Resources > Articles

How to Grow Customer Lifetime Value with 7 Actionable Strategies

Post Author
  • Pragmatic Institute is the transformational partner for today’s businesses, providing immediate impact through actionable and practical training for product, design and data teams. Our courses are taught by industry experts with decades of hands-on experience, and include a complete ecosystem of training, resources and community. This focus on dynamic instruction and continued learning has delivered impactful education to over 200,000 alumni worldwide over the last 30 years.

How to Grow Customer Lifetime Value with 7 Actionable Strategies

Customer lifetime value (CLV) is a vital metric for businesses to better understand customers and stay ahead of the competition. It is a key indicator for organizations to better understand long-term and financial viability. Additionally, it provides a customer-centric perspective that can enhance sales and marketing strategies to estimate the company’s growth.  

CLV is the total revenue a customer is expected to spend in a business over a lifetime. In other words, it’s the amount of money a business would make from a customer before they churn. And unless a business knows exactly how much money one customer can generate, they won’t know how much to spend in order to acquire more customers.

Having a high CLV comes with a number of benefits and can translate into:

  • Brand loyalty 
  • Increase in sales 
  • Recurring revenue from existing customer

Although there is no “one formula” that can be used to compute customer lifetime value, here is a general formula to calculate CLV:

Customer lifetime value helps businesses improve the customer relationships and make smarter decisions. Let’s dive into seven proven strategies businesses can try to help increase CLV. Incorporating these strategies will help organizations understand the audience better and truly give them what they need. 

 

1. Make it Easy to Buy

Businesses should make it as convenient as possible for customers to purchase their services or product quickly. Additionally, the fewer the clicks a customer has to make, the higher the chances they will make the purchase. It’s important for businesses to evaluate how many clicks customers currently need to make in order to purchase something. Simplifying the process will help ease the customer experience. 

Having a complicated process to purchase a product or service can be frustrating for customers and can have negative repercussions on the customer experience. It’s also good to remember that making the customer experience seamless in the buying process is not only about the actual steps they need to take, but also the information that leads them to make a purchase. 

 

2. Provide Exceptional Customer Service 

Delivering quality service to customers is a necessity for businesses of all sizes and industries. Data shows 58% of American consumers will switch companies because of poor customer service. As such, when clients receive good customer service, they have a better customer experience. If they have a good experience, they will most likely become loyal customers as well.

Common pain points, such as long wait times and unrelated answers, can have a negative impact on the customer experience. On the other hand, omnichannel support (text, email, live chat, phone) is a good and fast way to increase customer lifetime value and provide quality customer service. Particularly when it comes to repeat customers, delivering good customer service is key.         

 

3. Create a Customer Loyalty Program 

Loyalty programs offer rewards and discounts to customers for staying loyal with the business and it’s vital as it can drastically help increase customer lifetime value. Offering discounts and exclusive offers will incentivize current customers to make repeat purchases otherwise would not have been made. 

It’s also important to keep in mind that creating a customer loyalty program is not enough, businesses need to continuously work to encourage loyal customers to actually use the program. Additionally, collecting data from current members on the program will also provide insights and a better understanding of the customer base. Based on the data, businesses can leverage the information to improve the customer experience next time they visit. 

 

4. Focus on Quality 

It’s important for organizations to make their brand synonyms with quality. Improving the product or services can be a direct correlation to improving customer retention. A vital component of building customer lifetime value is getting customers to invest in the business. After all, there is no replacement for quality products and services. Focusing on quality will differentiate companies from the competition and capture the attention of new and recurring customers. 

Being able to identify the customers’ pain points and provide effective solutions is essential for businesses to grow customer lifetime value. This also helps organizations identify and prioritize pain points that need to be resolved immediately. Essentially, it’s creating a customer-first strategy in order to support their needs. 

 

5. Request Customer Feedback 

In business, there are always opportunities for improvement. It is important for companies to listen to their customers and don’t be afraid to ask for feedback. After all, customers that are happy will likely stay long-term with the business. Furthermore, receiving actionable feedback from customers can help the company prioritize which areas to focus and improve on first. 

It is recommended to collect and store all of the customer feedback in one place and share across departments. A notable way to receive real data from customers is through customer satisfaction surveys. The surveys can help businesses understand what customers think of their products or services, and the brand overall.   

