10 top tips for increasing the lifetime value of your customer
Increasing the average life time value of your customer is one of 4 of the main ways (the other 3 being leads, conversion, average order value).
And increasing the number of times a current customer places an order with you is one of the cheapest ways of growing a business.
Customer acquisition is costly so it makes sense to resell to your current customers as often as you can.
Increasing lifetime value also allows you to spend more on customer acquisition.
Here are my top 10 tips for increasing the lifetime value of a customer.
1. Ask for another order.
This may seem a little strange to you but I often consult with companies that have no follow up strategy in place at all.
One excuse I heard was “no we don’t follow up in case the customer is unhappy and wants a refund?”
If you feel your customers could be unhappy then you need to find out why.
Nothing travels faster than bad news about a product or service.
Having a system in place that’s tells your customer about other products that you sell is a must.
The first order is normally least profitable and when you look at the numbers you could actually lose money on this order.
The smart companies are ones that work hard for the second order and beyond.
2. Call them.
Now days a lot of business is conducted over the internet where the only contact we have with our customers is through email.
Calling your customers to ask for feedback is the quickest way to get information about how your customers fees about your product and service.
They can even give you valuable information to help you build an avatar of your customer as well as suggestion for other products and services to offer.
And why you are on the phone you could also tell them about your latest offer or a product you think will suit them.
Just because we use the web your main platform for doing business doesn’t mean you should completely dismiss the chance to talk to your customers in person.
3. After sales follow up sequence.
If your business is primarily internet then putting into place and after sales email follow up sequence is essential to keep a customer interested in your business.
Many companies think that once a customer has found you and ordered from you then they will automatically come back.
Unless your a specialist in your market where you are the only source for the product or you are an Amazon or Ebay then I am afraid that your continue to have to fight for your customers attention.
It’s easier for you because they now know and trust you but that doesn’t mean a competitor couldn’t find a way to entice them away from you.
By continually following up with your customer and letting them know you about over products and services is a must.
Especially as Internet companies are moving closer and closer to daily emails to their customers being the norm it essential you consider the same strategy.
4) Survey your customers.
Surveys are a great way to get to know more about your customers and what they like and dislike.
If a survey is done correctly then you can find out what other products you can sell to your customers.
You can even use them to lead into other products sales.
I like to keep surveys short and to the point and usually use a maximum of 5 questions.
My favourite which I got from “Ask” (Ryan Levesque) is the “Deep dive” survey.
Read more about Ryan’s book here.
This is simply an open question to your customer.
“Can you tell us in your own words why you ordered from us?”
“Please tell us what other products you would like to see us stock”
“Please share with us the one thing about doing business with us we could improve.”
And all you do is give a box for them to fill in what they want to say.
You can also use surveys that ask customers specific question that can then lead them to a product that could interest them.
There are plenty of ways to use surveys in your after sales funnels.
One of the best ways to increase your lifetime value of a customer is to introduce some kind of subscription offer.
I was looking up some facts about Amazon the other day and “Prime” subscription members spend on average of $17 USD more than a normal user,
Finding ways to lock your customers into a monthly, quarterly or yearly payment scheme is a well-known tactic for increasing life time value.
There are many ways you can do this.
Offering discounts or first call on new products to those that subscribe.
Advance content not available to normal customers.
More personal service.
You may need to think outside of the box a little but it is worth the effort.
I have been running subscription services for over 12 years on the internet (and before off line) and there is nothing better than knowing you have some almost guaranteed income turning up every month.
Subscription based services do not have to expensive but adding one to your business can help increase your turnover substantially.
6) Dynamic behavioural response marketing.
As a big fan of DBRM I just had to mention it.
DBRM works because your customer’s journey is dictated by the actions they take now and have done in the past.
Did they click a link?
Did they visit a page?
What have they purchased?
Did they take a survey?
How many times have they ordered?
How much have they spent?
All these and more can be used to make sure your customers sees and hears about products that should interest them.
And your job is to create a journey for them that will lead to more sales.
This can start as early as their first purchase.
Let’s say you are a hobby site and cover several different types of models.
