Customers are the lifeblood of every business. For a business to survive, it needs to improve customer satisfaction. However, few businesses understand that it is much better to focus on customer retention rather than customer acquisition. Because of this, precious time and resources are wasted on drawing in new customers who aren’t in it for the long haul. This is why businesses need to focus on customer lifetime value.
While securing new customers is good for business, you must also make sure that you are taking care of the customers you already have. These customers have already tried and tested your products and services. If they are well cared for, it is more likely that they will continue doing business with you, which would both increase your revenue and keep it consistent.
While getting customers to stick with your business can be tricky, all you need is a little bit of strategy to get the job done. With that said, here are the best ways to increase customer satisfaction and customer lifetime value.
What is Customer Lifetime Value (CLV)?
The customer lifetime value, or CLV, indicates the total amount a customer has spent on your business throughout your entire relationship with them. With it, you can track how much profit you make from one customer over a certain time period. If the customer lifetime value is low, it means that the customer has not spent much on your business and has little impact on your revenue. However, if it is high, it means that the customer is likely to bring in future revenue for your business.
This phenomenon is best illustrated through subscription services. Say your business is a music streaming platform that charges $25 a month for premium membership. If a customer stays with your business for two years, you will earn around $600 from that customer alone. This is their customer lifetime value.
Why is Measuring CLV Important for Your Business?
When it comes to optimizing your business processes and finding ways to boost your revenue, the numbers matter. Customer lifetime value is an important performance metric that shows how well customers respond to your business. The data can help you make key business decisions and improve your overall processes. CLV can also:
- Help you stay on top of customer trends
Positive customer lifetime value indicates that you are doing a good job, which means you should continue what you are doing. A dip in CLV, however, may mean you need to improve some things. Observing these trends allows you to modify your business so you can cater to your customers’ wants and needs. While you’ll need deeper research to pinpoint the exact areas for optimization, analyzing CLV numbers is a step in the right direction.
- Make more informed plans
Customer lifetime values provide data that allow you to create more accurate sales forecasts. You can estimate the amount of money to expect from your current customer pool, which, in turn, will help you estimate how much you can spend on other areas of your business.
- Boost the return on investment of your marketing strategies
Think of customer lifetime value as marketing and remarketing to the same set of customers. If you can persuade a customer to keep doing business with you, you can secure the return on your investment. It also allows you to direct your focus away from marketing strategies geared towards customer acquisitions, which can save you more money in the long run.
Proven Ways to Increase Your Customer Lifetime Value
Now that you know why positive customer lifetime value can help optimize your business, it’s time to learn how to do it. Here are some proven ways to increase customer lifetime value.
Make the Boarding Process Easier
In today’s incredibly fast-paced market, consumers want to get their goods as fast as they can possibly get them. Understandably, your business will have its own set of lead times for getting products and services out to customers. Because of this, you should make sure that all your processes are as smooth, painless, and quick as possible.
Nobody likes a complicated process. Potential customers are more likely to do business with you if your boarding process is simple and convenient.
Give High-End, Premium Customer Service
Effective, high-quality customer service can help increase your customer retention. Investing in your customer service system will help you build stronger relationships with your customers. Additionally, you’re more likely to lose customers with poor customer service. If customers do not feel cared for at your business, they will patronize one of your competitors instead—even if you offer higher-quality products or services.
In today’s heavily digitized market, it is difficult to find a brand with a human touch. Providing personalized customer success management allows you to form meaningful connections with your customers. Optimizing your business’s social media platforms is a great way to spark these connections.
When customers expect you to be available almost 24/7, you can use social media platforms to expand your brand’s reach exponentially. Customers get disappointed if you take too long to get back to them or don’t answer their queries as soon as possible. As such, your social media channels should have a dedicated customer support system to quickly answer consumer questions and boost customer lifetime value.
Omnichannel customer service systems can help your business provide premium customer service, create a consistent, integrated brand experience across multiple channels and ensure customer success. This means the level and quality of service have to be the same whether you are communicating through phone, email, social media, website, or chat. You can outsource these jobs to create a more efficient customer service system.
