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Infographic: 5 essential tips for increasing customer lifetime value (PDF download)
No matter the industry, businesses rely on acquiring and retaining customers and clients. Maintaining customer loyalty will improve your revenue, expand your customer base, and help grow your business.
While acquiring new customers is always beneficial, keeping the customers you gain can be far more impactful. Retained customers with a positive customer experience are more likely to bring in new business via word of mouth and spend more on your brand.
In the United States, an estimated 59% of customers have stopped doing business with a particular brand because of a bad experience. Therefore, it’s more important than ever to ensure your business is doing everything possible to increase customer lifetime value and retention.
What is customer lifetime value?
Customer lifetime value is the revenue you earn from a customer over time. Having a high customer lifetime value means your business will earn more revenue. Brand loyalty is one of the most significant factors in improving customer lifetime value.
Simply put, brand loyalty is an association that customers attach to your business, the products you offer, or the services you provide. Improving your customer experience by delivering high-end customer service, building relationships with your customers, and improving customer satisfaction can increase brand loyalty and, therefore, customer lifetime value.
5 ways to increase customer lifetime value
You can increase your business’s customer lifetime value in several ways. Here are five methods to implement right away:
1. Provide high-end customer service
The quality of your business's customer service can make or break your customer relationships. 89% of customers are more likely to make another purchase after a positive customer service experience. On the opposite end of the spectrum, 65% of customers said they had changed to a different brand because of a poor experience. Maintaining a dedicated, well-trained, knowledgeable customer support team is the best way to improve your customer service. This team should be accessible online, over the phone, or in person.
2. Build relationships with your customers
Building lasting relationships with your community and customers is vital for earning their loyalty and improving your customer lifetime value. There are several ways that you can accomplish this. One method is to offer your existing customers free upgrades, services, or products to reward their loyalty. You can also provide “premium services” for your loyal customers to improve their experience. Finally, contact your customers to tell them what you’re doing for them.
3. Collect feedback to fuel customer satisfaction
Some businesses fail to ask their customers for feedback, fearing they may say something negative. However, understanding your customers’ experiences, both good and bad, can lead to business success. Feedback lets you know what’s working and what isn’t. Are there services or products that your customers expect but that you have failed to deliver? Are there features that you could improve to enhance the average customer experience?
Collecting and acting on customer feedback can improve your overall customer satisfaction and lifetime value.
4. Personalize your customer’s experience
A recent survey showed that 80% of customers are likelier to do business with companies that offer personalized products and experiences. In addition, these survey respondents also indicated that they shop up to three times more frequently with these businesses, substantially increasing customer lifetime value.
Therefore, whether your business can provide additional services or products that personalize your customers' experience is worth considering. For example, you can personalize your customer’s experience by offering customizable service packages, curbside pickup services, and more product selections.
5. Upsell and cross-sell to expand revenue
Upselling and cross-selling are fantastic ways to increase customer lifetime value if you offer several services or products or provide various pricing packages.
Upselling is a sales technique that persuades customers to purchase an upgraded or premium version of the service or product they initially sought. Similarly, cross-selling is when you convince customers to buy another product or service besides the one they were interested in.
Some of the easiest ways to upsell and cross-sell include offering temporary upgrades or subscriptions, product and service bundles, free shipping with a minimum purchase amount, and complementary products with a purchase.
The bottom line
Increasing your customer lifetime value will enhance your overall revenue. Customers have many choices for where they shop and what services they subscribe to. Therefore, you must show your customers how much you value them to keep them coming back repeatedly.
Are you trying to improve your customer lifetime value? Show your customers that your business operates with integrity and honesty. Get accredited by the Better Business Bureau today.
Learn more about improving your customer relationships on BBB's biz HQ.