CLV – The Metric That Matters In Marketing
In 2023, customer lifetime value (CLV) will be an essential marketing metric. A CLV is the monetary benefit to your firm from having that customer as a client. A CLV helps businesses form strategies to gain new customers and retain the prevailing ones while upholding profit margins. This KPI is critical for determining where to put your marketing dollars to get the best possible return, as well as for appreciating the lifetime value of your consumers.
*The CLV data calculations
When determining CLV, it is important to take into account both the past and the future.
While it's impossible to guarantee a profit from any one consumer, a company's resources would be better spent on more valuable, engaged customers than on attempting to keep one-time customers as repeat buyers. However, it's important to also factor in the cost of marketing and other customer acquisition, engagement, and retention activities when calculating customer lifetime value (CLV). This insight is crucial for firms, as it allows them to look into the future and make well-informed marketing choices.
Strategies That can Help Boost CLV
Below are a few approaches that are likely to enhance overall CLV by fostering favourable, long-term relationships between a business and its customers.
1. Upselling and cross-selling
Cross-selling is a method of upselling additional products to existing consumers alongside their first purchase, like when one sees "customers also bought" or "you might like" recommendations on an online retailer's website. When upselling, more money is charged for an upgrade or added service, such as when a website requires a certain amount to be spent before free shipping is offered or when an airline charges more for passengers to choose their seats. Both methods raise the overall volume of orders, which in turn increases both revenue and CLV.
2. Creating a Lasting Impression
Customer retention and lifetime value (CLV) can be significantly improved by providing omnichannel assistance, investing in CX training and customer care strategies for your staff, streamlining the customer journey, and implementing other measures to create a memorable experience.
3. Developing a Customer Loyalty Scheme
It's essential to incentivise repeat business from current customers by providing them with a straightforward loyalty programme that's easy to comprehend and use. Customers who use the Starbucks app and enroll in the rewards programme, for instance, receive additional perks and enjoy a more streamlined experience.
4. Establishing a Community
Having customers feel like they are more than just a number being herded through a sales funnel increases the likelihood that they will continue to engage with your business in the future. Engage customers in conversation via social media. Inspire them to form online communities around your brand by sharing feedback, photos, comments, tips, branded hashtags, and more.
Ultimately, businesses that take the time to assess their customers' CLV can more accurately forecast future sales and use limited marketing resources for optimal return.
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