Marketers are always on the hunt for ways to maximize profits. One basic tenet of marketing is that it’s easier to sell to someone who’s already bought your product or service. That means that customer retention is a priority: you want to turn a one-time purchase into a long, profitable relationship, in which both sides benefit. The concept of customer lifetime value is useful for measuring the strength and significance of this relationship. This estimate can be found by multiplying the average customer lifespan (how long they remain a customer) by their average expenditure. The value of the relationship is something you can increase via a number of methods. Here are just a few ways to boost your customers’ lifetime value.
1. Educate Customers
You should be doing everything you can to keep someone’s business after initially earning it, and to keep it as long as possible. One thing you can do is to appraise customers of all the features of your product. Make sure the materials that accompany your product accurately represent all of the things it’s capable of. If your product is complex, YouTube videos can be a great way of showing customers how to use it. Otherwise, you risk them becoming frustrated and abandoning your company to seek out a product that’s simpler. You should also emphasize what advantages your product has over competitors to minimize brand switching.
2. Make It Easy for Online Customers to Save Information
Online shoppers are frustrated when they have to repeat the checkout process at a site they’ve bought from before. Letting them choose to save their information for future purchases can eliminate this hassle and keep them from jumping ship. A checkbox allowing customers to save their billing and shipping info is easy to add to your checkout and will increase your conversions in no time. By the same token, you should also make it so that customers aren’t required to make an account to check out of your store, as this is another source of frustration.
3. Reward Loyal Patrons (But Minimize Expenditure)
Another way to retain customers is to recognize them for their allegiance to your brand. People like to feel like a part of something, and loyalty and rewards programs have a proven track record of increasing customer retention rates. Giving customers a free product after their fifth purchase, shouting them out on social media, or streamlining their ordering process is a great way of earning their trust and continued business. It’s important that you track and manage your expenditure on such efforts, though: if your loyalty program is costing you more money than it’s earning you, take a second look at what types of rewards you’re doling out. Sending a congratulatory email costs a lot less than giving out a free product, and can have the same effect on customer value if executed correctly.
4. Implement A Save Team
A save team is a department whose goal is to retain customers who are on the verge of canceling their service. While this department ostensibly exists to help customers with the cancellation process, their real goal is to change the customer’s mind and pull them back from the brink of cancellation. Train this team to offer incentives for customers to remain with your company, ideally with a tiered system that offers more incentives for customers with a higher value. Of course, if a customer is insistent on canceling, you should let them. But you’ll be surprised how many people change their minds when offered a discount or another reward for staying with you.
5. Offer Short-Term Discounts
People respond to a sense of urgency. A discount that only lasts for a few days has the potential to attract new customers as well as incite former customers to return to the fold to take advantage of the offer. Uploading an attractive graphic promoting your discount to social media and emailing your subscribers is a great way to spread the word, and you could see many of these customers sticking with your company if they have a positive experience.
The higher an individual customer’s lifetime value, the more energy and time you should invest in maintaining the relationship. But it’s not a fixed amount, by any means. Try the suggestions above to raise the average customer lifetime value and increase your profits.