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In today’s market landscape where most of the businesses are focusing on acquiring new customers, retaining the existing clients has been highly understated. Despite the fact that it costs 5 times to attract a new customer than retain an existing one, 44% of brands invest time & money on acquiring new customers while only 18% focus on retention. According to research by Bain & Company, a 5% increase in customer retention yields more than a 25% increase in profits.
Irrespective of the brand name and size, retaining customers and establishing healthy relationships with them is extremely important for keeping the business up and running. That’s where the need for Customer Lifetime Value arises.
By defining a customer’s value to a brand over a specific time period, Customer Lifetime Value is a metric that indicates the total profit a business can expect from a particular customer account. The Customer Lifetime Value plays a pivotal role in identifying the customer segments that matter most to the brand.
If a customer keeps on purchasing from a brand, it brings in more revenue, thereby ensuring a high lifetime value. Moreover, by gaining insights into the customer’s worth to a company, this metric helps business owners understand how much they should invest in retaining customers.
One of the key reasons behind using the Customer Lifetime Value metric is customer retention. According to Gartner, 80% of future profits come from just 20% of existing customers. As every customer brings a different level of revenue, it’s important to evaluate how much you need to invest in retaining each of them. Leveraging Customer Lifetime Value (CLV) into your marketing strategy helps to minimize acquisition costs while keeping retention high. Moreover, Customer Lifetime Value helps you solve queries like:
The customer lifetime value is calculated by multiplying the following data points:
Delivering an excellent customer experience (CX) is the secret sauce to retaining customers and simultaneously increasing the customer lifetime value. Leveraging customer satisfaction surveys can empower brands to uncover actionable data for understanding the key drivers behind customer experience.
According to Ernst and Young, a company’s customer lifetime value faces a loss of more than $500 every time a customer has a poor experience. Sending a survey can help to transform feedback into growth and boost customer satisfaction too! Using Net Promoter Surveys (NPS® ) is a widely used method for gauging customer satisfaction for the following reasons:
Voxco offers best-in-class NPS® surveys that help you gather actionable data at important touchpoints along the customer journey. By understanding how customers feel about each aspect of your product or service, you can easily turn your detractors into promoters and increase their customer lifetime value (CLV). To improve your Net Promoter Score® and stack up against industry competition, you can use Voxco’s free NPS® Calculator.
Turn detractors to promoters. Increase Customer Loyalty. Get more customer referrals.
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Customer lifetime value lays the foundation of a successful business. It helps to improve customer retention, unveils the level of brand loyalty you own, and helps your business stay on top. Are you finding it challenging to increase your customer lifetime value? Get in touch with Voxco today!
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