What is Customer Lifetime Value (CLV)? For starters, if your online business isn’t thinking about it, now is the time to start.
CLV is a predictive measurement to determine a customer’s potential monetary value for your company. The longer the customer sticks with you, the greater their lifetime value.
To find a CLV, you take the total revenue from a customer (annual revenue times their approximate lifespan) and subtract the cost of acquiring that customer initially. This metric actually tells how much that customer is worth to your company.
Ideally, you want this number to be high and continually grow. In short, the best way to improve CLV is to keep your customer happy and in doing so, increase sales. Here are five ways to get you there:
Know What Customers Want
The best way to know what your customers want and value is to ask them. If you implement product experience software into your business’ app or site, you can send in-app surveys to your customers. With these surveys, you’ll learn what they like or don’t like from your product and what they’d like to see more of.
Otherwise, you can research for statistics and trends on your specific market.
Implementing what you learn might require your organization to develop a strategy:
- Create a vision of customer service
- Hire the right employees
- Train people on service skills
- Hold employees accountable
- Recognize and reward good service
A customer-centric strategy helps improve the CLV of your customers.
Make Your Users’ Experience of the Product More Enjoyable
Product experience relates to how your customer interacts with a particular product, not just the brand. They may be using several products, but the experience is of using each product and not the appeal of the brand itself.
Improving the product experience requires thinking outside of the product itself. Rather than always adding new features, try encouraging communication between yourself and the user or improve the flow of your product. Try increasing engagement through design and content upgrades to create a more enjoyable product experience.
Improve Your Customer Relationships and Create High-Quality Customer Service
The quality of customer service can make or break your customers’ satisfaction with your brand. You can create excellent customer service with links to helpful information as well as showing photos or diagrams of how to use the product. Customer service should be available 24/7 to help those employing your product at any time of day.
You might use social media to engage more customers and improve relationships. Letting customers know that you care about what they think goes a long way in enhancing CLV. You might gather your service team to discuss creative means on how to improve customer relationships.
Offer Exclusive Rewards and Programs to Individual Users
To keep loyal customers happy, you can send prizes and exclusive perks to top users. Give away free products, offer a phone consultation, send a note to a frequent user, and more.
Jason Lee, CEO of Polyvore (now Ssense), gives an example:
“…We had someone who was very ill and we found her blog and found a sweater that she wanted, so we bought her the sweater and we made a cup and printed her Polyvore set on it and we sent it to her.”
Appreciation always goes far in doing business.
Be Consistent in Your Strategy
Whatever you choose to do to improve your CLV, do it with consistency. When you do not act consistently, there is a chance that your CLV will decrease again. Growing your customer service strategy is the first step.
Apple is a prime example of a strategy that works. With enough workers and customer service representatives that are thoroughly trained as well as automated callback system, customers are a priority.
Implementing a consistent strategy is made easier with conversations with employees and adding goals for improving CLV. Expanding customer service may be one option, while creating written materials, such as a newsletter, might lead to more satisfied customers.
Data-driven decisions are more easily made by learning more about your customers and their experience with your products. You can then decide on steps to take to retain and expand your customer base. Your e-commerce business can grow its CLV by your being aware of both the product, the customer, and the brand experience and working to improve it.