Increasing the Lifetime Value of Your Customers
There are two ways to grow your business. One is to acquire new customers. The other is to increase the lifetime value of existing clients.
While marketing is usually geared toward acquiring new customers, research shows that retaining existing customers and increasing their lifetime value is the most effective way to ensure the long-term stability of a business.
Of course, the key to increasing the lifetime value of a customer over time is to generate more revenue from that customer. Increasing the lifetime value of customer involves a variety of tactics that range from fairly simple to much more complex. What follows are some suggestions from LeadGen Compass on ways your small business can generate more revenue from current customers.
- Prioritize customer onboarding. One of the leading causes of customer churn is poor onboarding. The onboarding process needs to be simple and fast. Further, consider personalizing the process according to the buyer’s persona so you can be certain you are meeting their specific needs from the start.
- Provide content that promotes engagement. Communicate with your clients often and let them know how your services are directly and positively impacting their business. For example, if you provide billing services, let them know how much quicker invoices are being paid. You also should share educational content that helps them do business better or alleviates a pain point.
- Offer high-quality customer service. Research shows that one of the most common reasons a customer switches brands is because of poor customer service. And it only takes a single instance for a customer to walk. The higher premium you place on customer service, the better.
- Focus on relationships. The key to customer satisfaction is making a customer feel appreciated and valued. It seems like such a simple thing but just listening will make a tremendous impact. It is equally important that you always deliver on you promises, connecting with them regularly (not just when you have something to sell) and regularly seek out their feedback and act on that feedback.
- Encourage annual billing cycles. Customers that pay a month or two at a time generate far less income for your small business than those who pay annually. Annual billing also provides a more predictable revenue stream that that you can reinvest in your company. Keep in mind that most customers will want some sort of discount or incentive for switching to annual billing.
- Upsell and cross-sell. Upselling means selling a more expensive product or service while cross-selling involves offering complementary products or services. While it is important to employ both methods, don’t overwhelm customers with too many choices.
In the end, the more customers that your small business retains, the more resources it will be able to pour into new customer acquisition. This cycle will ensure that your business continues to grow and thrive.
As we move past 2020 into 2021 we know that while the world will return to normal in many ways there are some things that will be changed forever. To get a headstart on 2021 and what comes next contact LeadGen Compass to set up a more secure future for your company.