What is Customer Lifetime Value?
The meaning of ‘customer lifetime value’ is the money spent and how much profit a company makes from a single customer over time.
The abbreviations of customer lifetime value are CLV, LTV, and CLTV.
Customer lifetime value can be calculated based on the satisfaction and retention of customers.
For detailed descriptions of customer lifetime value, you can check What is Customer Lifetime Value (CLV)? - CLV Definition
Why is Customer Lifetime Value Important?
Customer lifetime value helps you measure the financial value of your brand, and it is a good determinator of your product or service.
While evaluating the importance of CLV, you can easily say that existing customers are more prone to buy than new customers.
Also, rather than gathering new customers, retaining your customers is able to make a profit.
Therefore, holding your customers will make good for you unless you try to get new customers for your business.
Plus, you can calculate the revenue of your business if you keep track of CLV.
Segmenting your customers will be more straightforward to focus on and calculate the profit.
The 12 Influential Ways to Increase Customer Lifetime Value
These 12 influential ways are the most effective factors while increasing your customer lifetime value.
1. Optimize Your User Onboarding Process
It is always best when people directly understand your product or service when they start using it.
And you can make it possible by creating the most seamless user onboarding process.
When you consider what a good user onboarding process should include, we can order as
- A product walkthrough with tips and clues will help your users.
- It is better when you use a clear, precise, and detailed description for your product introductions.
- Explanatory information and tutorials can develop your user experience.
- Creating a personalized process for your users will help them feel integrated.
- Asking for customer feedback is one of the factors that can shape the user experience.
- You shouldn’t ignore offering help and support through the process- if necessary, user demos and guides should be provided for the users.
However, if you have a user onboarding process and cannot see the impact you are trying to show, you should optimize your user onboarding process.
Making the user onboarding experience as fast and easy as possible can increase the possibility of customers’ preferences.
To offer the right user experience, you can check user onboarding examples.
2. Personalize Your Customers’ Experience
The second way to increase customer lifetime value is the personalization of your customers’ experience.
Everyone loves personalization when it comes to addressing. With personalization, you can build better relationships with your customers since you give them a feeling of caring.
Also, your customers will be more prone to communicate with you, which can help you in collecting customer data and their preferences.
This can guide you through the product and meet their needs in a more influential way.
Better relationships grow to repeat purchases and a sense of belonging for your brand.
You can start personalizing your customer's experience with your emails and communication, and the best time to consider this option is now ;)
3. Solve the Problems for Pain Points
Problems may not always be the disadvantages if you want to develop your current situation. You should know how to turn them into advantages.
Solving the problems of your customers help you increase your CLV because you will be increasing user engagement.
The more you engage with your customers, the more referrals you will have as well.
When your customers have a problem to solve, and you help them, you will contribute to customer satisfaction.
Indeed, it is crucial to truly help your customers to find solutions to their problems along with its important impact on customer lifetime value.
4. Create Loyalty Programs
As we have pointed out, customer retention is one of the leading factors in increasing customer lifetime value.
Loyalty programs can help you strengthen your bond with your customers and make them repeat their purchases if you use them strategically.
However, you should not let go of all the other things by considering that customer loyalty programs are enough by themselves.
For creating a long-term relationship, you can make use of membership sites to connect with your customers. It is not late to turn your website into a membership site with a membership website builder easily.
By creating a membership site, you can increase the number of your customers, their loyalty, and your average customer lifetime value.
5. Offering Incentives
Incentives have a positive impact on your business, such as taking an emotional response, leveraging motivation, and creating a sense of fairness.
If you have a reward-based system, you can upgrade your customers and their opportunities.
Offering incentives can help you reach the customers, but it may not be sufficient to hold them with you.
Therefore, you may need to create special discounts, personalized offers, or free shipping to your customers.
It will help them feel privileged and more related to your brand.
6. Collect Customer Feedback
Customer feedback can provide you with more information about your products and services.
Also, giving an ear to what your customers are saying will support your customer LTV since they feel the importance you give to them.
You should collect customer feedback with a periodical schedule to make them effective and useful.
To evaluate the process, there are different ways of collecting feedback surveys. We can recommend Net Promoter Score (NPS) for you.
