In this day and age, we are ready to do whatever it takes to make sure that customers are happy with our services and that they have decided to continue walking by our side. Even so, even if you receive the OK, you should not relax. Given the surprisingly high (and still growing) level of competition, your customers are never safe. They can always be stolen right out of your pocket. However, it’s better to think of the things you can do than worry about those you cannot control.
One of the metrics that any entrepreneur should carefully consider is LTV (lifetime value). While there are plenty of other indicators that can tell you how well your business is doing, this one provides you with the information you need to make improvements. And that’s gold in the eCommerce world.
But what makes these indicators so much better than everything else? Well, it must be its balanced nature. LTV measures the total amount of value a customer brings to the table, eliminating fluctuations and peaks. By means of this metric, you will be able to understand exactly where your business stands and make an advised decision regarding its future.
It is high time entrepreneurs understood something. Customers are the blood of any successful business. The happier they are, the better your company functions and the faster it grows.
Your job is to increase the lifetime value of your customers, as once again, their satisfaction is your profit. Let’s figure out exactly how to do this and how to do it fast, without spending a fortune to get there and waiting an eternity to recover the investment.
The newsletter, your old friend
It’s true, we just can’t get rid of newsletters. They bring so many advantages to the table that quite frankly, it would be a shame to let them go. But, luckily, we don’t have to, as newsletters can be reinterpreted over and over again and they can change form to ensure that they serve any purpose. This time, the newsletter doesn’t have change form. But rather improve it a bit. Considering that this is one of your major communication channels with your customer, it would be an actual shame not to use in this purpose.
If you decide to go with this strategy, then we have a few suggestions for you:
Go for a personalized approach. By now everyone knows that segmenting audiences and bringing personalized content to your readers will help you fulfill your goals faster and simpler. You should have certain pieces of information regarding your customers so that difficult, right?
Timing is everything, especially when creating a schedule. Unfortunately, in the business environment, one good newsletter can’t exactly bring a considerable change. That’s why you need to invest in the consistency of your posting more than anything. Send a fixed number of newsletters over the course of the month, for as long as it takes to fulfill all goals.
As a reminder, make your newsletters worth reading. Your clients need to find value in the messages you constantly send to them. Tips, tricks, trends, ideas, guides, whatever you can think of, put it in your newsletter wrapped up in a great language and interesting, eye-catching visuals. Your focus is to turn the newsletter in an interesting piece of writing that is truly enjoyed by your clients.
Keep your brand alive – in the mind of the customer
What are you hoping to get? Well, you are looking to increase the lifetime value of your clients. This means that you want them to buy more and more. But if they forget about you, well, then there isn’t much buying, is it?
Plus, the quieter you stay, the louder your competition will seem. And better. You don’t want anything to make your client think that there is a better alternative for him out there. That’s completely unacceptable, not to mention that it’s completely against your strategy to increase the lifetime value of your clients.
So, you need to create buzz, noise, to stay within your client’s focus area. It won’t be easy, as you will need to dedicate some time to this endeavor, but it will certainly be worth it, at least in the long term, if not immediately. Basically, what you will need to be doing is a bit of multi-channel marketing. Reach out to customers through all your communication channels, including social media channels if your industry permits it.
However, to do it effectively, segmenting audiences might be a good idea, again. Understand where clients spend most of their time and use at the appropriate language to reach out to them. Create distinctive campaigns that fit with the communication channel they will be distributed on.
Your purpose here is not to sell, but rather to influence clients, to get them in a certain mood and keep them focused on your offer at all times.
The switch towards a subscription-based business
Yes, we’ve said it. Subscriptions are one of the ways through which you can increase your customers’ LTV. The fun thing of it all is that if you are already functioning as a subscription-based business, well you’ve got one thing covered. If not, this is certainly another very good reason to make the leap. You might be wondering why in the world would your decision regarding the pricing model influence in any way the lifetime value of your customers. They simply seem two very distinct things, which wouldn’t normally have anything to do with each other. Well, surprise, surprise. They do and it’s a strong connection, by the way.
When you are providing customers with the option to sign-up for a subscription, you are inviting them to open up to a relationship, to make an investment. And everyone likes how investment goes so well with LTV. Subscriptions mean recurring revenue. You focus on acquiring customers through various campaigns, spending a lot of money in those directions but in the end, you win your customers over a longer period of time, which basically means recovering expenses and making a profit.
Plus, when you have them subscribed everything, every strategy you will end up using to fulfill different goals, will develop faster and better, with actual results. That’s the great advantage of having subscribers and not necessarily clients.
When trying to calculate the LTV outside of a subscription, you might find it difficult to find predictability. The problem with this aspect is that you cannot sustain future investments if you don’t know if those customers will return to your business and continue buying from you. Within the subscription model, you have predictability, you have order and you can easily build strategies meant to increase LTV, thus sustaining future investments.
Up-selling & Cross-selling, your two new best friends
As you can imagine, this is the type of strategy that functions so well with subscribers. You have a list of clients who, on a regular basis, pay the subscription. Yearly, monthly, whatever their pricing plan is, they return. That’s when you come bearing gifts. These gifts come in the form of cross-sales and upsells. You study the behavior of your client, you check the selected payment plan and decide if he/ she would be more interested in a bigger plan with more advantages or in a cross-selling campaign.
The idea is that you can use these elements to ensure a faster LTV improvement.
Yes, you have to make sure that you are not throwing promotions around. You don’t want to turn your audience into promotion seekers, as that would be the worst of the worst. When you cross paths with such an audience, you can’t really make a huge profit.
However, the reason for which this strategy makes sense in the frame of a subscription model is that you are dealing with regulars, with customers that know your brand, understand the quality of your products/services and they are more likely to accept your offers. It’s like going to the coffee shop, the one you visit every morning, a place where you appreciate the coffee, the service, the staff and they recommend a new blend of coffee.
Wouldn’t you be more open to the idea of trying the blend there than in any other coffee shop in town? Sure you would. It’s the power of habit and brand engagement.
Customer Service, a partner you need
We’ve heard a lot of stories about customer service, about how much good it can do to your brand. And yes, we have to say that they are all true. Customer service is a huge force and you would be surprised what advantages it might bring.
The lifetime value of your customers will most certainly be influenced by the quality of your company’s customer service. So, it has to be irreproachable.
The secret behind an increased LTV can be found in the relationship between the customer and the company he is subscribed to. Basically, if a customer stays with you for a long time, he will continue investing in your company. The more you hold on to your customers, the greater the profit is going to be. And retaining customers for a long period of time is accomplished by means of your customer service. The better you communicate with your customers, the faster you answer to their requirements, the stronger your relationship will be. Through customer service, you gain points, trust points. And you become a partner to your clients. It’s like that coffee shop we have previously mentioned. You trust the recommendations of the staff working there.
You need to be able to convince your clients that you are by their side, that you want what is best for them, that you are professional and that your target is not making a profit, but ensuring satisfying experiences for them.