How much thought do you give to the Lifetime Value of each of your customers?
Brands that can leverage this metric well tend to come out on top of others, because each of their customers is a believer in the brand: they come back for repeat purchases, and possibly even refer others to the company.
Whether their reputation is justified or not, Apple customers are a perfect example of high Customer Lifetime Value:
- Despite the overall higher market share of PCs, Apple customers tend to prefer the Apple ecosystem.
- They tend to have multiple Apple devices that all integrate with each other.
- And when it’s time to replace one device with another, usually only Apple devices are in consideration.
To get our definitions straight: Customer Lifetime Value is the projection of the net profit contributed to the whole future relationship with a customer.
People tend to mistakenly think of customer lifetime value as average order value — “how much on average does someone purchase at one-time?”
But think about how you would interact with a customer if your goal was not for them to buy something from you now, but instead for them to be buying stuff from you every year? Every quarter? Every month?
You are entering into a long term relationship with your customers. And, as these things go, taking it slow tends to be a smart move.
Our take is that Customer Lifetime Value begins at the very beginning, with the customer onboarding process. As soon as you become aware of a customer, you need to be in touch with them regularly. You need to provide value from the get-go and it’s ideal if this value is not perceptibly tied to the need for purchase.
One great way to do this is to provide education about your product, service, or industry.
One of the worst things to happen for your business is for a customer to regret they purchased from you. And sometimes, the simplest way to address this is by educating your customer before, during, and following the purchase.
You don’t want your customer to just buy a product from you — you want to be a trusted resource they check for information about your product type in general. Once you’ve built this trust, you should see your share of customers with high Lifetime Value increase.
Some other things to consider are:
It’s easier for customers to remember you if they regularly hear from you. So, set up your email newsletters, blog, and social media posts for maximizing reach for existing customers.
Build a relationship with your customer
Above, we talked about being a source of information for your customer, but creating brand believers often requires something more than that — you want your customer to like you — and that’s harder to accomplish.
Have some fun with it
Business is transactional in nature, but we’re all looking to have some fun and experience positive emotions in our daily lives. If you can get your customer to experience joy, you will almost certainly have a customer for life.