How To Increase Customer Lifetime Value

Whether you have a small business or a big one, customer retention is essential. So, it’s vital to focus on increasing customer lifetime value (CLV). It takes a lot of hard work to encourage brand loyalty.  

And a repeat buyer will expect something in return. If you have high-value customers, then you should treat them as such. But not to worry. We’ve drawn up a list of dos to help you increase customer loyalty and retain customers by increasing your customer lifetime value.

What Is Customer Lifetime Value (CLV)?

To put it simply, customer lifetime value (CLV) is a metric that indicates how much revenue or net profit you can make from a single customer over time if they continue to buy from you.  

So, in addition to having customer acquisition strategies to gain new customers, you also want to focus on providing value to existing customers. You want to enhance the customer experience and ensure satisfaction. A satisfied customer will be more likely to come back to your business again and again. As such, this will increase your CLV.

8 Tips To Enhance Your Customer Lifetime Value

Now that you know exactly what customer lifetime value is, here are our most effective tips for improving it.

Optimize Your Onboarding Process

First impressions are important. This is where you need to make your biggest positive impact on new customers. Strategic onboarding will differ between industries. It depends on your product/service, desired outcomes, and customer needs. Here are a few key points:

• Make it as simple and fast as possible.
• Tailor it to your buyer persona.
• Communicate the value of your brand from the start.
• Make it understandable, straightforward, and engaging.

Provide Valuable Content

Engaging with customers is important and email marketing is the first step. Your emails should emphasize your value. Present this value in a way that showcases its benefits to the customer. This works better than promotional content in terms of customer lifetime value. If you provide accounting services, send a monthly email to tell clients how much they saved using your services.  

Do you have an environmentally friendly product? Show how much less carbon dioxide they’ve produced since using your product. This could also be personalized educational emails to solve their problems. Or it could take the form of blogs, webinars, etc. Be a reliable, visible, source of knowledge. Find their needs and suggest ways that your product or service can actually help.

Feature Customers in Social Media Content

Have customers shared your content? Or told their followers great things about your brand? Share it on your social media accounts. This shows your appreciation for their loyalty. Customer lifetime value increases when they feel appreciated. Putting them in the limelight will create a buzz and they will become loyal repeat customers. Doing this has the added benefit of working as a testimonial. It will aid you in acquiring customers that might have overlooked your brand.

Offer Top-Notch Customer Service

Quality customer service is one of the most essential aspects of any business. You can have an amazing product or service – but if you have bad customer relations, no one will buy from you. A good customer experience depends on good customer service. So, by providing exceptional customer service, you can improve customer satisfaction, and build better relationships with your customers who will, in turn, continue to buy from you. Good customer service includes:

• Having more than one channel of communication. Be active and engaging on multiple channels and have teams for those channels. You want customers to be able to easily reach you no matter which channel they use.
• Have responsive 24/7 support. A dedicated team that is well-trained will be your best asset.
• Monitor all your social media accounts. Customers expect the fastest response on social platforms.
• Have live-chat support on your website or app. They are interactive and a huge selling point.
• Have a knowledge base to help your customers help themselves. Most people prefer using tutorials, video guides, and self-service articles.

We live in a fast-paced world where people expect responses almost immediately. Great customer service plays a vital role here. All transactions need to be fast, easy, and dependable. This includes customer service and placing orders. Here’s how you can increase convenience:

• Auto-billing
• Automatic orders
• Refills
• Reminders

Build Relationships and Reward Loyalty

It’s important to cultivate good customer relationships throughout the customer lifetime. They should feel appreciated and heard.

They need to know that your team is professional, proactive, and invested. Doing customer surveys is a good way to gain insight and see if your customers are satisfied with your business or if there are areas that you can improve. Rewarding loyal customers will keep them loyal. Here are examples of how you can reward loyal customers:

• Have customer loyalty programs in place.
• Give them a free subscription upgrade.
• Give them insight or sneak peeks into new products before they’re launched.

The cost to you is minimal compared to the future value you’ll receive. A little appreciation goes a long way.

Offer Personalized Experiences

Business growth depends on loyal customers. And loyal customers want the business to know when and how to reach out to them.  

To improve customer lifetime value, give them something that competitors can’t. It’s like going to your favorite coffee shop. You only go there because they know your “usual” order. They know when you’ll be there and they might even be ready for you when you arrive. A happy customer means more revenue for the business. But we can’t do this without relevant customer data.

Collect Actionable Feedback from Customers

Having actionable feedback will tell you what to prioritize during the customer's lifetime. You need a team that is solely responsible for collecting and monitoring customer feedback. They need to know what keeps customers happy and what doesn’t. How does this feedback help us personalize their experience?

• It helps you deliver the right message, on the right platform, at the right moment.
• It makes onboarding easier and more personal.
• You’ll be able to deliver a better customer experience.
• It makes upselling and cross-selling easier.
• Customer support teams can provide more meaningful support.
• You can craft personalized in-app messages which increase client conversion.

Collect and store this data in one place. Ensure that all departments have easy access to it.

Detect Common Pain Points and Provide Solutions

Identify the issues that occur most frequently. You can find this in client feedback and on social media accounts. Then, simply provide solutions by showing how your product or service could help. And if you notice a decline in engagement, be proactive. Ask them if there are points of dissatisfaction and solve them. Sometimes, people want to be noticed before they ask for help.

Use Good Customer Success Software

Having the right software can make a huge difference. You might want to cut corners to reduce your expenses but this is a must. The software:

• Integrates all processes: social media management tools, CRM systems, and help desk software.
• Collects all customer data, including billing histories, survey results, etc.
• Analyzes customer behavior and survey data. It creates a customer health score based on that data.
• Makes it easier to segment and prioritize customers.
• Makes spotting problems easier.

Implement Expansion Revenue Tactics

Expansion revenue refers to any profit you make from a customer after their initial purchase (for example, when you upsell or cross-sell a customer).  

Upselling is when customers upgrade their subscriptions or buy a more expensive version of the product they initially wanted. For example, you’ll notice many businesses provide inexpensive basic plans. Business or premium plans are more expensive. The goal is for existing customers to upgrade to a more expensive plan. Cross-selling is when businesses sell complementary products or services.  

Let’s say you sell skincare products and your existing customer purchased a face wash. They’d likely be interested in a moisturizing cream or serum to go with it. Here’s how you can encourage upselling and cross-selling:

• Offer temporary upgrades.
• Provide product bundles.
• Have a sidebar widget with complimentary choices.
• Offer free shipping with a minimum spend.
• Recommendations should be limited.

Encourage New and Existing Customers To Switch To Annual Billing

You should always encourage customers to switch to annual billing as opposed to monthly billing. It’s easy for monthly billing to become inconsistent.  

Getting customers to commit to a year of usage increases the customer lifetime value. It also makes future revenue easier to predict and forecast. Not many customers will opt for this and an incentive will be necessary. You can offer a discount for annual payments or provide an extra month or two for free.

The Bottom Line

To increase customer lifetime value, you need to encourage loyalty in existing customers. Marketing strategies should ensure sustainable business growth.  

Customer retention is much easier than acquiring new customers. Keep your existing customers satisfied with personalized experiences. Determine what they need and provide solutions. And always show appreciation for customer loyalty – they’re keeping you in business!