Customers are what keep your business going. While many factors can contribute to your success, if you don’t have customers buying your product or service, you’re not going to last very long.
That’s why it’s so important to maximize what customers pay for what you offer. Those that can do this are people that see sustainable growth over a long period of time.
To better understand how much value customers can bring to a company, many organizations have looked to one important statistic: Customer Lifetime Value (CLV).
What is Customer Lifetime Value?
Customer Lifetime Value is sometimes referred to as Lifetime Value or Lifetime Customer Value. Generally speaking, it’s a measure of how much profit you gain from a single customer over that customer’s lifetime.
This one attribute is so vital that many companies try to specifically calculate CLV through a Customer Lifetime Value Model. The CLV formula looks at three factors:
- the amount of money a customer is expected to pay in a single purchase
- the chances of that customer doing repeat business
- the cost of acquiring that customer in the first place
It should be noted that a Customer Lifetime Value formula isn’t the be-all, end-all way of calculating the true lifetime value of a customer. Other factors can play a role in determining what a customer will pay over the course of their lifetime.
It is, however, a good starting point, and figuring out ways to increase that value will go a long way toward helping you convert more customers.
There are some common strategies for doing this. You can increase the average order of each customer’s purchase, or increase the rate at which people purchase from you.
Those are all fine ideas (they answer the what), but they don’t exactly go into detail on the steps needed to accomplish it (the how).
So that’s what this article intends to do — show you how you can increase Customer Lifetime Value through some relatively easy methods.
1. Make It Easy
You already know that you want your customers to go through your sales funnel multiple times throughout their lives.
Now ask yourself, how easy is it for them to buy from you?
Do they like what you’re selling but find it a chore to actually go through your sales funnel?
If the answer to the second question is “yes” then you’re hurting your chances of getting people to buy from you repeatedly.
Think for a moment about how customers buy your product.
How many steps are involved?
What information do they enter?
How many clicks does it take for them to buy from you?
That last questions is particularly important. The fewer clicks from a customer to make a purchase, the better.
Think about ways that you can make that process simpler and more streamlined.
If purchasing something from you takes only a click or two, the customer will likely be more willing to shop with you in the future. If it’s a lengthy struggle, they might look elsewhere, even if they like your product.
2. Make It Personal
In the marketing world, it’s common practice to segment your current and potential customers. Years ago, you would do this based on very general characteristics like age, sex, profession, etc.
In today’s world, however, that type of strategy isn’t enough.
Hyper targeted marketing is the way to go, and that leads to personalizing your interactions with customers. This is the best method to engage in LTV marketing since customers respond more positively when they feel like a company knows them well.
But this level of personalization in your sales funnel must be taken to the next level. You can’t just slap a customer’s first name at the beginning of an email and call it good.
In this new wave of marketing, you should offer special deals and content that appeal specifically to the individual.
Give them recommendations based off of their past purchases.
Reach out to them on special dates (like a birthday or anniversary) so they know you’re thinking about them.
This is all part of the Pareto Principle, which states that 20% of customers give you 80% of your revenue.
Focus on making that 20% feel welcome and part of your brand, and the revenue will follow. Now imagine if you can increase that 20% even more.
This level of personalization encourages customers to continue to shop with you, resulting in more customer retention and an increase in customer lifetime value.
3. Keep Talking To Them
In today’s online world, interacting with your customers is easier than ever, particularly on social media.
Customers don’t have to wait weeks or days for a response to a question or a problem. Now you can respond almost instantly, answering their inquiries and providing solutions to issues.
This isn’t just a nice perk; in many cases, the customer now expects it. In fact, they now expect it in less than 60 minutes, according to one study.
Think of it like an extension to providing excellent customer service.
Consider the companies out there which have gained a solid reputation for providing great customer support. Chances are they are active on social media.
Lowe’s is just one example of this. They provide content that speaks directly to their customers.
A good company is always available and ready to lend an ear to whatever the customer has to say.
Seek to improve your communication, and you’ll solidify a customer’s loyalty to your brand
4. Give Them More Stuff
The art of the upsell and the cross-sell is a classic sales funnel strategy, so don’t ignore it just because it’s been around for a while.
If anything, with the data you can now collect on your customers, the upselling and cross-selling part of your sales funnel should be even more effective.
This is especially true if you offer products that go well with each other.
If you offer a nutritional supplement, you could offer a special diet plan book to go along with it within the same funnel. That’s a case of upselling.
For cross-selling, you can offer other products that take them to a new funnel. So perhaps you can offer a pre-workout supplement to go with their nutritional supplement. That would take them to a new landing page and set them down a new funnel.
This is the way to get customers to spend more, either in one interaction or over an extended period of time, which increases Customer Lifetime Value.
More Customer Value Awaits
These are, of course, only a few easy suggestions for increasing the overall value of customers over their lifetime.
Other methods include providing loyalty programs, signing up customers for an annual billing cycle, continuing to engage with marketing practices even after customer acquisition, and more.
Just know that finding ways to increase Customer Lifetime Value will pay big dividends for you in the long run.