Customer Lifetime Value (CLV) is a crucial metric for the success and sustainability of any business.
CLV represents the total amount of money a customer is expected to spend in your business, or on your products, during their lifetime.
Now let’s look at a simple way of calculating CLV. Let’s assume :
- Profit generated by the customer each year = $1,000
- Number of years that they are a customer of a brand = 5 years
- Cost to acquire the customer = $2000
Now the CLV would be $1000 multiply by 5 minus $2000 which gives you a CLV of $3000.
Besides there is a transaction cost involved for each order and since the customer is already buying from your store, increasing AOV (Average Order Value) In order to achieve an increase in AOV works magic to drive direct revenues, increase profits and reduce costs. Brands resort to multiple innovative tactics like deciding on a threshold limit to be eligible for free shipment along with reduced prices and discounts for combo deals, offering bonus points for referrals, recommending complimentary products, availability of multiple payment options and a hassle-free check-out process.
In order to have optimal CLV and increasing your AOV you need to have all your customers’ data accessible at one place, a one-stop platform to communicate with them on multiple channels, predictive analytics and personnel empowered to monitor your data streams undeterently.
And when we say an updated customer database it should be over and above mere description of your buyer and that’s where Buyer Persona comes into picture. It is an attempt to map the journey of prospective as well as existing buyers based on extensive research and real and meaningful conversations including facts and figures related to demographics ,purchase behaviour patterns, tastes and preferences, personal and professional background, goals and challenges, lifestyles and Preferred Mode of Communications.
Building such profiles gives a clear road map for designing and executing policies related to acquisition, retention, re-activation and expansion and the underlying principles remain the same for all of these some of which can be summarized for your perusal as below.
- Innovative Campaigning:
Welcome to the new platforms of web-series like Shitty Ideas Trending(SIT) or a Marathi You Tube Channel Bhartiya Digital Party (BhaDiPaa) being the in-thing and latest trend in creative marketing with humour and satire sprinkled . It boasts of having millions of hits across the digital space which can turbo-charge the growth of your brand.
- Incentivizing Customers :
Enterprises are smart enough these days to introduce a new concept of CASHBACK which stands out from other usual free trials, heavy discounts, flash sales and clearance sales as it kind of binds the customer to return to you and claim the balance of their cashback wallets on their every next purchase till it gets all exhausted! Many e-commerce platforms including Dine-Out and Grofers are extensively using this and the resultant turnover is mind-boggling. And that way Cashback is a win-win situation for both as other ways of incentives might not necessarily guarantee a customer come-back!
- Convenience Guaranteed :
Look at the toll free customer care number of Just Dial(8888888888) , with an apt tagline -The Local Search Engine , for everything under the sun and you would realize that this single step lead to diversion of enormous traffic and made them stand out from their rivals as convenience of the end users was their top-most priority.
- Woo Back Cart Abandoners:
These tribe of people are the low-hanging fruits of any business. Deep dive into the reasons that triggered their withdrawal at the last moment and it would give you homework to be done to lure them join the bandwagon. According to Business Insider, approximately $4 Trillion worth of online merchandise was abandoned in incomplete shopping carts last year alone, of which 63% was potentially recoverable. Isn’t that jaw-dropping statistics? Doesn’t it speak volumes in terms of an urgency to nail this segment of almost-on-the-verge-of-becoming-your-actual-buyers!
- Be There :
Have this quote framed and strategically mounted for every single personnel to see,- “As a company you need to get to the future first, ahead of your customers, and be ready to greet them when they arrive” by Marc Beniofz.
- Be Better Than The Best:
is the mantra for consistently outperforming yourself and rivals when it comes to quality and innovation of your product and service. Apple is a classic example and their vision is unparallel and uncompromising which keeps them ahead in the rat race.
- Redefining Services:
Delivery and installation of the product or confirmation of subscription is not the end of the road but in fact the start of a meaningful journey.
- Brand Ambassadors:
need not always be celebrities who charge exorbitantly (they of course guarantee proportionate returns too because of their huge fan following) but featuring your brand’s fans in your marketing content can value add to your relationship. We all were mesmerized watching the charm personified- King Khan of Bollywood and moments of unbelief, surprise and excitement of the commoners who were caught unaware on the lenses in a path-breaking and innovative advertisement of Dubai Tourism, weren’t we? Make your customer the hero of your story as they say.
- Flaunt All That You Have:
Amazon does a commendable job in cross-selling and up-selling with its ‘Frequently Bought Together’ and ‘Customers Who Bought This Item Also Bought’ features without sounding salesy.
- Listen to Your Customers:
Rewind and rehearse this quote by Jeff Hoffman when you intend to seal a deal-“When reps take the role of a curious student rather than an informed expert, buyers are much more inclines to engage.” AMWAYS’s -‘We’re Listening’ is more than a tagline and the secret sauce behind a good recipe which gave them longevity and sustainability in otherwise volatile direct selling segment.
Take every small step that you can and see your customers turn into your brand advocates. Brand Advocacy is one of the most effective marketing strategies and requires consciously chosen, crafted and executed policies to drive positivity and a sense of belonging for one’s brand. There is this famous quote which is self-explanatory and defines what brand advocacy is all about-
“There’s a singular ‘Tipping Point’ for marketers and it happens the moment its customers begin to see themselves as extensions of the brand – sharing their experiences with others, cheering new products, even defending the company in time of crisis. It’s called ADVOCACY, and in the hyper-connected digital age, it’s the apex of marketing achievement.” – Joe Chernov So all the folks out there having an adrenaline rush to stay at the top of the game need to be well-equipped with tailor-made solutions provided by Artificial Intelligence and Machine Learning with its scuba-dive analytics and advanced algorithms to offer you buoyancy and some breather to stay afloat amidst flora and fauna, awaiting to be explored!