Customer Lifetime Value (CLV) or Lifetime Value (LTV) is the amount of money a person will spend to buy your services or products over the entire lifespan of their relationship with your company.
For example, when one of your customers keeps coming back to make more purchases from your company for 10 years and buys $10 worth of services or products during each year, his or her value to your company is $100 minus any money your company had to spend to acquire this customer.
Customer lifetime value is very important to your company because the higher the number the more profit the company makes per customer.
You have to spend more time and money acquiring new customers than holding on to old customers - around five times more in the long run.
In order to boost customer lifetime value, it's important to keep your existing clients engaged. Here are some ideas:
Divide Your Customers into Groups
Segmenting customers into groups helps to streamline your customers’ experiences and helps you understand where their interests lie.
A customer who is interested in your activewear products may not at all be interested in your company’s dress socks collection. Someone interested in your dress sock line may not like the activewear.
In the same sense, if you gain a new customer and they have just learned about your company and its products, they may not be ready to make a purchase yet and are therefore not ready for the same marketing as solid return buyers.
Once you’ve accurately grouped your customers, your company can now focus on both kinds of customers, new and returning, and do so without over-messaging to either.
With DataCue, you can automatically emphasize the products each of these customer groups sees on your website. The activewear group will see complementary activewear products more prominently, for example. This will drive up sales value per customer.
Offer Personalized Deals
People love deals, and if they see a coupon, they are more likely to want to return to your store or company and make a second purchase. One type of coupon to send that will still enable your company to make a good profit is a 10% off coupon for existing customers.
One question to be asked here is when is the best time to send coupons out to your customers. One way of doing this is sending a coupon or coupon code out to customers a few weeks after they make a purchase. Doing so at this time is perfect because the customer’s purchase is still fresh in the mind. Seeing a coupon for 10% off on their next purchase may entice the customer to come back sooner and grab more products.
Show Your Appreciation
Send a simple thank you email to each customer for his or her continued business. This should be personalized to the product or service they’ve bought. Show them they are appreciated and that you care about them and their needs. Discuss how best to use the product, and cross-sell complementary items. As an added bonus for the customer and a special show of appreciation, you can also include a coupon or coupon code within the message for them to use at their convenience.
Sending such messages to your customers can also be the beginning of a drip campaign where you send ongoing emails on a schedule. These can help build rapport and trust in your brand’s authority.
A few days after the customer makes a purchase, automatically send a quick email survey to the buyer and ask them how their experience was while shopping at your company. Include ideas that can get them coming back to you for more.
Be Active on Social Media
If a customer buys a product or service from your company, often the first thing they will do when they get home is to post about it on social media and share their experience with all of their friends and family. You must have an active social media account so your customers can follow your company and share their use of your products through their own social media accounts.
You will also be able to keep in touch with your customers this way, and can also have special deals or contests on your social media channels in order to keep your customers interested in your products. Building up this customer relationship is the real key to higher Customer Lifetime Value.
The bigger and more active your social media presence is, the more likely your company will have new customers as well as more sales from returning customers, especially if you focus on aftersales care.
Streamline the Buying Experience
If your customers have a bad buying experience, the likelihood of them becoming a returning customer is very slim.
Consider offering options for customers to pay with money order, credit cards, PayPal, Google Pay, and other options. You can also add estimated shipping costs to help the customer choose a cheaper shipping delivery.
The easier it is for a customer to navigate and purchase from your company the better chances your company has of gaining repeat customers. Store their previous preferences such as currency, shipping address, and preferred product types. Personalizing the website with DataCue will make them feel more at home and remove many of the extra steps a customer has to go through to make a purchase.
Customer Lifetime Value is a lot more valuable to a company than one may think. Higher LTV helps bring in more profit and revenue from returning customers and it can also help to generate new customers through social media and word of mouth from current returning customers.
Start focusing on retaining those customers and building their sales just as hard as you work to gain those new customers.