Did you know that selling to an existing customer has a 60-70 per cent chance of success, whereas selling to new prospects has a 5-20 per cent chance of success? What does this imply for your company? — You can get a much better return on investment by concentrating on increasing customer lifetime value (CLV) rather than acquiring new customers!
But what is customer lifetime value? Why is it important for businesses? How can it be increased? ETRAFFIC’s skilled marketing team can develop the correct methods to maximise your CLV and improve your company’s bottom line. Please call us today at 1300 887 151 to learn more or book a free strategy session below.
How to Increase Customer Lifetime Value
Ensuring that your customers have a memorable experience is one of the quickest methods to boost your customer lifetime value. According to a PWC study, 43% of customers are willing to pay extra for a product or service that provides a better experience.
Furthermore, 65% of customers in the UK and 75% of those in the US consider customer experience important when deciding between purchasing choices. This goes to show that customer satisfaction is key. Creating a positive customer experience promotes loyalty, encourages brand advocacy, and helps you retain customers, increasing CLV.
Customer loyalty programs are a popular technique to keep clients longer and encourage them to visit your store more regularly. Loyalty programs come in all manner of types, but essentially, they aim at rewarding clients every time they buy your products or services.
Not only does this increase their spending but it also increases their average purchasing frequency. It could be a partner program, a points program where customers get reward points that they can redeem every time they acquire your product or services, or even a tiered program where they can graduate from one loyalty tier to another based on their spending.
Email marketing is one of the most profitable digital marketing and customer engagement channels, with a whopping $44 return on investment (ROI). The best part? — Customers enjoy promotional emails notifying them of discounts and special offers.
Besides promotions, you could share advice and helpful content on how to use your products in numerous inventive ways. You could also keep in touch with holiday greetings, birthday wishes, and so on, converting your clients into loyal customers. Remember that the more they hear from you, the more likely they are to buy from you whenever they need a product you offer.
Social media creates a sense of community around your brand by allowing direct communication and conversation, which can turn your brand’s fans into true advocates. This is a key social media value proposition. Everyone has a voice and a way to be heard on social media, at any time and on any topic.
The brands that succeed in social media are those who listen to their customers and are responsive to their requirements. By establishing and growing these relationships over time, social media gives your customers a way to magnify your message inside their networks, which now stretch far wider than they did previously.
How to Calculate Customer Lifetime Value
From the definition, CLV refers to the total amount of money your firm makes from a customer throughout their engagement with you. This engagement is considered in terms of years. To calculate customer lifetime value, multiply the average purchase value by the average number of purchases.
Assume you manage a company where the average consumer spends $1,000 over two years. The average CLV of your store is $2,000.
Customer Lifetime Value = (Customer Value * Average Customer Lifespan)
Let ETRAFFIC Help Improve Your Customer Lifetime Value
What’s your average customer lifespan? Contrary to popular belief, the gold mine is not new customers but existing customers. Increasing your customer base is highly determined by your existing customers and how loyal they are to your brand.
That’s why at ETRAFFIC, we believe in working smart not hard. You don’t need a hundred customers on your roster if you can make more money from a single customer. You can free up more time to concentrate on other company activities that are more vital in increasing your total revenue.
Easier said than done? — Let us help you. We are professionals at determining the best tactics to increase customer lifetime value.
What is Lifetime Customer Value?
Customer lifetime value (CLV) or lifetime customer value is defined as the total amount of money the customer expects to spend with your business or your products during their lifetime. Every business should be on top of this metric because it helps the business to make the right decision when investing money to acquire new customers and retaining your existing ones.
A reputable digital agency will focus on increasing your customer lifetime value over time. If not, you are not reaching your full potential with the money spent on marketing. That’s why you should be utilising the services of a reputable and experienced digital marketing agency such as ETRAFFIC to increase the CLV of your business. Following are the reasons why you can depend on ETRAFFIC to increase the customer lifetime value of your business in the long run.
Why Measuring CLV Is Crucial For Business?
Increasing customer lifetime value is a case of working smarter and not harder. Making more money from a single customer means you don’t need a massive amount of customers on your roster. This gives you more time to focus on the core functions of your business – which is crucial to the overall success of your small business. That’s why you need to work with a trusted partner like ETRAFFIC.
