Growing a business is a lot of hard work. There is no corner-cutting involved in it. If it has to be done, it has to be done. There are no two ways about it. The easiest way to grow your business is by acquiring new customers and retaining the existing ones. In short, more emphasis must be placed on increasing the Customer Lifetime Value or CLV or CLTV so that the churn is low. Therefore, plan and strategize accordingly.
Before looking at the best strategies to increase CLV, let us see what the data says because all your decisions should be data-based. There is no gut feeling involved here.
- Acquiring new customers is approximately 5x more expensive than retaining the existing ones.
- 44% of businesses are still more involved in acquiring new customers. They give less focus on customer retention.
- Only 16% of businesses are concerned about reducing churn.
If you believe that the way to success is guaranteed only by getting new customers, you need to start thinking differently. Assume you do nothing to increase the CLV and your current customers start dropping more rapidly than the rate with which you get new ones. Can you still run a profitable business? Obviously not. Wiser is to give customer lifetime value its due importance.
Customer lifetime value is the net profit a business makes from a customer over a period of time. So longer the CLTV, the higher the net profit. The calculation of CLTV is very simple and requires no rocket science. A business already has all data relevant to its calculation. You just need to know two simple things:
- Customer Revenue – This is the amount a customer spends on your business in a year.
- Customer Lifespan – This is the number of years the association with the customer continues.
So,
Customer Lifetime Value = Customer Revenue x Customer Lifespan.
It’s Time To Change
The COVID Pandemic was an instigator that forced businesses to embrace modern technology rapidly, forcing them to move forward (although with trepidations) into the future with a new reality. Budgets became extremely tight, and traditional working methods were no longer satisfactory. The print media suffered the most, and businesses all over the globe lost a lot of advertising space and opportunities to impress costumes and prospects. They had to scramble to become internet wonders overnight. Many organizations were already doing this.
Nonetheless, some were still not ready to embrace any radical change. The change was, however, forced on them. Many rose to the occasion by adopting technologies like IVR systems, order management software, etc. Virtual Conference Platforms became the new event hosting rooms. Those who were skeptical of these technologies became delighted customers. While those who were still resistant to change folded like a pack of cards.
The good thing in all this was that online advertising got a significant boost. Businesses realized their customers were still waiting to hear from them and continue the relationship. Organizations started concentrating a majority of their efforts on wooing and impressing their audience through different channels like social media, email, SMS, blogs, etc. AI Writing Software became a tool of choice to churn out unique content time after time. All advertising and marketing strategies became internet friendly. Almost every brand, whether big or small, now has an eStore. Despite all the changes, the main concern still remained the same – increasing the customer lifetime value.
Changes In Revenue Pattern
The most significant change was how businesses made money during the pandemic. Subscription-based businesses (like Amazon Prime, Netflix, and Spotify) made the most profit. Their monthly and quarterly packages were costly, while annual subscriptions were more pocket-friendly.
Obviously, the customers opted for the most reasonable option, and the business had guaranteed earnings for that period. So their customer lifetime value was far better than any other type of business.
Every business cannot mimic the SaaS model, but they can surely learn from it and improve their strategies to increase CLV.
5 Best Strategies To Increase Customer Lifetime Value
Increasing CLTV is not as difficult as it seems. All it requires is some creative thinking and a little effort. So, here are 5 best strategies to increase customer lifetime value:
1. Opt For Subscription Pricing Or Loyalty Programs
If you can adopt the SaaS model of pricing for your business, you are all set for success in the coming years (provided the quality of your product or service is worth it). Nevertheless, all businesses can adopt this model because of their unique products. There are still ways to accommodate and come as close to it as possible. For example:
- Introduce the concept of automatically renewing orders monthly or quarterly at a discounted rate. Brands can use it for fast-moving products like cosmetics, supplements, soaps, detergents, lotions, etc. This selling method serves two purposes. One, the customer does not have to remember to place the order constantly, so their headache is gone, and two, you get guaranteed long-term earnings.
- Recurrent order filling is not viable for apparel and other costly products like furniture, home decor, cookware, dining items, etc. Hence, opt for loyalty programs that give customers special discounts or rates, priority access to sales, and more.
- Have special rates in place for customer birthdays and company anniversaries.
2. Upsell And Cross Sell
Usually, every brand or company sells numerous products and services under its umbrella. Regrettably, only a few consider extending combination deals and recommending other related products. When a person buys something, it presents a unique opportunity for the business to sell more products. Most of us get easily enticed by special deals and other products that go well whit what we are purchasing. Such recommendations work in favor of the brand.
Upselling means enticing the customer to opt for a higher-value deal than what they are presently using. Cross-selling means offering customers products or services that complement what they buy. Both these methods present a reliable way to increase the customer’s lifetime value. However, you are lowering your ROI if you do not make good on these golden opportunities. Statistics show that 50% of existing customers are likely to buy new products and, in doing so, spend 31% more than new customers.
3. Personalized Content
A key strategy to increasing CLTV is to make the customer feel important. Personalization The best way to achieve that is crucial. There needs to be more than just creating customer personas. You need to show specialized content tailored for each segment.
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Present content through emails, blogs, newsletters, etc., tailored to suit their likes and dislikes. Makes use of AI Writing Software to aid the process. It will ensure the message is clear, the content is plagiarism free & grammatically correct, it has the proper distribution of ranking keywords, it is SEO friendly, and so much more.
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Look at their past purchases and accordingly send special offers and other recommendations that the customer will find attractive.
4. Make Events Easily Accessible
Reaching out to customers is necessary for every brand. However, customers and clients now wish to be a part of your events from the comforts of the space they deem fit, which could be their house, vacation home, or office. Therefore, it is necessary that all your company events meant for the public are easily accessible over the internet. For that, you need to have a good Virtual Conference Platform that can handle anywhere from 2 to a few thousand people. It should be feature-packed (for your convenience and customization’s sake) and hassle-free for the participants, providing a virtual experience that is as good as being present in the same room.
5. Improve Customer Service
Customer service is a vital aspect of every business. Every organization receives calls and emails from its customers and prospects. Some have an issue that needs addressing, and others doubt that they want to clarify. The whole point is the ease with which the audience can reach you, and the way you interact with them sets the tone for future dealings. The better the experience they have engaging with your brand representatives, the more happy and satisfied they will feel. A happy customer is a long-term customer. Never doubt that. So step up the performance of your customer service department.
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If need be, empower the customer service team with Interactive Voice Recognition (IVR) tools.
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Reduce the burden of work on live agents and have them ready to deal with unique problems.
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Reduce the wait time for customers. Deploy chatbots to answer their queries.
Increasing customer lifetime value is about giving customers a remarkable experience every time they interact with your business. If you make them feel that your organization cares about them and their well-being, you are set on the right path. Aiding this success story are technological tools like AI Writing Software, Virtual Conference Platforms, IVR tools, etc. Embrace technology, for it is here to help your business reach its true potential.
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Strategies to Increase Customer Lifetime Value
Source: Trends Pinoy
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