A majority of companies spend more time and money to attract new customers than to keep them. But did you know customer acquisition can cost you seven times as much as retention? Put your money where the metrics are and increase your bottom line through your customer lifetime value.
Customer lifetime value (CLTV) is a prediction model which represents the total net profit a company can make from a customer. Savvy business owners use this model to assess the value of the relationship with a customer over time.
Increasing customer retention rates by 5% can increase profits 25% to 95% (Invespcro).
But the appeal to improve CLTV goes far beyond dollars and cents. In a saturated marketplace, increasing customer lifetime value can turn window shoppers into long-time loyalists.
Improve business with these four strategies to increase customer lifetime value.
4 Strategies to Increase Customer Lifetime Value
1 | Define your brand identity
If your customers were asked to identify your company from a line-up of competitors, could they?
“The success of your business will always come back to one thing: your customers’ emotional connection to your brand.” –Danial Dashtizad, Creative Director, Miva, Inc.
Entrepreneur defines branding as “the marketing practice of creating a name, symbol, or design that identifies and differentiates a product.” At Miva, we believe effective branding forges a lasting connection between companies and their customers.
Stand out from your competition by defining your brand identity. Customers flock to companies which reflect their values and beliefs.
Ask yourself and your leadership these questions:
- Why did you start this business?
- What differentiates you from your competitors?
- If your brand could talk, what would it say?
Reframe your answers as statements your company can confidently stand on. This is your brand message. Effuse this message in your marketing so all stakeholders—internal and external—can take part in adopting, and spreading, your brand.
For more insight on branding, read our interview with Eric Yonge, President and Creative Director of EYStudios.
2 | Provide value through content marketing
In the words of author and marketer Donald Miller, people recall information best when presented in story form. Your content marketing should build a story your customers won’t want to put down.
Successful content marketing is an extension of your brand providing value to customers across all relevant touch points.
Pay attention to three key phrases. Successful content marketing:
- Is an extension of your brand. Your content should resonate with your brand identity. This represents a business’s integrity, and keeps customers in a time where many have broken their trust.
- Provides value. Beware the trap of proliferating solely what you find important. Utilize social media to learn which content your customers care about most. The more value you provide, the more you’ll receive—in “likes”, “shares”, and ultimately, purchases.
- Reaches across all relevant touch points. Pay close attention to where your customers are active rather than attempting to overtake every platform.
For an example of content marketing done right, look no further than Miva merchant 3Rivers Archery. These longbow and recurve experts provide consistent value through hunting tips and techniques and helpful videos, enticing enthusiasts to engage—and return.
3 | Personalize communication with email marketing
While branding and content marketing help build loyalty long-term, email marketing utilizes personalization to improve customer lifetime value.
For every $1 you spend on email marketing, you can expect an average return of $38.
Personalization is the ability to use data to serve customers based on their desires. In fact, personalized emails deliver six times higher transaction rates, but 70% of brands fail to use them correctly.
- Make it personalized: Email marketing improves conversion by remembering a customer’s purchasing habits and reminding customers of items they’ve abandoned. Use this data to gear promotions toward their interests.
- Keep it personal: Customers respond better when they feel they’re talking with a person, not a company. Try sending emails in the name of a brand ambassador or lead associate rather than your company name and assess results.
- Show your appreciation: Thank customers for their loyalty and keep them coming back with rewards or milestone bonuses, such as for their birthday or anniversary.
Hungry for more? See how our latest integration with MailChimp can help your business sell more, harness data, increase your audience, and track results and ROI.
4 | Keep customers engaged through subscriptions
Now that you’ve bolstered your brand and communication with recurrent customers, keep them engaged with subscriptions. Subscriptions allow customers to “set and forget” a recurring order. This not only enables lower retention spend, greater revenue, and order predictability for your business; it also gives your customers one less thing to think about.
There are about 5.7 million subscription box shoppers in the U.S. today (Forbes).
- Rethink your offerings. Don’t be so quick to reject the subscription model. Miva merchant BTO Sports revamped how they treat their offerings, and their customers, when they asked, “what can we offer on a recurring basis?”
- Innovate your packaging. Another benefit of subscriptions? The potential for user generated content. “Unboxing” is the act of filming oneself opening new product. This growing, lucrative trend proves that delight is in the details, and the more people can engage with your product, the more potential customers you’ll attract.
Interested in implementing the subscription model for your business? Miva merchants trust MivaPay to manage their subscription offerings. MivaPay allows a safe, versatile way to store and use payment information, giving you more control and your customers, peace of mind. Find out more.
Increase Customer Lifetime Value: The Bottom Line
More than two-thirds of businesses agree: it’s less expensive to retain customers than acquire new ones. Yet 85% of companies surveyed do not have a retention strategy in place (eConsultancy).
Stand out from the crowd and retain customers by increasing your customer lifetime value. By prioritizing the customer, utilizing your data intelligently, and staying true to your brand, you stand to redefine the customer lifetime value and achieve a better bottom line.