Sure-Fire Strategies for Increasing Customer Life Time Value

In spite of the continued adoption of social media, many brands struggle with retaining a truly loyal customer base.

Indeed, it is much cheaper to retain an existing customer than to acquire a new one especially in industries where the bottom line depends on a long-term view of sales and revenues.

In one study, KiSSmetrics found that on average a lost customer costs a brand $243. Other findings showed that businesses have a 60-70 percent probability of selling to an existing customer but this falls to 5-20 percent for a prospective or new customer.

The reason why so many businesses struggle with retaining their existing customers is they focus more on the transactional value as opposed to the customer’s experience after the transaction. Yet, the customer’s experience after the conversion is at the heart of maximising lifetime value.

Here’s a simple formula for calculating customer lifetime value:

 (Average value of sale)

X

(Number of repeat transactions)

X

(Average retention time in months or years for a typical customer)

So what can brands do to increase the lifetime value of their customers at a time when customers are presented with so many choices?

Give Customers a Reason Not To Go To Your Competitors

customer retentionTo keep customers around for the long term, it is important to provide them with real value that they will not find anywhere else. This is not about giving free stuff or discounts—it is about offering additional resources and services that differentiate your brand from the competitor. This includes exceptional customer service.

Go the Extra Mile To Offer Extra Convenience

Today, every consumer is looking for the easiest and fastest way to solve their problems. Brands that deliver true convenience are winning.

Convenience comes in many forms whether that is refills, automated billing, free delivery, fuss-free money-back guarantees or just simple reminders. If you can allow customers to spend more time enjoying your product, you may be able to keep them around your brand for the long-term.

To offer convenience, you must understand your customers’ needs to determine what would make their life easier.

Do Not Compromise On Quality

After a while, a lot of brands start to lose sight of the initial value they offered—this is a sure way to lose customers. Customers don’t stay loyal to poor quality; on the contrary, they continue to spend on products that give them bang for their buck.

The more consumers feel that they are getting value from a product or a brand, the more they are likely to share the news with their friends and family.

Solve Their Problems, Fast

Customers are increasingly intolerant of brands with poor customer service. In one study, up to 72 percent of customers ranked customer service as the biggest reason why they remained loyal to a brand.

Platforms such as social media pages, blogs and discussion forums have become the new way through which customers engage with brands. Use these channels to listen to your customers so you can solve their problems on time.

Customers will stick with and promote brands that hear them and swiftly address their concerns. Consider that up to 45 percent of customers will abandon their shopping cart if their questions about any aspect of the product are not answered in good time.

Automate the Processes

To get more value from your customers you need to integrate processes that will make it easy for them to make additional purchases. Used well, automation can be helpful in nurturing customers and keeping them in the sales funnel.

Automation is also a great way to link all aspects of your marketing efforts including social, email, SEO and lead generation to present to your customers a cohesive and seamless experience with your brand.

Make it Personal

influencer marketingWhile automation can be beneficial, it is easy to lose customers when excessive automation depersonalises the experience they have with your brand.

One study found that as many as 94 percent of brands believe that personalisation is important for success.

Amazon does an excellent job of personalising its customers’ experience by providing relevant product recommendations based on an individual’s needs and purchase behaviour.

People want to see that you are anticipating their needs and are providing them with opportunities to meet these needs. Such feelings of convenience and specialness largely drive purchase behaviours.

Reward Your Loyal Customers

Incentivising your esteemed customers is a great way to retain their loyalty and get more business from them. Incentives can be as simple but as meaningful as providing access to exclusive content, creating an exclusive club for super fans or recognising a fan by placing them in the spotlight and publicly appreciating them.

Make a point of getting up-close with your customers for example by sending them something they care about. A good way to do this is looking at their social profiles to see what they enjoy, and then surprise them with a gift you know would be meaningful to them. Such gestures will keep customers loyal and they will become some of greatest brand ambassadors.

Understanding your customers’ journey is critical to meeting their needs, retaining their loyalty and therefore keeping them in your sales funnel. Have a good look at your own data—it will show you possible gaps in the customers’ journey so you can identity better ways to maximise their lifetime value.

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