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One critical metric often flies under the radar in a world obsessed with chasing new leads and flashy acquisition strategies: Customer Lifetime Value (CLV). By focusing on attracting new customers, you are overlooking a crucial opportunity for growth. Studies have shown that existing customers spend 67% more than new customers. Despite this, many companies focus on acquiring new clients while neglecting the immense potential of their current customer base.
A Harvard Business Review article shows that even a 5% increase in customer retention can boost profits by a minimum of 25%. Imagine the potential for revenue growth if businesses shift their focus from constantly chasing new leads to maximizing the value of existing customers. Doing so would lead to substantial growth and stronger, more loyal relationships.
In this blog, we’ll explore how to use CLV to drive your business forward, from boosting renewals to using proactive support. Ready to turn your existing customers into your most valuable asset?
Depending on where your customer is on their buying journey, the methods to increase their customer lifetime value will vary. Consider these five examples as ways to improve:
One of the most manageable ways to understand each customer group and secure ongoing relationships is by incorporating interviews and market surveys. For example, ask your customer about their next purchase. It may seem straightforward, but it’s surprisingly effective in gaining valuable insights and driving future engagement. You can also segment your customers and analyze data to see which will remain loyal, such as tracking repeat purchases or identifying peak buying times. All of this can reveal valuable trends and insights.
For subscription-based businesses, ensuring a customer renews is critical to maximizing CLV. A study found that 75% of subscription businesses need to proactively manage renewals, which can lead to missed opportunities for retention. A proactive approach to managing renewals is to learn when customers might cancel and address the issues before you lose them. Consider asking them if they plan to renew their subscription:
Other strategies may include:
Not all customers are sure if they will remain active indefinitely. Still, there are signs of disengagement—such as reduced frequency of purchases or interactions—where you can present opportunities for reactivation. These are called “fall-off activation” strategies.
One way to work around this is to implement targeted campaigns designed to re-engage these customers. Put it into practice: If your 12-month subscription plan is ending, reach out to the customer around month 10 with a personalized email, offer a special deal or exclusive content based on their previous interactions, and do so with an extended subscription plan in return.
Think about your current database of customers and what would happen if 5% to 10% of them upgraded their service or added on a feature. This would mean a significant boost in revenue and increased customer lifetime value. The key is to utilize cross-selling and upselling. Data reveals that 60% of consumers are open to purchasing additional products or services from brands they already trust. Which means there is a huge opportunity present.
To ensure successful cross-selling and upselling efforts, consider your customer’s buying history and preferences and use strategies, such as personalized recommendations, bundled offers, or tiered product options that provide added value. By aligning your offers with customer needs, you can enhance satisfaction and increase their overall spending with your brand.
Effective loyalty programs can significantly boost CLV by encouraging repeat purchases and deepening customer relationships. An estimated 75% of consumers favor brands that offer rewards programs. These can range from a points program (the most common) to a tiered program—when benefits depend on rank.
Imagine some of the world’s best loyalty programs, like Starbucks Rewards. Customers earn loyalty “stars,” aka points, by ordering and paying using the Starbucks app, which they can then redeem to get free drinks and food. And if you’re a loyal customer—and a coffee fanatic—those points will add up quickly. That’s the idea behind this strategy: to create a loyalty program that’s not only easy to use but the benefits pay off in the long term, boosting customer lifetime value.
Consider these facts:
On the business side, a robust loyalty program boosts customer loyalty and provides valuable insights into your customer’s behaviors. These insights, such as their favorite items or when they’re most likely to purchase, empower you to offer even more personalized rewards and offerings.
Whether you’re hosting a product launch, launching a brand activation, or opening a pop-up store, experiential marketing efforts create memorable experiences that enhance CLV when done right. Most consumers will likely purchase from brands that engage with them through experiential marketing, further creating strong, humanized bonds. By tapping into a customer’s emotions and offering real-life interactions, these experiences help to foster long-term loyalty. As a bonus, these events also help generate valuable word-of-mouth marketing, especially for customers who have had a positive experience interacting with your brand. This kind of strategy will help expand your brand’s reach and impact.
CLV is one of the most influential metrics for predicting revenue potential and making strategic marketing decisions. The above five strategies can enhance your customer’s experience and deepen their relationship with your brand.
At Babe Paisley, we specialize in experiential marketing that brings people together and makes human connections at the heart of everything we do. Are you ready to boost your CLV? We’re here to help your business create unforgettable experiences that keep your customers returning for more. Contact us today to get started.