Customer Lifetime Value (often referred to as CLV or CLTV) represents a fundamental metric used while making significant decisions concerning marketing, sales, product development, and customer support service.
CLV is the value a customer provides to a business over the complete lifetime of a collaboration with a company. Having its importance in mind, we should discuss some tactics and proven techniques that help organizations increase customer lifetime value.
What is Customer Lifetime Value (CLV)?
Before we start to examine how to increase CLV, let’s begin by defining the term more thoroughly.
Customer Lifetime Value can be described as the customer relationship’s financial value, based on the current value of the projected future incomes from the customer relationship. CLV is an essential idea that supports companies to direct their aim toward the long-term benefit of their customer relationships. In simpler terms, instead of focusing on a single purchase, companies keep track of the overall gains obtained throughout full cooperation and all interactions with a customer.
Customer lifetime value is a relevant metric that outlines the upper limit of costs needed to acquire new customers.
In short – CLV is the ultimate KPI. It is a crucial statistic company must trail to enhance the customer experience.
Increasing Customer Lifetime Value
It’s imperative to always keep in mind the value behind customer retention and brand loyalty. Brand loyalty is one of the most challenging strong points for a business to achieve, and it is simultaneously the most important one. CLV is closely connected to matters of customer loyalty and lasting, prosperous collaborations. Recognizing the paramount impact of carefully looking into the customer lifetime value helps decision making, seeing the big picture, and building a strong connection with current customers.
Increasing customer lifetime value unquestionably leads to an increase in profit and grows business.
7 Strategies to Increase CLV
Every business should consider strategies for increasing customer lifetime value.
Each plan or maneuver depends on the company itself and must be conducted according to its necessities, goals, and mission.
For instance, these are primary ways to increase CLV:
- Making Customer Lifetime Value a strategic priority
- Directing the attention toward customer experience
- Adapting to customer expectations, values, and preferences
- Personalizing communication
- Rewarding the customers
- Concentrating on quality
- Re-engaging customers
Making Customer Lifetime Value a strategic priority
Getting staff to perceive CLV in terms of the customer’s value and not solely as a sales metric represents a much-needed mindset shift. This change drives organizations to focus on the customer experience and makes customer satisfaction an indispensable component of the company culture. Many businesses choose to outsource sales and customer service to third-party teams and let them take care of their customers’ necessities and wellbeing. Choosing the right outsourcing company means already having a team of trained professionals on board, which undoubtedly leads to increased CLV since their customer service and sales representatives recognize its relevance.
Directing the attention toward customer experience
Countless researches suggest that excellent customer experience creates increased loyalty, which obviously largely contributes to increased CLV.
According to one study, 86% of people who encountered exceptional customer experience were likely to make new purchases from the same company. On the other hand, only 13% of people who got a negative customer experience decided to rebuy the product or service from the same provider. Companies must have a precise idea and set of principles related to customer experience integrated across their teams and departments.
Building an enhanced customer experience strategy enables organizations to overcome major challenges and ameliorates the results. Numerous organizations seek external help to improve their customer experience. Outsourcing customer care is often the most beneficial strategy for increasing CLV.
Adapting to customer expectations, values, and preferences
In today’s market, customers are expecting far more than a functional product or providing a service. Shared values, priorities, and inclinations typically represent a primary reason for customers to have a long-term relationship with a brand. Researchers support this theory, indicating the influence of a visible focus on social components and meeting expectations. The majority of customers have stated that they are likely to remain loyal to a brand that offers total transparency. Companies should strive to strengthen the values they have in common with their customers by offering them opportunities to be associated with specific initiatives or showing support for a particular cause.
Increasing sales and building customer lifetime value requires continuous communication with customers. The answer to developing a powerful brand is forming a strong connection with customers, leading to brand loyalty. Consistency, transparency, and uninterrupted support are the foundation of a successful collaboration.
Providing customers with timely and straightforward solutions to their problems, struggles, concerns, or doubts by offering them multi-channel support raises mutual trust and understanding to a new level.
Personalization is one of the principal methods used by businesses to increase CLV. Tailoring communication to match an individual’s needs and preferences surely increases customer satisfaction and ensure their overall loyalty to the brand. According to the data gathered for the past few years, personalized communication with customers leads to both immediate and long-term profit.
To sum it up, e-commerce sites are the most obvious example of how powerfully personalization can impact potential buyers.
Rewarding the customers
A rewarding experience primarily consists of providing several benefits and perks to loyal customers. However, it doesn’t need to end there. Loyalty plans can offer extra value and intensify brand advocacy. The type of reward and the outcome a company can hope for mainly depend on the industry, niche, and product or service in question. Each organization should modify the approach and the advantages they are willing and able to provide. Finding innovative ways to exceed customer expectations can have a massive impact on customers and their plans to repeat purchases in the future.
Concentrating on quality
The company’s commitment to quality makes countless customers line up whenever their favorite brand releases a new product. Brands like Apple represent the most evident example of it.
Investing time and resources into building high-quality products are the most beneficial tactic for increasing customer lifetime value. Constant aim for excellence develops trust and lasting bonds with customers.
The same goes for service-providing organizations. Directing the energy and expertise toward superiority is the prime technique for obtaining and retaining faithful and satisfied customers.
How can companies re-engage their prior customers who haven’t purchased anything recently or haven’t opened the emails lately? Re-engagement can be achieved through email marketing and re-marketing. Sending messages to customers who haven’t bought anything in three months and offering them something exceptional will drive their attention and lead to increased CLV.
The ideal scenario would include real-time re-engagement. It would be best if dedicated staff sent texts to those customers who choose to leave before finalizing their purchase. Regaining customers’ interest immediately after they decide to ditch their shopping carts is a terrific CLV strategy.
Outsourcing sales and customer service increase CLV.
Many companies choose to look for an outsourcing partner whose teams would be responsible for their sales processes and maintain stable and long-standing relationships with their customers. Outstanding customer service is a necessary asset. Customer support teams are the ones who keep customers happy, well informed, shielded, and appreciated.
In conclusion, outsourcing these services to a trustworthy company is remarkably beneficial for numerous business growth aspects, especially for improved customer lifetime value.