NPS is one of the most engaging and informative ways of hearing your customers.
7. Provide Customer Support
Today, most businesses have customer support, but do you know that not having customer support takes too much time for the users, and it harms the user experience?
You need to have an exclusive customer support system based on the needs of your customers.
24/7 support is one of the choices for the bigger companies since there is a flow.
Live chats are the best choice, and you can find the best AI chatbot that is suitable for your business.
If you have social media accounts, you might be interested in forming friendly customer support on your accounts as well.
Omnichannel support is mostly advised to increase the customer's lifetime value since it appeals to all kinds of support for the customers rather than multichannel support.
8. Create Content for Your Customers
People generally want to be convinced about a product or service to use or to continue to use.
Therefore, it is much better if you can be more convincing in what you are doing.
The most common and approved way of doing this is creating content for your customers on your website or with your emails.
For example, you can share testimonials from your customers, which you can take from your social media accounts or directly from your customers’ cases.
The more you feature the voice of your customers, the more CLTV you will have at the end.
9. Cross-Sell and Upsell Products to Your Customers
Selling a similar product to what your customers buy, which is cross-selling, or selling a higher-priced product to your customers, which is upselling, are valuable for businesses.
If you want to retain your customers, you need to evaluate their shopping experience, and then you will be able to achieve revenue expansion.
It may sound not too easy to handle; however, you can succeed if you pay attention to what your customers’ shopping habits are.
Bundle products, limited recommendations, and complementary products are effective ways to hold and upgrade your customers’ experience.
10. Create Communities
Communities bring people together for the same purposes, and solving a problem or sharing an experience might be good purposes.
When you have a community for your customers, it is much easier to provide them with a space where collaboration is valid.
Along with retaining your customers, you can have a customer acquisition process which can lead you to increase customer lifetime value.
11. Provide Customer Training Programs
Not many businesses think that there needs to be a customer training program, do you or did you?
It might be a cliche for you, but if your product is too hard to handle, you need to get one to make it work and show that you care about the UX.
You can include a customer training program in your onboarding process or any kind of beginning process that your customers happen to demand.
It will increase your possibility of increasing CLV and ROI since people get a high knowledge about your brand.
12. Encourage Your Customers to Upgrade Your Pricing
Though it is not the most common way, it undoubtedly increases the CLV.
If you run a product with supply and demand, then you can perform this method easily based on the needs of your customers.
Sometimes, meeting the expectations of your customers may depend on their plans, and there is no wonder to recommend upgrading their pricing plans.
For many businesses, the higher plans have higher opportunities, so though it can affect the plan of your product, it contributes to the budget as well.
To Conclude
All in all, we hope these points can lead your way and help you for improving your customer retention, thus, customer lifetime value.
We have covered the meaning, importance, and methods of increasing customer lifetime value.
These will help you determine the route of your business while acquiring new customers and retaining existing customers.
FAQs
If you are interested in the details of increasing customer lifetime value, here are some enlightening questions.
Is CLV Valid for All Businesses?
Yes. If a business has customers, customer lifetime value can be activated automatically by evaluating the experience of your customers. Businesses can determine their CLVs in short-term and long-term periods.
Can All Business Increase Their Customer Lifetime Value?
Yes. If the right methods are applied, all businesses can increase their CLV. Also, it is important to decide if the business needs to go on with the existing or new customers to activate the significance of CLV.
Is There Any Frequency of Measuring CLV?
It depends on the business model of the brand. The business owner should take the frequency of acquiring new customers, how long they remain loyal to the brand, and how the current customers are appealed to repeat their purchases into consideration. Then, it is possible to measure CLTV for the business.
Does CLV Affect the Past of Businesses?
When CLV is decided to measure, it affects the future of the businesses, and the business should be aware of this. The past CLV can be calculated, and improvements can be made accordingly for the business. However, CLV is a metric to affect the future.
Recommended Blog Posts
Here are the other articles from Popupsmart to add value to your customer retention and acquisition at the same time!
- 11 KPIs for Customer Retention: The Key to Customer Loyalty
- How to Increase Perceived Value? 10 Practical Tips
- 50 Psychographic Survey Questions to Boost Customer Loyalty
- 15 Presell Page Examples to Lead Your Customers to Buy
