The better your customer lifetime value (CLV) is, the more profitable your business is going to be.
And don’t fool yourself – your CLV is a moving target. It can change based on the products or services you’re offering, demand in the marketplace, how consistent you are with customer support, and so on.
That isn’t to suggest that your CLV is going to go through radical shifts. But it’s good to remember that you may need to recalculate from time to time.
It is possible to boost your CLV – in other words, the average profit you generate from each customer. Want to know how? Read on.
Stress Relationship Over Sales
It is easier said than done. Salespeople usually have monthly quotas to meet, and furthermore, business objectives dictate revenue goals.
But short-term thinking can negatively affect your CLV. After all, if your leads and customers feel like they’re being pressured into buying something, they could just as easily find their way over to a competitor who isn’t just seeing dollar signs.
According to Invesp, it costs five times as much to attract a new customer than to keep an existing one.
Building a long-term relationship will enable you to maintain your existing customer base while you’re growing it. Here are several things you can do to foster lasting engagement:
- Create relevant content for your users. Whether it’s blog posts, podcast audios, or videos, use entertaining and engaging content to nurture leads and usher them further down the sales funnel.
- Be helpful in unexpected ways. Show interest in who your customers are, and if they mention a challenge their experiencing, see if there’s a way for you to help them solve it – even if it’s not in your job description.
- Be willing to refer them to other businesses. It seems counter-intuitive. But there may be times when your product just isn’t the right fit for the customer you’re talking to. Send them in the right direction, and they will come back to you for additional advice and return business.
Create More Opportunities For Upselling & Cross-Selling
So, you’re a guitar manufacturer. Could you be making and selling guitar strings too? Or maybe you’re running a social media SaaS app. Couldn’t you educate your customers with digital resources on best practices to help them get the most of their social media marketing efforts?
These are both simple examples, but there is a chance you aren’t creating enough upselling and cross-selling opportunities for yourself. When you increase the value of the average sale, you simultaneously enhance your CLV.
Avoid upselling and cross-selling when it would be dishonest or incongruent to do so. You should be suggesting products your customers are going to benefit from. 86% of customers are willing to pay more for an upgraded experience.
Leverage Multiple Touch Points
From email and social media to in-person meetings and phone calls, there are many touchpoints you can leverage as a business.
56% of customers are somewhat likely to switch to another brand or company if they offer more options to connect with them.
The key point here is to understand the preferences of your customers. Which communication methods do they like to use? How would they like to be contacted? How often do they want to hear from you?
Customer loyalty is tough to foster, but when you’re interacting with your customers through the expected channels with the right amount of frequency, you will increase your CLV.
If you want to enhance CLV, learn to play longball. Avoid shortsighted strategies that generate immediate revenue but do nothing to nurture customer longevity and loyalty.
What are you doing to increase your CLV? Have your experiments and initiatives worked out?
Let us know in the comments below.