Systematic evaluation of the problems and growth patterns of businesses suggest that business growth is the resultant of two key factors - new customer acquisition and existing client retention with focus on increasing Customer Lifetime Value (CLV).
The probability of selling your product or service to a new customer is about 5 to 20 per cent. However, selling the same item to an existing customer has a probability of roughly 60 to 70 per cent. (Source: Marketing Metrics). This clearly suggests that client retention, with a focus on increasing CLV, is a far more effective strategy for producing a steady and predictable increase in revenue.
Despite this, ironically 44% of businesses spend more time and money on acquiring new customers, whilst only 16% of businesses focus on retaining and delighting existing customer than to find new ones. (Source: Blog - neilpatel.com )
Over the years, marketing experts have created a plethora of definitions for customer lifetime value. However, all of these definitions boil down to the fact that CLV is the projected net profit contribution of a customer over a period of time. Thus, a high CLV means each customer will bring in more revenue for your company.
Calculating customer lifetime value will require you to identify and add together the sales profits over the lifetime of each customer. Finally, you will get the CLV from a particular customer after deducting the acquisition costs from the sales profits.
Now the most important question arises as to how to improve customer lifetime value. Following proven tactics could go a long way in assisting you.
Improving the Customer Onboarding Process
It is extremely important for you to instil a strategic onboarding process to encourage new customers to come back for more, and thus increase their lifetime value to your company. Depending upon the industry you operate, your customer needs or expected outcomes, the onboarding process has to be fine-tuned. This can be done by engaging the newly acquired customers with highly personalized and interactive content.
Intelligent usage of marketing tools like moLotus - a breakthrough mobile interactive video advertising platform, can simplify your work and yield superior outcomes. For instance, you can run welcome campaigns targeting new customers sending them personalised and customized rich media content with suitable call-to-actions.
Offering High-End Customer Service
It is essential to invest in quality customer service to help your business grow and increase retention rate. Poor customer service leads to customer defection towards competitors. But how do you give top-notch customer service that boosts customer retention and increases customer lifetime value? Choosing a Customer Support platform could serve the purpose on the basis of features, reliability and scalability among other things. Ensure that your team responds to customer requests as fast as possible.
moLotus platform connects well to your brand's customer service needs—all with one touch. Brands are achieving phenomenal success in running automated customer support campaigns using moLotus.
Creating Customer Delight
Delighting your customers is a must for customer retention. Research shows that customers react positively to surprises like thank you notes, birthday coupons etc.
During the festive season, greet your customers with personalized and rich multimedia messages via moLotus. Customized birthday greetings will keep them engaged while enhancing consumer loyalty and brand exposure. This cost-effective communication platform is more effective than other marketing channels like cold calls, SMS and printed mailers.
Collecting Actionable Customer Feedback
Listen to your customers by seeking actionable feedback from them. Collect and store all the feedback you receive in one place and share it across all departments. Start using the “Rate-it-” an additional capability of moLotus to get an appropriate rating from your customers about the products or services they have procured from you. You can also send out customer satisfaction surveys like NPS and CSAT.
Rewarding Customer Loyalty
Loyal customers should receive some incentive to keep choosing your business over and over. A properly designed and managed loyalty campaign will do wonders for your business. Customer Loyalty Cards have been quite effective in creating a loyal customer base. However, modern customers are bored of carrying too many cards from different stores and brands. Many brands have already been strategizing around converting users from cards to digital platforms like loyalty apps. moLotus platform has further revolutionized the digital loyalty cards space. Brands in Malaysia have replaced all the plastic cards with mcards which gets directly to the receivers’ mobile phone - reducing cost and increasing loyalty.
The Bottom Line
You are the best judge of what suits your company as not all of the tactics mentioned above are suitable for every business. At the same time, there is no denying the fact that each tactic is super effective in boosting CLV. Retain more customers and grow your business!