Cars, Helicopters, Planes and Quadcopters.
Your customer’s first purchase is a model car.
You now put them on a list that talks mainly about new cars, car upgrades and anything to do with cars, especially more expensive ones.
Unlike what happens with many sites at the moment…
They send every customer the same email whether it is about new quadcopters or new cars.
I know there is an argument that they may go on to buy a quadcopter later but that could be after they have decided that your emails do not interest them because at the time they don’t like quadcopters.
So they remove themselves from your list.
DBRM is the future of internet customer relations and should now be taken seriously.
One thing that we don’t know about our customer is how much spending power they have.
We can try to make educated guesses when we create our customer “avatar”.
But that is an average picture of our customer…
…Not an individual picture.
Some customers will pay a premium price if they know they are getting something better than anyone else.
So it makes perfect sense to put ascension offers in front of them.
This could be:
Upgrades that make a product better.
A better version of the same product
A more advanced version.
It could also be a more personal service or even a “One on One”.
Don’t presume what your customer “can’t afford it”. Your often be surprised a customer can end up spending.
8) Micro offers.
Sometimes it is worth putting a “Micro” offer in front of a customer who hasn’t purchased for a while.
These can be very low cost offers but it keeps the customer interested in your company.
Sometimes it’s even worth losing money on a product, just to warm up an old customer again and get them back into a new sales funnel.
Depending on the industry you are in…
…A micro offer is normally under £10 and represents really good value for the product(s) you are offering.
Don’t forget this method can work out cheaper than the cost of finding a new customer.
As always you may need to think outside the box on this one but it is well worth doing to re-introduce your customer to your business.
9) Brand Loyalty.
I should have probably mentioned this one earlier but it is not always easier to achieve.
That’s doesn’t mean I don’t believe in it (Just look at Apple) but it does take work.
Creating a brand means being very clear about your message. And sticking to it no matter what.
Companies that use a figure head like Richard Branson, (Steve Jobs deceased) and Tony Robins live or die on how well their personality is received.
But normally these personalities are strong individuals who are very sure about what their companies stand for and are trying to achieve.
And many smaller companies are run by individuals that don’t mind being put “Out there” and are just as driven.
Using a figure head can really create a brand loyalty.
People often use the term “Faceless organisation” when talking about companies like banks and big corporations where the people who run them are pretty much unknown.
They can still have a strong brand but they tend to have to spend a lot of money convincing people to use their product.
That’s why they often try to associate their brand with a star or someone who is popular with the public.
I think people are more likely to swap brands now days and when there is no personality attached it is much easier for them to do so.
But branding starts with simple things like being consistent with your graphics or message.
Check out the popular youtube channels to see how many of them use branding so people recognise their videos.
10) Loyalty Schemes.
In some ways we have touched on this idea in some of the other top 10 tips.
But I think it is probably worth talking about it as a separate subject.
Loyalty schemes come in all shapes and sizes.
A couple of our dogs are on a special food which we get from our vets. They have a loyalty scheme where they give us a free bag every time we order our 10th bag of food from them.
If you are in the UK then Sainsbury’s and Tesco’s have loyalty reward schemes in the shape of voucher’s and special offers based on the amount of shopping you do.
Many other stores have adopted similar ideas because they can see how these schemes have helped other businesses grow.
And you should certainly consider this in your own business.
One word of warning…
When I decided to change barbers a while ago the new one I tried gave me a loyalty card that would give me a free hair cut on my 10th visit.
My first visit was fine a nice haircut.
The second visit was not so good and I wasn’t as pleased as the first time.
By the 3rd visit even the loyalty card couldn’t get me back to that barbers.
(And I only have a short back and sides!)
Even a loyalty scheme won’t bring customers back if you don’t give them a good service.
Well I hope you found these 10 tips for increasing the lifetime value of your customer useful.
If you want to know how to find your customer lifetime value here is one way you can do it.
Take a period…3, 6, 12 months or even longer.
Add together the total takings for the period selected.
Then simply divide it by the number of customers (no duplicates) you have in your database over the same period.