things don’t just make or break a deal – they also determine whether or not a client becomes a repeat buyer.
- By getting to know your customers better, you can significantly improve the onboarding process by making it feel much more “familiar” and welcoming to new customers.
- Personalisation can help your product deliver a better customer experience with a more intuitive UI. And it’s no secret that 8 in 10 consumers are willing to pay more money for a better experience. Not to mention that an investment in UX/UI can return a decent ROI.
- Personalised product selection software, using predictive analytics technologies like SwiftERM, identify consumer’s future behaviour, then rank every SKU by greatest likelihood of that individual consumer will purchase from all the SKUs you have listed, in order of greatest likely buying propensity. In other words, the ones they love best. CLV soars and RoR is all but eliminated. It out performs segmenting manyfold. But the art to it isn’t choosing one over the other, the seasoned marketer runs them both in tandem, to achieve maximum effect.
- With a better understanding of what your customers want, how they feel, and who they are, it becomes easier to perform cross-selling and upselling.
- Personalisation helps you deliver better and more meaningful customer support, which is vital if you want to increase customer value over time. It also makes it easier for clients to feel like they have an actual relationship with your brand, instead of just being a source of profit.
Please help us by commenting on this article, it helps us keep our content relevant. SwiftERM is a predictive personalisation software provider, a Microsoft Partner.