How to improve your customer lifetime value (CLV)

Customer lifetime value (CLV) is the profitability that a customer generates during their loyalty period. It’s all about long-term value, so the longer you retain customers, the better.

Monitoring and improving this metric is essential. It boosts loyalty, increases revenue, and grows customer satisfaction. As a result, good CLV can put your business in a strong market position and stand out from the crowd. 

Below, we’ve compiled a series of powerful strategies for improving customer lifetime value. You’ll learn how to master the onboarding process, why listening to and acting on customer feedback is essential, the benefits of partnering with a professional telephone answering service, and more.

1. Make a good first impression

Let’s start with the onboarding process. This is your chance to make a great first impression and determine the customer’s CLV potential. 

Onboarding is the very first customer journey. It should be short, simple, cohesive, and personalised. Here’s what we mean by that:

• Short and simple: Avoid complicated processes that make signing up or checking out laborious. Onboarding should be seamless and easy to follow, with instant support available.
• Cohesive: Don’t restrict the customer onboarding process to a single platform. Onboarding should extend to multiple channels, including your website, live chat, emails, and social media. Again, support should be available at every contact point. 
• Personalised: Understanding that every customer is unique is key to improving your customer lifetime value. That’s why you should personalise the onboarding process to their needs. For example, send an email or push notification to users who abandoned their basket or instigate a chatbot pop-up after a certain amount of time asking if they need help. 

The onboarding process establishes the baseline for each customer’s lifetime value. An easy journey, clear and impactful communication, and access to support are crucial for an effective onboarding that will encourage customers to return and increase your CLV.

2. Listen to customer feedback

You can’t improve your CLV if you don’t know what your customers need. That’s why listening to their feedback is crucial.

If you don’t already, you should encourage shoppers to leave reviews after each brand experience. Adding a prompt to transactional emails is common, but you could also send standalone messages requesting feedback. 

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It can be as simple as asking: “On a scale of one to 10, how likely are you to recommend our products/services?” Or you can go into more detail with a short survey.

Integrating questions seamlessly into the customer journey and making submissions quick and easy is key. Nothing is more offputting than lengthy, excessive questions, unclear instructions, or asking for feedback at the wrong time. 

3. Respond to reviews

It’s not just about gathering feedback; you need to act on it to improve your customer lifetime value genuinely. The chart below demonstrates customers’ expectations regarding business response times based on a local consumer survey of over 1,000 people. 

34% of respondents expect companies to respond to their reviews within two or three days. Over 20% said within a week is acceptable. 

Intriguingly, 14% of people want a reply the next day, and 11% want it the same day. Generally, most people expect an answer at some point. 

And it’d be a mistake to ignore the 7% who said they don’t expect a reply. By defying these low expectations, there is a considerable opportunity to impress customers and encourage trust, loyalty, and customer lifetime value. 

The findings above clearly show that customer expectations are high–and rightly so. They’ve taken the time to let you know their thoughts, and you should reciprocate with action. 

Acknowledging your customers’ feelings, proactively showing that you hear them, and delivering change are potent ways to boost customer lifetime value. Customers who feel appreciated and respected are more likely to stick around for the long term. 

4. Provide excellent customer service

Customer service excellence is non-negotiable and can often make or break customer lifetime value. One bad experience can cause a company to lose a customer for good. PwC conducted a survey and found that companies have few chances to get it right, as the chart below shows. 

A staggering 32% of respondents said they’d stop doing business with a brand they love after just one bad experience. Others might be more forgiving and give them a few chances, but generally, there’s considerable pressure on businesses to uphold a high service standard. 

A key element of excellent customer service is speed. No matter how someone contacts your business, they want an instant response (we’re talking seconds). They also expect the convenience of multiple contact options, so they can choose one that suits them best, and 24/7 support so that they can get in touch any time of day or night.   

Let’s not forget empathy and attentiveness. You should show your customers basic care for their needs and a genuine willingness to resolve their issues.

5. Launch a loyalty scheme

Loyalty schemes are a great way to incentivise repeat purchases, reward engagement, and boost customer lifetime value. There are numerous ways to implement a loyalty scheme, depending on your commercial objectives and what matters to your customers. 