We are experts in devising the right strategies to improve the customer lifetime value of your business. We implement effective strategies to build solid customer relationships, upsell your services, and build customer loyalty in the process. We will maximise your CLV so that your potential increases exponentially.
Many digital marketing agencies in Australia place a big emphasis on bringing in new clients for your business. This is a good practice when done correctly however if not, it can backfire on you big time. Finding new clients will cost your business both in terms of time and money.
Just imagine what would happen if you go to all the trouble of attracting new clients but they only make one or two purchases from you! The money you spent on acquiring them would be a complete waste. The aim should be to make the most money you can from a single customer. The more money you make from a single customer, the better this is for your business.
Most businesses don’t maximise their returns from single customers because a lot of the time, they are targeting the wrong audience and bringing in unprofitable customers. That’s why working with a trusted partner like ETRAFFIC to devise the right strategy, you will attract highly profitable customers and increase the CLV of your business.
It’s been proven that existing customers already know your brand and trust it. Furthermore, you have already done the hard work to win them over. The latest statistics show that a business has a 60-70% better chance of converting existing customers compared to a 5-20% chance of converting a new customer. So, how will you get an existing customer to spend more money on your business in the long run? That’s where relationship building and upselling come into the equation and why these are two of the most important strategies you should focus on when it comes to retaining existing customers.
Our Process
Our agency uses three key strategies to increase the customer lifetime value of your business. We understand that customer loyalty towards your brand is essential to increase the CLV of your business so we have developed the following key strategies to increase the customer lifetime value of your business:
Increase sales per order
Increasing the sales per order is the first strategy to increase the customer lifetime value of your business. You should be motivating your customers to spend more money on every transaction. We will implement the right strategies to help increase the sales per order and improve the bottom line of your business.
Increase sales over time
Increasing the number of sales your business closes over time is the next strategy to increase the customer lifetime value of your business. This strategy will focus on the number of transactions of your business while the first strategy focuses on the value of the individual transaction.
Reduce the cost of serving customers
Reducing the cost of serving your customers overall is the third strategy we use to increase the lifetime customer value of your business. The costs of serving your customer include all the costs such as packaging the product, shipping the product, and answering service calls of the customers, etc. The lower the costs of serving your customers, the more profits your business will make in the long run. This is an important strategy to increase the lifetime customer value of your business.
Our expert marketing team at ETRAFFIC can devise the right strategies to increase your lifetime customer value and improve the bottom line of your business.
Our Points Of Difference
- We have specialised knowledge and experience in improving the CLV of your business
- We are a trusted name in the industry
- Our team has extensive experience in the digital marketing industry in Australia
- We provide excellent customer service and support
- All work is done in-house and not outsourced to a third-party
- We practice what we preach
- We employ some of the best digital marketing specialists in Australia
Lifetime Customer Value FAQs
As a rule of thumb, your Customer Lifetime Value (CLV) should be at least three times more than your Customer Acquisition Cost (CAC). For example, if you spend $100 on marketing to get a new client, that person should have a lifetime value of at least $300.
(Customer Value) x (Average Customer Lifespan) = Customer Lifetime Value
The CLV is affected by many factors some of which include brand credibility, customer satisfaction, technical quality of products and services, functional quality and personal commitment.
To build a lifetime value model, begin by defining an appropriate time frame for CLV calculation. Following this, identify the features that can be used to determine futuristic projections. Calculate the lifetime value (LTV) of the machine learning model for training then create the machine learning model and run it. You should then check whether the model is applicable.
By sharing customer testimonials, delivering individualised communications, aligning with your customers’ beliefs and morals, offering a subscription model, improving customer experience and many other tactics that show that your company prioritises CLV.
Cost per lead is a digital marketing metric that measures whether your marketing campaign is cost-effective in generating leads for your sales team. The lead is often a potential customer who expresses interest in your business by completing your marketing goal. For instance, if you are running a pay-per-click campaign, you have achieved your goal and can be considered a lead when they click on the ad.
Good CPA should allow you to control your advertising cost for your specific marketing objectives. You should also be able to track and maximise your return on investment on all the marketing channels. A good CPA lets you measure your marketing efforts’ success while ensuring you invest in cost-effective channels.
Please call us today at ETRAFFIC if you want to increase the customer lifetime value of your business.
As a trusted marketing agency we deliver proven marketing strategies to help your business grow. Stay in touch with ETRAFFIC on all our socials.
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