Customer Lifetime Value, or CLV, is the amount of money a single consumer spends on your business’s products or services throughout their lifetime. CLV is a vital marketing metric that gauges customer satisfaction and brand loyalty.
Why is CLV Important To Your Business?
Perks of Brand Loyalty
Longtime customers are essential in maintaining a profitable business. Returning customers spend more than new customers. Advertising to existing customers is also less expensive than converting new ones, as previous customers are more likely to engage with ads, purchase and invest in new products or services. Retargeting strategies on CTV and display ads are especially impactful in this case.
Regulating Customer Acquisition Costs
CLV estimates how much profit a business will earn from each customer. This metric is essential when setting marketing campaign budgets. For example, if a customer is expected to bring in $10,000 in profit to your business, spending $2,000 to acquire a similar customer makes sense; however, if your CLV is less than $1,000, that new customer acquisition cost is too high. CLV helps you spend your marketing budget wisely and on the right people. It can guide you as you develop a flexible CTV campaign budget on the Vibe.co platform.
Top 5 Ways to Increase Customer Lifetime Value
- Introduce a referral program. Shoppers take recommendations from friends and family very seriously. Referrals are more likely to convert to sales than any other type of advertising. Encourage your existing customers to share your business with their network by offering discounts, rewards, or gifts for successful referrals. Most of the word-of-mouth referrals are free advertising, so invest in these programs!
- Create personalized campaigns that engage your customers. Brand loyalty is rooted in relationships. Consumers who feel connected to a business are more likely to continue to spend with them. Generate premium content that resonates with your customers and provides value. Not all content has to be product-related or sales. Customers also find value in videos, blogs, tips and tricks, and education.
- Use customer surveys often. It is essential to understand what customers do and do not like. Surveys are an excellent way to gauge engagement and satisfaction. Surveys also help customers feel like their opinions are valued. This shared respect will lead to longer (and stronger) customer relationships.
- Invest in customer service training. If your business provides excellent service and customer care, there is no doubt customers will return: set up training programs and employee recognition awards to encourage excellent customer service.
- Reward customer loyalty. Everyone likes to feel appreciated. Encourage customers to shop frequently with loyalty programs. Set purchase milestones that award discounts, free shipping, or bonus items. Loyalty programs make customers feel like a business cares about them. Sending a quick “Thank You” email or discount code can go a long way in achieving brand loyalty!