Mutual value is crucial for a loyalty scheme to work. Consider some of these popular methods:

• A basic points system: Customers collect points with every spend. After reaching a certain number of points, they receive a reward, such as a discount or free item. 
• Loyalty cards: Dedicated customers can unlock exclusive offers with their loyalty cards (a good example is Tesco’s Clubcard).
• Tiered rewards: The more someone spends, the greater their rewards. 
• Vouchers: This is another basic system in which customers receive vouchers for their next purchase. It is a great way to entice new customers to sign up for your loyalty scheme and retain them. 
• Anniversary rewards: A simple and effective way to reward loyal customers on their special day (e.g. birthdays). 

Loyalty schemes are all about customer lifetime value. Rewards need to be attractive, fair, and genuinely useful. Consistency and ease are also essential. Customers should be able to easily earn and redeem rewards without any strict criteria that could prevent them from shopping with you altogether.

Find out what matters most to your customers and choose a loyalty scheme that aligns with their needs and yours to improve your CLV. 

6. Increase customer lifetime value through cross-selling

Cross-selling and upselling are practical ways to increase customer lifetime value. They allow you to offer complimentary products and services, enhance the overall experience, and influence customers to return for the same great service every time. 

Timing and relevance are vital. Offering the right item at the right time could encourage consumers to shop with you again. 

So, pay close attention to their spending habits. What type of items do they tend to buy? How much do they normally spend? Which channels do they typically purchase through? 

Every consumer’s answers to these questions will be different, so it’s essential to personalise the cross-selling experience for each person and ensure it’s relevant to them. This will make the experience more meaningful and valuable, thus increasing your revenue and CLV.

7. Categorise your customer lifetime values

Only some customers will be profitable. That’s why it’s worth categorising your CLVs into different classes, such as low, medium, and high. 

High CLV are your most loyal customers. They shop with you often, spend more than the average customer, and recommend your business to others. Medium CLVs are also frequent shoppers but spend less than high CLVs. 

Low CLVs are irregular shoppers. They may place an order a few times a year and spend little. 

Grouping your audience will help you visualise which customers require more attention. It will also allow you to focus your marketing and support efforts on areas that will generate the most revenue and customer lifetime value. 

8. Create a brand community

Customer lifetime value comes from more than the price of your products or services. Go beyond the price tag and create a strong brand community to differentiate your business from others and deliver superior value and quality people will trust.  

That’s not to say you shouldn’t offer competitive prices, but it’s often not the top customer loyalty driver. 

Social media is an excellent platform for building and nurturing your community. You should share posts regularly and often and actively engage by initiating discussions and replying to comments. 

We also recommend widening the range of topics you post about. Rather than strictly communicating deals and product launches, for example, educate your followers about your brand with behind-the-scenes insights, engaging polls, and even sharing relevant humorous content. 

Creating a brand community enhances the relationship between your business and its customers. Maintaining these strong relationships is a compelling way to encourage people to stay with your brand for the long term. 

9. Improve your products and services

Customer lifetime value derives from multiple sources, a direct one being the quality of your products or services. Ultimately, if the quality is low, your CLV will suffer. 

We explored the significance of customer feedback earlier. This is an excellent way to see precisely how your customers feel about what you sell. 

You should check online reviews and social media comments regularly and speak to your visitors in-store if you have a physical shop to understand what your business is doing well and what it could do better.

By adapting your products and services in response to feedback, you’ll show that your brand is attentive and cares about building a high standard for its loyal customers.

10. Use a telephone answering service

Lastly, consider partnering with a telephone answering service like Bizik to boost your customer lifetime value. Our people are experts in their field and trained to the highest standards, so they know how to provide a positive and consistent customer experience. 

You’ll save money on internal hiring and have immediate access to industry professionals who will adapt their customer support style to your brand. That way, our PAs act as an extension of your team rather than merely a third-party service. 

Whether you need us to answer your incoming calls, implement managed live chat, or deliver after-hours support, we have a range of flexible solutions to suit your business’s and customer’s needs. 

Final words

Customer lifetime value is about making a memorable first impression and nurturing customer relationships once you’ve gained their initial trust. It’s an ongoing process that requires continuous monitoring and adjustments, but if you follow our top tips above, you’ll transform your CLV. 

Start your 7-day free trial to find out how Bizik can help you boost your customer lifetime value.