Keeping existing customers is generally a lot easier than finding new ones and converting them to become paying customers. They already know, like and trust you/ your brand/ your products. So one of the key things to think about is how can you increase the customer lifetime value which means the value of a customer to you over the lifetime that they purchase with you.
You want them to come back time and time again. The higher the customer lifetime value the more that you can afford to pay to get that customer in through the door (customer acquisition being the fancy name for this!) and the more affordable media becomes.
Ways to increase your customer lifetime value
1. Recurring income – can you set up a monthly subscription if you are selling products that could be needed on a monthly basis (membership, monthly retainer, etc)?
Maybe if not monthly then quarterly. If it’s a subscription for a service then potentially annually. It is so great to know that you have this income planned and coming in through the door on a monthly basis. It will help with cash flow and planning for the business. Also, investors love recurring revenue.
2. Loyalty scheme – can you set up a loyalty scheme to reward customers? Maybe a discount off future bookings, a points system where they can redeem their points for goods (Boots advantage card is a good example here).
3. Reactivating lapsed customers – this is a really nice one as these people have already bought from you and therefore they are likely to buy again if you provide them with the right offer, messaging and a reminder that you exist. How about a welcome back offer/ value add? Alternatively, if you have a new product offering then that would be the time to get back in touch to tell them and explain why you think that they would be interested to hear about this new product or service.
What value is there in it for them? What challenges or pain points will it solve? How will it make them feel?
4. Raising Prices is another way to increase CLV. I have had quite a number of clients that have been undercharging for their products and services and they weren’t aware that they were.
However, I advised them that they were (having done some market research) and both were in a position to increase their prices by 10%. Note you can only raise your prices if you are undercharging and that you deliver something of great value. Looking at what competitors are offering and charging would be a good place to start to get an idea of whether or not you could increase your prices. Things that will determine prices include your brand equity and how much people actually need the product/service and the transformation you provide.
5. Different product offerings – talk to your ideal customers about what other products or services they would want to buy from you or that they need.
This is doing research – either a survey or speaking to them directly (give your best customers a call/email directly and ask them if you can have some time with them to ask a few questions in return for some free product or discount off their next purchase.).
Speaking to your ideal clients will highlight what products or services they would want to buy from you and is a great way for you to help them by providing something that they need. This, in turn, will mean that they will spend more money with you.
6. Upselling – this is where you upsell to the customer – you offer them something that is of more value and cost than what they originally planned to buy.
This could be a larger version of the product, a bundle, a gift set, You get the idea!
7. Cross-selling – this is where you sell them an additional product (often of lower cost but potentially with a higher profit margin). An add-on that you sell at the time of purchase, e.g. plant pots when I am buying my house plants from Patch.
Or a set of travel-sized products when you are purchasing the main product.
I talked about the importance of customer lifetime value in this post – it really is a great metric to continue to review so that you can ensure profitable, sustainable growth.
What do you think? Was this helpful?