MAXIMISING CUSTOMER LIFETIME VALUE: 12 PROVEN STRATEGIES

Customer lifetime value (CLV) is a metric that indicates the total revenue a business can reasonably expect from a single customer account throughout the business relationship. The metric considers a customer’s revenue value and compares that number to the company’s predicted customer lifespan. 

WHAT IS THE IMPORTANCE OF CUSTOMER LIFETIME VALUE?

Customer lifetime value (CLV) provides a picture of the business's long-term and financial visibility. High CLV is an indicator of product-market fit, brand loyalty, and recurring revenue from existing customers. It is recommended that e-commerce businesses monitor and optimise customer lifetime value if they are looking for steady growth. 

WHAT ARE THE STRATEGIES TO INCREASE CUSTOMER LIFETIME VALUE(CLV)?

The following are the strategies to increase customer lifetime value: 

1. PERSONALISED CUSTOMER EXPERIENCE 

A personalised customer experience is achieved when every touchpoint in a customer journey –like one's websites, emails, push notifications, social media ads, or chatbot interactions are tailored to their unique needs, interests, and preferences. 

WHAT ARE THE EXAMPLES OF PERSONALISED CUSTOMER EXPERIENCE?

Following are examples of personalised customised experiences   :

·TAILORED PRODUCT RECOMMENDATION

By tailoring product recommendations based on user preferences, behaviour, and past interactions, businesses can create a seamless and intuitive shopping experience for their customers. It not only increases the likelihood of conversions but also cultivates customer loyalty and satisfaction. 

·CUSTOMISED COMMUNICATION CHANNELS

Customised communication involves tailoring one's messaging to their specific needs and preferences and using data to make informed decisions about how to engage with them. Communication channels can be categorised into 1) verbal,2)written and 3) non-verbal.  Each of these communication channels has different strengths and weaknesses and often one can use more than one channel at the same time.  Examples of communication channels are emails, video, radio, and social media. 

 

 

2. LOYALTY PROGRAMS 

The idea behind a value-based loyalty program is to connect with customers on a deeper level.  It involves donating a percentage of purchases to charity or welfare programs. One can offer multiple options for different charities to choose from or have one that genuinely aligns with the customer's value. Loyalty programs are offered by retailers and other corporations as a way to attract and retain customers. They offer rewards, discounts, or other special incentives and are designed as a reward for customer repeat business. 

 

WHAT ARE THE TYPES OF LOYALTY PROGRAMS?

Types of loyalty programs are:

 

·POINT –BASED SYSTEM LOYALTY PROGRAM

Point–based system loyalty program is the most frequently used type of reward program. In this type of program, members collect points for performing specific actions –these points can be later exchanged for a variety of rewards.  In a loyalty program, a point card system is characterised by an assemblage of points by customers based on specific actions or purchases. These points can be ransomed for rewards, creating an incentive for customers to engage with the business. 

 

·TIERED REWARDS

A tiered loyalty program is a structured customer loyalty strategy where participants receive varying levels of rewards and benefits based on their level of engagement or spending with a company or brand. 

                               With a loyalty program, companies can offer points or benefits to customers. In return, customers redeem points for discounts, free products, rewards, or inside perks. The goal is to motivate repeat purchases and build trust between customers and businesses. 

 

 

3. EXCEPTIONAL CUSTOMER SERVICE 

 

HOW DOES CUSTOMER SERVICE IMPACT CUSTOMER LIFETIME VALUE?

  A customer who has a bad experience with a product shipment for example may abandon the brand a year into spending with them, which diminishes their customer lifetime value. There are five essential elements of excellent customer service: understanding customer needs, providing quick service, effective customer service management, being customer first, and prioritising data security. 

Good customer service always helps retain one's customers. It is what keeps customers coming back for more purchases. Retaining customers increases one's revenue and it’s also much cheaper to keep a customer than to try to gain a new one. 

 

4. UPSELLING AND CROSS-SELLING 

 

Upselling and cross-selling are powerful techniques within customer lifetime value(CLV) strategies that focus on increasing revenue from existing customers. It includes:

 

A) RELEVANT PRODUCT SUGGESTION

Visitors love options, so promoting similar products is a great way to upsell. this solution is typically used on product pages. As a marketing strategy, cross-selling and up-selling should be used to ‘help customers win. ’ It's about making recommendations that might better meet customers' current needs and aiding them to choose by being fully informed about their options. 

 

B) BUNDLING OFFERS

Create enticing bundle offers where customers can purchase related products together at a discounted price. For example, customers buying a camera, offer a discount bundle that includes additional lenses or accessories.  In other words, a retailer chooses a few specific items that must be bought together to obtain the discount or the bundle is offered as a general discount for purchasing multiple items. Buy–one–get–one (BOGO) is an excellent example of a price bundle. 

 

5. . SUBSCRIPTION MODELS 

 

WHAT IS THE SUBSCRIPTION MODEL CUSTOMER VALUE? 

 

Subscription model customer value focuses on customer retention over customer acquisition. In essence, subscription business models focus on the way revenue is made so that a single customer pays multiple payments for prolonged access to a good or service instead of a large upfront one-time price. 

 

6. . CUSTOMER FEEDBACK AND ENGAGEMENT

Customers' lifetime value will help brands pick out their most loyal customers from their entire customer base, those who spend the most and have the highest average purchase value. Once they identify their best customers, one can increase engagement and pinpoint upsell opportunities by offering them a personalised customer experience. 

 

7. REFERRAL PROGRAMS

 A referral program is a word–of–mouth marketing tactic where existing customers tell their friends, family, and colleagues about their brand, products, or services. Typically, the customer receives a loyalty reward from the company when the person they refer makes their first purchase. 

 

8. DATA-DRIVEN MARKETING

 to maximise customer lifetime value, one business should seek ways to foster a community for customers. Interact with them on social media, encourage consumers to post videos and photos, share opinions, offer advice to one another, etc. 

 

9. CONTINUOUS VALUE ADDITION

 Continuous value addition is vital for maximising customised value and enhancing customer lifetime value. 

 

10. COMMUNITY BUILDING

to maximise customer lifetime value, the business should seek ways to foster a community for the customers. interacting with them on social media encourages consumers to post reviews and photos, share opinions, offer advice to others, use branded hashtags, and engage in a community setting. 

 

11. OFFER FREE UPGRADES

 Businesses sometimes baulk at the idea of giving away freebies, but the truth is they work. Not only do they make a positive impression, but they are also a valuable way to conduct beta research on new products. Freebies and upgrades make customers happy and heighten their memories of the positive experience with one business. 

 

12. REACH CONSUMERS WITH A SEAMLESS OMNICHANNEL APPROACH

 

A well-structured omnichannel strategy is consumer-centric and connects all channels. Today's buyers are accustomed to shopping on a variety of devices, platforms, and channels. They don’t think about channel boundaries and they expect business to be accessible at every touchpoint. 

 

In conclusion, human-centred strategies play a pivotal role in maximising customer lifetime value (CLV). By prioritising personalised experiences, exceptional customer service, and continuous value addition, businesses can foster long-term relationships with their customers and drive sustainable growth.

To more info:- e-commerce website development