One of the oldest adages in business is, “The customer is always right,” which often translates into a goal of customer happiness. After all, customers are your most significant organizational asset.
It almost goes without saying that strong customer relationships are vital to a company’s success. If you’re struggling to retain customers, consider improving your customer lifetime value.
The Importance of Customer Lifetime Value
A retention metric, customer lifetime value (or CLV) is a projection of the total expected revenue from a customer relationship.
Knowing the total value a customer brings to your bottom line opens the door to a better understanding of your business model’s sustainability and where to best invest resources.
Quick Tips for Improving CLV
How do you improve CLV? Put the focus on providing lasting value to each customer.
1. Know What Drives Your CLV
A 2016 Temkin Group report found loyal customers are five times more likely to repurchase and four times more likely to refer. Unsurprisingly, customer loyalty is a significant factor in CLV and retention rates. Don’t worry; you don’t need a program to build loyalty. Offering client education and responsive support is one fundamental way to increase customer loyalty.
2. Collect Customer Information
Engaging with customers is far more natural when you understand where they’re coming from. Gather feedback and use a CRM tool keep a pulse on each customer’s lifecycle. Quick access to customer information allows you to ensure interactions occur precisely when needed.
3. Make Use of It
From sales forecasting to granular reporting, armed with your CLV, the opportunities are endless. For example, you can use customer lifetime value in campaigns and other long-term marketing initiatives, benchmarking your audience before you begin and monitoring changes to lifetime value after implementation.
The Customer Is Always Right
Yes, the well-known moniker is a business cliché. But it’s also a great reminder to keep a customer-centric mindset.
CLV isn’t just a useful retention metric. When correctly applied, customer lifetime value allows you to prioritize your customers and their needs to provide the solutions that satisfy them.