Provide a Memorable Customer Experience
You should view your customers’ interactions with your business as a journey. From their initial awareness to your interactions with customers post-purchase, you need to ensure that their customer experience is seamless and memorable. Remember, even if you have an efficient customer service system in place, this does not necessarily translate to a good customer experience.
Customer experience and customer service are often used interchangeably. To boost your business's customer lifetime value, you need to ensure excellence on both fronts. While your customer service system works to get your customers the help they need as soon as they need it, your customer experience strategy keeps your brand memorable and well-loved. Here are some key factors to help you distinguish between the two.
Customer experiences are proactive, while customer service is reactive.
You should make it a goal for your brand to manufacture a holistic customer experience. To create a great customer experience, you need to ensure your products, services, and marketing strategies are consistently resonating with your customers. Some of the most common reasons your customers will seek support from your customer service system are to ask questions, raise complaints, praise your brand, or simply communicate their consumer feedback. These interactions typically stem from past experiences they have had with your brand and should be taken into account by a customer success manager.
Customer service is a response to the customer experience.
As mentioned, you should create a holistic customer experience. How customers experience your brand dictates their overall perception of it. If they have any questions or concerns about their experience, they are more likely to utilize your customer service system.
Customer experience is geared towards building relationships.
Your goal in creating an excellent customer experience is to boost customer lifetime value. The most basic building block of CLV is long-term relationships with your customers, so you must make that your main goal. This will entail deep research into your target customers’ wants and needs so you can execute them in all of your customer touchpoints.
Collect Actionable Feedback From Customers–and Act On It!
One of the best ways to boost your customer lifetime value is to gather suggestions from your customers and then optimize your processes accordingly. Since your customers are the lifeblood of your business, you‘ll know whether or not you’re doing a good job based on how satisfied your customers are with your brand.
You can collect customer feedback to measure overall customer success. This will allow you to kill two birds with one stone: you can gauge how receptive customers are to your brand, and you can collect actionable data to improve your business processes. Collecting actionable feedback and acting on it is a great way to build your relationship with your customers. Customers are more likely to trust your brand because this action allows them to feel like you care about them beyond the sale.
Customer feedback is usually collected using surveys that come in the form of either an NPS or a CSAT. An NPS (Net Promoter Score) measures customer loyalty. On the other hand, a CSAT (Customer Satisfaction Score) measures the level of satisfaction your customers have with your product or service at each stage of the buyer’s journey. Both surveys are an effective way to gauge how positively consumers are viewing your brand and how you can optimize your processes to serve them better.
Digital software and other computer tools are your best bet to accurately measure customer satisfaction. While they may incur additional costs, these tools are typically included when you use an outsourced CS package. Outsourcing your customer service can help you optimize the way you collect customer data, which allows you to focus on other areas of your business.
Leverage the Advantages of Outsourcing Customer Support
It is crucial to ensure that your customer experience strategy and customer support system are in tip-top shape. These systems require almost round-the-clock monitoring to ensure they’re running efficiently, which is something your business may not have the resources to do. This is especially true for your customers’ post-purchase journeys, as the majority of your staff may focus more on the pre-purchase segment of the buyer’s journey.
Poor customer service can give your brand a bad reputation and negatively affect customer lifetime value. Outsourcing your customer support is wise because it will help your business accommodate all customer requests and facilitate an excellent customer experience. An outsourced customer support team allows you to ensure that customers can reach you whenever they need you. This can also prevent you from over-burdening your internal team with the extra work it would take to journey with each and every customer throughout their individual buyer’s journeys.
Don’t Lag Behind Your CLV Numbers
Your customer lifetime value is a direct reflection of how effectively you value your customers, and this will reflect on your revenue. Remember, higher CLV numbers mean higher revenue, as customers are more likely to keep doing business with you if they are happy.
Today’s customers want to know that you care about them way beyond the sale, so providing them with a seamless, personalized, and engaging customer experience is crucial. When coupled with a stellar customer support system, you can expect your CLV numbers to grow.
Work with an outsourced customer support team to build deeper relationships and boost your customer lifetime value. Helpware can connect you with highly-skilled and efficient customer support team members, as well as optimize your processes with the best software on the market. As the top provider of outsourced customer support, Helpware can assist your team in creating excellent customer experiences. Reach out today to book a call!