Increase Customer Lifetime Value, Use These 6 Strategies

What is the one thing that every business needs?

Employees? Desks? The obligatory office pet? (Those team photos with the pets are just adorable.)

Nope!

It’s customers, but you’re smart and answered that correctly milliseconds ago didn’t you?

However, a trickier question to answer might be: How can I increase customer lifetime value?

What is CLV?

We know what you’re thinking; another acronym to learn? Yes, and you’re right. Marketing is the only industry that has more acronyms than healthcare ― OCD, ADHD… also known as a writer’s best friends.

For instance, we have the ROI of SEO, lowering CPC, and raising CRO. And there’s a lot more where that came from.

CLV stands for (drum roll, please) Customer Lifetime Value. You didn’t see that one coming, did you?

But do you know how to increase customer lifetime value? Which is different from things that your customers value, but also slightly related.

In today’s article we’re going to answer all of your burning questions:

• What is the value of each of my customers?
• Why should I listen to my customers at all?
• How can I increase customer lifetime value?
• Why isn’t the McRib available all of the time?

By the way, the answer to that last question is marketing related, but more psychological, really. It has to do with scarcity. Threaten to take something away from people and they instinctively want it more. Scarcity is an element of persuasion that can and should be used in your own marketing.

How about that for a worthwhile meander?

What is the Value of Each of My Customers?

Jeff Bezos, a pretty successful chap who you may have heard of, has gone to great lengths to keep customers happy because he understands CLV.

A quote of his to take note of: “The most important single thing is to focus obsessively on the customer.”

Why would he say such a thing? Simple; because retaining customers is easier than acquiring them.

This is a man who understands that the most important thing he can do, and everyone who works at Amazon, is to increase customer lifetime value. (We’ll give you a couple of Amazon examples that show how they do it later.)

The question above ― What is the value of each of my customers? ― is what we call a trick question because the value of each of your customers will vary depending on your industry and your business. But the fact that it’s easier to keep customers than it is to get them doesn’t change regardless of your business.

Marketing is kind of like dating. You get to know your customers. You invite them onto your email list and social sites. You let them know how wonderful you are without trying to brag too much. You tell them stories about yourself and hope that they’re buying it all. And then you pop the question.

Rarely if ever would you ask for a sale immediately. That would be like going on a blind date and proposing marriage before the appetizers arrived. Email, incidentally, is where the majority of the wooing happens, because this is where ROI is the highest.

Why should I listen to my customers at all?

Some say you shouldn’t. We say you should listen.

Getting a solid return from your marketing budget is dependent on delivering value to your customers. And it’s important to understand that they define what is valuable to them, not you. So, you may want to figure that out.

We’ll also give you some feel-good strategic reasons later on why listening to your customers is advantageous.

OK, now that we’ve had our own appetizers, let’s get to the main course, shall we? Let’s increase customer lifetime value! Who else is pumped?

How can I increase customer lifetime value?

You can work to improve SEO and drive profits using PPC ads until the cows come home, but until you truly understand CLV and work to increase it, you’ll be going on a lot of blind dates.

The strategies below will help you avoid courtship missteps and ensure a successful relationship develops with every new encounter, and by that, we mean prospective customers.

Give Your Customers a Free Upgrade

I’ll bet you a million dollars that you’ve had the experience of getting bumped up to first-class on a flight. How did that make you feel?

Less cramped no doubt and the food is certainly better. But didn’t you also feel grateful and appreciative? And don’t you feel a certain way about that airline now, as in more loyal perhaps?

Maybe your business is such that free upgrades won’t work, but surely you can think of something to give customers for free that would add value to their lives. Isn’t Mr. Bezos constantly offering us free memberships to Amazon Prime, even though we’ve already had a free membership before? (And you thought maybe they just forgot.)

If your business has a premium service, offer it to your customers for free, or at least offer a free trial. If you have a product line, why not include a free product they haven’t yet tried along with their next purchase? Like getting bumped up to first class, I’ll bet you’ve also had this experience, too. And if they love that new product, you can bet they’ll continue buying it and become a more loyal customer.

Sam Walton (of Walmart fame) famously used to visit competitor’s stores to see what they were doing and then integrated good ideas into his own stores, or found ways to improve upon what his competitors were doing. Do you think he understood how important it is to increase customer lifetime value?

Paying attention to airlines and Amazon is just the beginning. Keep your spidey-senses activated with every business encounter you have and you just might learn something valuable.

Everyone Loves Content, not Raymond (Sorry, Ray.)

You’ve likely heard that content is king about as many times as you’ve had hot meals, but it’s true. Content is King. (Aren’t you enjoying some content right now… not that we’re baiting you into a compliment or anything.)

