How to Increase Customer Lifetime Value

Understanding how to create a lasting relationship with your customers is a key part of running and growing your business. A key step is to understand and evaluate the Customer Lifetime Value (CLV) which represents the total amount of money a customer is expected to spend in your business, or on your products, during their lifetime.

 By recognizing this value, it better helps further determine multiple things: 

• • How much money to invest in attracting new customers and keeping the current ones. 
  • An idea of the profitability of the company which will give a better idea of how much to invest.
  • Gathering the data will help increase and continue repeat sales.
  • It will help you make decisions when it comes to future purchases and avoid extra spending in areas that do not need the funding.
    
    

How to Measure CLV 

It is very easy to determine what the CLV will be: 

CLV is the average value of a purchase X number of times the customer will buy from you each year X average length of the customer relationship (in years). 

An example of this would be: 

Some who lives alone and goes grocery shopping every week:

$75 per week X 52 weeks in a year X 3 years= $11,700

Someone who lives with their significant other and goes grocery shopping every week: 

$175 per week X 52 weeks in a year X 3 years= $27,300

Based off of these 2 CLVs, you should be investing in the second shopper. 

There are 4 main takeaways that you gain when calculating your CLV and trying to assess where to invest your company’s money: 

• • How much you can spend to obtain a similar customer and still have a beneficial relationship
  • Which products the customers with the highest CLV look for 
  • Which products are the most lucrative 
  • Who are the most beneficial types of clients 
    
    

How to Improve CLV

While knowing how to track the CLV is important, it is also crucial to understand how to continue to build and grow the customer lifetime value

1. Have great customer service

Showing your customers that you are with them throughout every step even after the purchase builds that trust and relationship for future encounters. Follow up with the companies through social media posts or newsletters to let them know new deals or rewards offered that they might be interested in being a part of. 

2. Create a loyalty rewards program to encourage customer loyalty

Having programs such as receipt validation gives customers an extra reward and sense of security when choosing your company. Loyalty and rewards programs help businesses attract and retain customers by providing valuable incentives and benefits that encourage them to become repeat customers. Integrating programs such as receipt validation allows customers to earn extra rewards for their purchases and gives them a sense of satisfaction when choosing your company. Loyalty programs foster trust and security between brands and customers, which ultimately leads to better customer lifetime value. 

3. Hear what your customers have to say

Giving your customers the opportunity to tell you what they believe works and what needs some improvement is a way to build a better relationship with them. If there is an issue that could cause your consumers to not want to return then it is important to fix that in order to prevent them from turning to a different company for their business. 

4. Stay in touch with your customers

It is important to show long time customers that they are still as involved and valued to your company as new customers. By continuing to reach out to them it will give them an opportunity to reach back out to you and maintain that relationship. 

Now that you have a deeper understanding of Customer Loyalty Value, how will you move forward? Brandmovers can help you! Get in touch with us today to see how we can help you cultivate deeper and long lasting relationships with your customers!