Businesses that have a long-term CLV strategy can increase profits without having to constantly onboard new customers using four simple steps focused on improved communication and payment solutions.
One thing companies love more than a customer who makes a purchase is a customer who comes back to make another one. While it’s easy for business owners to get caught up in measuring short-term profitability through single transactions, it’s in your best interest to create customer experiences that lead to repeat purchases and improved Customer Lifetime Value, or CLV.
What is CLV and why is it important?
CLV measures how valuable a customer is to your company, not just on a purchase-by-purchase basis but across the whole relationship. Loyal customers have higher CLVs, and not just because they make repeat purchases. Loyal customers also:
- Are willing to refer your product or service to friends and family
- Are not easily swayed by price or availability of a competitor’s product
- Do not actively search for alternatives or other options
- Spend more money more often
- Are cheaper to retain than finding a new customer
- Will often provide feedback on how to improve products or services
Creating repeat customers with higher CLV is one of the most effective ways businesses can improve their bottom line.
How do I increase CLV?
Here are four ways you can motivate customers to spend more and increase CLV:
1. Communicate special offers
Everyone likes a good deal, and everyone likes to feel special. Combine the two to create exclusive offers just for returning customers. Give your customers a reason to come back to your store (brick-and-mortar or online) with a high-value coupon or lure of limited supply. Reinforce positive purchasing behavior with a loyalty program that encourages bigger or more frequent transactions with an enticing reward as the incentive.
2. Ask for feedback
Asking your customers for feedback shows that you value their opinions, and it also results in great suggestions. This can be done using a pop-up survey at the end of a transaction or a direct communication through email or text. Additional communication channels, such as online chat or a “contact us” form or email address, allows customers to easily get in touch with a company representative.
When there’s negative feedback, you have the opportunity to turn a bad experience into a positive one with an empathetic, timely response.
3. Prioritize customer service
Repeat customers sometimes get ignored because they are seen as a “done deal.” This is a huge mistake. Whether it’s a customer’s first or fiftieth interaction with your brand, make each customer feel like your best customer. Be responsive and friendly. Personalize service by providing product recommendations or addressing customers by name. These small touches can go a long way in making a customer feel valued. Outstanding customer service is one of the most effective customer retention strategies and will always be a key ingredient to creating loyalty.
4. Make payment easy
Every part of the shopping experience should be pleasant, including payment. Keep the checkout process clean; don’t distract your customers with pop-ups or last second sales add-ons, and don’t send them to another website to complete payment; this breaks the flow of what they are doing and doesn’t allow you to control the customer experience.
Make future transactions easy by allowing customers to save their shipping and payment information with Authorize.net’s Customer Information Manager (included with your account). Avoid adding extra steps the consumer must make during checkout that involve updating expiring cards with our Account Updater service. This service validates expiration dates with the card companies and makes the necessary updates as the card information changes, so that the consumer’s checkout process is uninterrupted.
Create a win-win with higher CLV
Loyal customers add to the bottom line in many ways so it’s important to keep them happy. You can start by communicating special offers, asking for feedback, prioritizing customer service and making payment easy. These four simple steps can make a significant impact on CLV and increase customer retention and satisfaction.