Content is one way of providing value to your customers, and one of the best channels to deliver this value is by email. Email is where we nurture our relationships with customers (coming up) and where we can solve their problems (also coming up) or educate them on a topic they enjoy; a topic that just happens to be related to your business. (What are the odds?)

Email is not for sending soulless drip campaigns that promote and promote and do nothing but promote. That’s like asking for marriage every time you see your boyfriend or girlfriend, even though they keep saying no.

In one of the best marketing books of all time, Seth Godin in Permission Marketing explains that for email marketing to be effective, it must be personal, relevant, and anticipated. But more than anything, it must provide value.

In his book, Godin uses the 80/20 rule or Pareto principle (Yes, we’re just showing off now) as an example. Provide value 80 percent of the time and your customers won’t mind getting promotional messages the other 20 percent. But if you give them nothing but promotional junk, that’s feeding them empty calories they likely don’t need and certainly don’t want.

Also, permission marketing only works when your customers or prospective customers actually give you permission to market to them.

Solve Your Customers’ Problems

We all have pain points and most, or all, businesses are in a position to help solve one or more of our problems. Can you create content that helps your customers do something important or achieve something meaningful? If you can, email is the perfect way to engage with them, even if it’s just to let them know that you’ve published a brilliant new blog post on the best eCommerce marketing tools to boost sales.

If you do have a product or a service that does solve a problem for people, this is simple. Just focus on delivering value around that problem and you’ll be fine. But what if your business is the problem?

Let’s stick with our Amazon theme, shall we? Since you’re a human being living in 2021, we are going to assume that you know how difficult it is to reach another live human being to help you these days when you have a customer service issue. Well, not Amazon.

They are definitely the one exception. And if you haven’t had the pleasure, just Google “Amazon phone number” and see how easily and quickly you find the information you need and a human who is ready and willing to help you with whatever problem you have.

It will restore your faith in humanity, and I’m only slightly joking.

Build Relationships with Customers

You understand now that getting a new customer is like a courtship. You’ve done the dating thing, you’ve popped the question, and low and behold, your prospective customer said, yes!

Well, if you want this marriage to last, there is still work to do, no? You don’t forget about them, do you? You don’t stop communicating with them. This is the beginning, not the end. (Insert your own marriage joke here.)

You want to make them feel like you understand them. You want them to know that you’re listening to them and that you appreciate them. But how do you do this?

Email and social media are both marketing mediums that allow two-way communication. This is how. Connect with your customers on a regular basis. Ask for their feedback. Ask for their opinions. Give them something they love, like great marketing content that will help their business grow. Or surprise them with something they didn’t even know they wanted or needed.

Just make sure that you always remember to provide value and keep the promotional messages to 20 percent or less. Maybe we’ve beaten this metaphorical horse to death too much, but value makes all of this work. Without it, you’re just a used car salesman (or woman) looking for your next victim.

Nurture is a word we used earlier but it bears mentioning again. Email is the perfect place to nurture a relationship with your customers. Isn’t email where they receive messages from friends and family members? Isn’t it more personal than other forms of marketing communication? You better believe it is. So, use it that way.

Upselling and Cross-selling are OK, but Only If…

Remember the used car salesman (or woman, still) example we just used? Of course, you do, and apologies for asking an obvious question. Think about it this way: If your upselling or cross-selling strategies make you feel a little dirty, don’t do it.

What do we mean? Have you ever made a first purchase with a company and before you can even get through the checkout experience, you’re taken on a wild ride that makes Mr. Toad’s Disney experience seem tame by comparison?

You’ve got to click on “no thanks” or scroll down looking for a way out of the upsell loop. It’s horrible. And be honest; have you ever felt like canceling the order while trying to get out of this maze?

Of course, you have. It’s off-putting, and off-putting is the opposite of increasing customer lifetime value.

You might very well have other products or services that can benefit your customers, and it’s OK to let them know about each and every one of them. Just think about the timing.

Your marriage proposal was finally met with a yes. Now is not the time to tell your spouse that your mother is moving in with you, who we’re certain is a fine person, by the way.

Prioritize Quality

Yes, this seems obvious, but hear us out. The way you increase customer lifetime value is by putting all of these strategies into action.

Of course, your product or service should be high quality. Of course, your customer service should be as well. But focus on doing everything in this article as well as you possibly can, and see what happens.

We don’t want to spoil the end of the movie for you, but what happens is that you inspire loyalty in your customers and they repay you by paying you. Over… and over… again.

This is where we drop the mic…

How well are you increasing your customer lifetime value? Have you considered hiring Robben Media to do this crucial task for you?