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There are several tools you can use to reach almost any prospect or customer at any given time. However, managers fail to think about whether they should be reaching out to new customers or if they should focus on their existing customers. Managers should be thinking about the amount they plan to invest into the projected customer lifetime value (CLV) long term before they allocate customer recruiting and retention resources.
Calculating a customer's CLV can prove to be difficult as not every customer will have the same profitability potential so it is important to learn where efforts should be spent. CLV analysis is critical to determining where to target your marketing and sales budgets on which customers will bring the most business. The main thing to remember about CLV is that it points to profit margin not revenue.
While some customers might bring in steady revenue, the time you need to spend on retaining that customer may make for a worthwhile continuous investment. It may not take much to keep that customer coming back while others may hate to spend money so expect to spend more time and effort retaining them. The decision whether to focus on other customer retention may depend on the results of customer analysis. The analysis can be performed based on customer spending history. Are they a solid long term customer or first time buyer?
CLV analysis results may uncover customers who have average revenues and the cost to retain them may be minor which can yield large profits. You can always try to cross sell or upsell to these customers through low pressure tactics such as special offers on other products and services or free trials as an attempt to get the customer to make another investment.
CLV reporting also allows you to understand when customers became profitable for your business. You can discover which marketing and retention attempts worked by sending out occasional surveys to your customers asking several questions about their experience and what made them decide to make the initial investment. Results of the study and surveys are essential to successful marketing campaigns and can help provide forecast and other areas of concern.
You can take some of the following measures to maximize CLV:
You can identify your major and minor customers, long term and short term customers, how much revenue they bring, and sort out those who have been inactive and prove to be unprofitable for the company.
Figure out how you plan on keeping your best customers your CLV analysis generated. Segment these customers by their profitability and create separate strategies for each of these segments by projected worth. Offer incentives to your best customers such as an occasional call to ensure they are happy with their service to offer a personalized customer experience.
Many customer relationships can be ruined if the right message isn't conveyed to customers who expect a certain level of support. Always ensure sales and marketing staff are well equipped to offer any advice or information your customers may have about your company's products and services. Failure can cause them to take their business somewhere else.
You can succeed in customer retention from the first time your customers make contact by maintaining a consistent positive experience. Your staff can surpass expectations by developing trusting relationships and support. After all, happy customers are repeat customers.