 

6. Produce Compelling Content

Content marketing is an efficient tactic to retain existing customers and get new ones. However, in order for customers to engage with the content, businesses need to provide value to them. For example, creating targeted campaigns focused on solving customers’ pain points. Sharing educational content and resources will have a greater impact on consumers as well. 

Businesses must remember that every interaction in the customer journey influences the customer lifetime value. Building an engaging content strategy with insightful information will help customers stay engaged and loyal over time. The content should be of high quality and a reflection of the organization and the brand. 

 

7. Optimize Customer Communication

Personalized communication is key to customer retention and it can deliver more meaningful customer support. Additionally, personalization goes hand-in-hand with excellent customer service. Businesses can craft highly personalized messages and improve the onboarding process for customers based on the feedback received.

Highly personalized interactions with customers foster a sense of appreciation and respect for businesses that can eventually turn into advocates for the brand. There are a variety of ways to leverage a personal touch that can help cultivate customer loyalty, including, addressing emails on a first-name basis, special rewards, or even hand-written thank you letters.    

 

That’s Just the Beginning

Customer lifetime value is crucial for businesses. Interested in learning more? Check out our recent webinar with GoDaddy’s Senior Data Scientist on Evaluating Customer Lifetime Value. Zach King showcases a framework to visually understand customer performance and drive-long term success. 

Watch Webinar

 

Translate Data Insights into Business Strategy

Our Data Science for Business Leaders course empowers leaders to leverage data in decision making and strategy, solve business problems with the data available, and help build a data culture in their organizations. Ready to gain powerful business insights with data? Register today.

Learn More 

Author

  • Pragmatic Institute is the transformational partner for today’s businesses, providing immediate impact through actionable and practical training for product, design and data teams. Our courses are taught by industry experts with decades of hands-on experience, and include a complete ecosystem of training, resources and community. This focus on dynamic instruction and continued learning has delivered impactful education to over 200,000 alumni worldwide over the last 30 years.

Author:

Other Resources in this Series

Most Recent

Data Scientist Presenting Insights to Team
Article

Data Analytics vs. Data Mining: What's the Difference?

Both data analytics and data mining are important skills for any data scientist to master. When deciding which approach to use, it's important to consider the specific problem you're trying to solve and the type of data you have available.
Category: Data Science
Businesswoman networking using digital devices
Article

5 Common Misconceptions About Data Maturity

Companies that don’t utilize data lean heavily on intuition and industry experience when making business decisions. Data-driven companies are different.
Category: Data Science
The Power of Data Storytelling for Business
Article

The Power of Data Storytelling for Business Impact

In a world where data is increasingly becoming more accessible, it is more important than ever for businesses to learn how to leverage data to their advantage. 
Category: Data Science
paperwork and reports on 80/20 rule in data
Article

Overcoming the 80/20 Rule in Data Science

Data practitioners spend 80% of their valuable time finding, cleaning, and organizing the data, leaving only 20% to actually perform analysis on it. More often than not, data scientists spend hours preparing and cleaning the data to produce a report for stakeholders, only to find out they were looking for something else or didn’t understand the analysis enough to act on it.
Category: Data Science
Balancing Profits and Ethics
Article

A Conversation on Ethical Use of Data in Business

It’s vital for organizations to be open and transparent and spend time discussing ethics within the business.
Category: Data Science

OTHER ArticleS

Data Scientist Presenting Insights to Team
Article

Data Analytics vs. Data Mining: What's the Difference?

Both data analytics and data mining are important skills for any data scientist to master. When deciding which approach to use, it's important to consider the specific problem you're trying to solve and the type of data you have available.
Category: Data Science
Businesswoman networking using digital devices
Article

5 Common Misconceptions About Data Maturity

Companies that don’t utilize data lean heavily on intuition and industry experience when making business decisions. Data-driven companies are different.
Category: Data Science

Sign up to stay up to date on the latest industry best practices.

Sign up to received invites to upcoming webinars, updates on our recent podcast episodes and the latest on industry best practices.

Training on Your Schedule

Fill out the form today and our sales team will help you schedule your private Pragmatic training today.

Subscribe

Subscribe

Training on Your Schedule

Fill out the form today and our sales team will help you schedule your private Pragmatic training today.