It hurts to see customers use your products or services for some time then leave your business. It is the wish of every businessperson to retain clients for a long time.
After all the hard work of searching for customers, others just buy once from your business. Maintaining customers for a long time ensures continuous flow of revenue and business stability.
In this article, we shall talk about customer lifetime value and how to improve and calculate it.
What is the customer lifetime value?
This is the amount of money a business generates from a single customer after having sold to the customer for a long time.
It’s the revenue you get from a customer who keeps using your business products or services. Here is a more simplified definition of customer value by Hubspot.
Ways to improve customer lifetime value
Improve onboarding process
After acquiring new clients, you need to give them the best onboarding process.
Research by Wyzowl 86% of people says that they would like to stay with brands that invest in Onboarding once they become customers.
Your new customers need to know how your business operates and how the products or services will help them solve their pains.
They also need to know how to effectively use the products or services from your business.
For example, if you have a SaaS business and your newly subscribed customers don’t know how to use your services, they will leave you.
Customers can keep buying from your brand when they see the value of your business and know how to use the products or services to solve their pain points.
If you’re selling physical products, ensure you give the customers the best after-sales services. For example, you can offer to give them free maintenance of the products for a year or so.
You can also guide them every step as they familiarize themselves with your products. These small actions help trust your business and build a persona connection with you.
They will make your business their shopping point which will increase your revenue and sales over time.
Excellent customer support
Your customers will have challenges that need to be addressed as they use your products. They will need a person to guide them through every challenge and show them the right way.
Businesses should have a professional support team to address their customers. Research by Statista shows that 33% of customers like to have their issues resolved in a single interaction.
The team should be available 24/7 every time their customers need them. Here are some statistics that show the value of great customer support.
When customers enjoy business products and know the business has their back every time they neet a challenge, they will stay with that business for a long time.
As part of customer support, you can add live chat on the website where customer needs can be addressed immediately.
Act on customer feedback
To keep customers using your business products or services you have to engage them. Ask them how they view your products and how they want the products improved.
You can run a survey and send it to the customers. Collect the customer feedback, analyze it act on what your customers suggest to keep improving the value of your business.
Once customers give you feedback about your business you should act on it immediately.
The feedback is the customer’s direct way of saying how they want the product or service to effectively solve their pains.
Do upselling and cross-selling
As you market your business and watch customers use your business, look for other ways you can increase the value you give them.
Look for products or services you can upsell or cross-sell to the customers. It will help you increase sales as you also help your customers in solving their pains.
Providing more services or products that will keep satisfying your customers and make them happy will encourage them to keep using your business.
Simplify checkout process
Complicated checkout processes can discourage customers from using your business. A simple and easy checkout process can motivate your customers to make recurrent sales from your business.
Also include different payment options that customers can use in their purchase.
If you limit or use specific options, you can limit your customers and end up losing most clients who don’t have your preferred payment options.
Give discounts and special offers
Discounts and offers motivate customers to buy as they can get what they want at reduced prices.
To keep customers and encourage them to use your business products or services, give them offers and discounts.
Better shipping terms
You can have excellent products for your customers. However, if your shipping terms are not good and customers keep missing or having delays with their deliveries they will stop buying from you.
Offer your customers the best shipping terms that are cheap. You can also offer them free shipping as part of your after-sales service.
It will encourage them to keep making purchases from you as they get their goods on time and in the right condition.
Write high-quality content
Your customers will keep engaging with your website content as they keep buying from you.
It is essential to offer your customers quality content that is fun, educative, full of information that helps them in solving their pains.
Your great quality content will also help draw more traffic to your website, engage with your products or services and lead to conversion and sales.
Customer lifetime value importance
It’s expensive to acquire new customers
Marketing a brand is hard and costly. It is expensive to get new customers for your business. Retaining customers for long reduces the cost of marketing and acquiring customers.
You also get continuous revenue for the customer purchases. It is also easy to sell to customers who have used your business for a long time as they know your products or services well.
It boosts brand loyalty with time
As you keep serving your customers, you give them the best solutions to their pain points. To maintain them you do more research and learn how you can keep satisfying their pain points.
Customers will keep using your business and trust your brand with time. Since they have seen the quality of services or products you offer and their impact on their life, they refer others to your business.
How to calculate the customer lifetime value
There are different lifetime models in calculating customer lifetime value. Here is a compilation of the models by Hubspot business.
Here are some more explanations on calculating customer lifetime value.
To keep making profits and increase your sales you have to maintain your customers for a long time. Your business should deliver the best products or services to the customers and help them solve their pain points.
Retaining your customers will help increase your customer lifetime value and increase your brand growth, sales and revenue.
Use these tips to keep improving your customer lifetime value, deliver the best solutions to your customer pain points and keep making repeat sales.