It is a well-known fact amongst businesses of all sizes that keeping an existing customer is cheaper than acquiring a new customer.
Many might not realize, though that increasing customer retention by only 5% can increase profits by between 25% to 95%.
Are you starting to look at customer lifetime value models and interested in learning more about how to maximize customer lifetime value?
Let’s take a look at everything you need to know.
What Is Customer Lifetime Value?
One of the most important metrics you can use to measure your growing company is customer lifetime value (CLTV.) You can use this metric in relation to CAC, which stands for the cost of customer acquisition. Basically, you are relating how long it takes to make back the investment you made in order to earn the new customer.
Customer lifetime value is a metric that explains to companies how much revenue, over the course of the business relationship, one customer should be expected to generate. A greater lifetime value means that a customer will continue to purchase some accompany for a longer period of time.
Acquiring new customers is expensive. For this reason, it is essential for growing companies to extend their customer lifetime value.
1. Improve the Onboarding Process
Poor onboarding is the leading cause of churn. Customer church is basically the percentage of customers that, during a certain time period, stopped using the service or product of your company.
For this reason, onboarding should be one of your top priorities.
In the onboarding process, your customer is truly engaging with your service or product. This means this is the spot where you have the capability of making the largest positive impact. A good onboarding process should be strategic in order to encourage new users keep coming back.
Different desired outcomes, industries, or customer needs can lead to onboarding processes looking quite different. There are a few key tips, though, that most businesses are going to want to use in order to engage the target demographic.
The first step is that you want to make sure the onboarding process is fast and easy. Some examples of ways that this can be done include using interactive how-to videos, walk-through guides, wrapped tutorials, and any other valuable content that can help your customers achieve the ends they want.
It’s also possible to personalize onboarding sequences for each buyer persona.
2. Keep Them Engaged With Value-Packed Content
One of the best ways to retain customers is through email marketing. However, for this marketing tactic to be successful, you must go about it the right way.
You want to be sending your customers emails that emphasize the value of your service or product.
You also want to consider producing educational content. This is content that is created in order to help offer value to the customer without any sales pitches.
3. Provide High-Quality Customer Service
The quality of your customer service is absolutely crucial to the success of customer retention and business growth. You will lose customers to your competitors if you have subpar customer service even if your product is perfect.
One study found that after one single instance of poor customer service, 33% of people were likely to find a different brand entirely.
Customer service is not a place that you want to skimp. You can boost your lifetime value per customer by offering support on as many channels as possible, offering around-the-clock support, monitoring social media, offering live chat support, and maintaining a knowledge base.
4. Listen to Your Customers
If you want to increase your customer lifetime value, you’re going to need to start listening to your customers if you aren’t already.
You want to understand the preferred methods of communication, likes, dislikes, positive experiences, negative experiences of your customer. So help you to engage with them in ways that are personal and relevant.
5. Keep in Touch After Purchase
The customer relationship does not and when they buy your product, or at least hopefully not. It should be of the utmost importance to you to maintain the relationship with the customer in the hope that they will return.
There are a million reasons you can find to send your customers little reminders of your company. This can help them to relate to you and you can encourage them to become loyal consumers.
You can also reach out to people who started the purchasing process but did not finish. You can remind them of their interest and reach out to express that you can assist them if they’d like.
6. Understand Your Audience
There is a difference between what people say and what people actually do. Listening to customer feedback is incredibly helpful, however, this still can leave a hole in your understanding of your audience.
There are a wide variety of tools that can help you to understand your audience better. One of these tools is Session Replay, which allows you to watch past videos of anonymized users in the way that they interact with your apps or websites. This is a remarkable tool that lets you proverbially look over the shoulder of your customers while they are on your website.
One of the great things about this tool is that it can help you to identify problems you might not have otherwise known existed. You can therefore remedy any issues you find to help improve the customer experience and customer lifetime value. Follow this link to find more information on Session Replay.
Customer Lifetime Value: A Vital Metric Not to Be Overlooked!
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