You’re probably wondering: How can I increase my revenues while not breaking the bank? 💸 Well, this is a great question but the answer is… by simply increasing the lifetime value of your existing customers.
Customer lifetime value, done right, can have a meaningful impact on increasing your customers loyalty and retention which will ultimately lead to sustainable growth and a wealth of other advantages. Let’s take a closer look. 🕵🏼♀️
What’s Customer Lifetime Value (CLV)?
A customer lifetime value (CLV, or CLTV) is a primary metric that measures how much profit your customers will generate throughout their relationship with your business. It also shows how healthy your customer base is and can predict how likely your customers will spend money on your products or services in the future.
Why is CLV essential?
- Identify your ideal customers and retain them
Knowing the customer’s lifetime value can be a very effective way to estimate how much money your customers are willing to spend on your business over time. Hence, you can start retaining them by developing a customer acquisition strategy that will target your ideal customers and prospective buyers.
Moreover, you’ll be able to gather more insights about your customers to encourage them to spend more money over their lifetime with your brand.
2. Supercharge your customer loyalty and support
The picture is getting clearer: if you found that the CLV is lower than average, you should think of offering your customers a loyalty program that meets their needs or optimizing your customer support strategy across all channels. But before you do that focus on identifying the upcoming threats and ensure that everything is moving forward as planned by continuously reviewing the CLV. That will be the green light for you to distinguish which decisions or features work for your brand and which don’t.
Related: Why Is It Essential To Launch a Loyalty Program?
3. Increase revenue over time
A high CLV means that each customer will result in more revenue for your brand and repeated orders from existing customers. Measuring CLV is absolutely key to understanding how your business earns revenue and where you can improve it.
For instance, CLV can identify the customer segments that will bring you the most value and you can later attract them through your marketing activities.
Conclusion
Boosting your customer lifetime value is key in order for your business to thrive and build on revenue.
Instead of focusing on acquiring new expensive customers, start focusing on how to sell to and keep your current customers with higher lifetime values by understanding who the best ones are, what are their needs, and how you’ll be able to offer them a premium service. 🤞
