Ways for Companies to Increase Customer Lifetime Value

October 31, 2019 Alma Causey

Customers have always been a demanding bunch -- and rightfully so. These days, customer expectations continue rise given competition and the ease on social media of airing complaints, so companies must look for ways to improve their customers’ experience and make each interaction as positive as possible.

Such efforts can pay off. A business mindset that focuses on the customer, in tandem with operational and IT improvements, can increase customer satisfaction by 20% to 30%, according to advisory firm McKinsey & Company. Meanwhile, the global benchmark for customer satisfaction was 83.54% in 2018, down about 3% from 2016, according to research from chat software company LiveChat.

If your organization wants to increase customer lifetime value (LTV) through better customer experience -- sometimes also called CX -- then the following suggestions might prove to be helpful. 

Emotional Connection = Loyal Customers

Forming an emotional connection with customers can lead to positive customer experiences. The Journal of Consumer Research reported that emotions drove decision-making attitudes in customers more than 50% of the time. In fact, once formed, emotional attachment can strengthen customer loyalty. 

For example, in banks, "emotional connections with fully engaged customers net an additional 23% in revenue," according to Gallup.

A 2015 study from Harvard Business Review described positive emotional engagement for customers contributing to:

- Customers being three times more likely to recommend a product or service

- Customers being three times more likely to repurchase

- A 44% reduction in customers shopping around 

- Decreased price sensitivity and chance of defection

Therefore, it’s important for companies to make a customer feel valued, and not just a means of making money. Zappos, for example, discovered that a customer missed the return deadline for a pair of shoes because her mother had died. The company waived the return shipping fee and had the shoes picked up via courier. Zappos even added an extra personal touch by sending a bouquet of flowers and their condolences to the customer. This situation provided an ideal opportunity to form an emotional connection with a customer, and Zappos made the most of it.

Loyalty = VIP Status

As illustrated, customers display loyalty when an emotional connection is forged.

Sales and marketing teams can help customers feel as if they belong to a community in various ways, such as VIP events curated just for them. Let the customers know they matter by making them feel special. 

Whether it is a sale that is exclusively marketed to the VIPs via social media or a unique discount code that is shared only with them, they will be bound to feel valued.

Necessity = Increased Demand

Another way of increasing customer LTV is by showing customers the necessity of a related product and service. Known as upselling, this method has been perfected by many companies, including Amazon.

You may have noticed when you purchase something from the site, you are shown other related products, too. If a customer buying a smartphone, for example, is shown protective covers at a discount, you could capitalize on each sale. It is all about helping the customer realize that they need your product.

Suggestions = Increased Sales

This idea is closely related to the necessity strategy mentioned above. A killer landing page is how a marketer ensures their product reaches and converts the right audience. Other factors that can increase the conversion rate include testimonials and positive reviews.

As customers read descriptions of the items that your company sells, they should also be shown a list of products with features similar to those items. Another suggestion that can improve the customer experience is showing them related accessories to what they have already purchased from you.

CSAT Scores = Increased Customer Satisfaction 

Customer satisfaction (CSAT) scores are important for businesses that are part of the digital world. Although many companies collect them, not all companies analyze the scores to help increase customer satisfaction.

It is also true that CSAT scores only offer a partial view of the overall customer experience due to their subjective nature. So, instead of depending solely on them when making decisions, companies should use them as early-warning signs. With rigorous analysis of the scores, trends and the need for corrective measures may be anticipated.

For instance, when a loyal customer receives a low CSAT score, it should be a cause for worry. Sales reps and customer success managers should then be notified quickly because this score can affect the customer’s LTV negatively. It might also indicate dissatisfaction brewing among other customers. 

Customer Feedback = Improved Customer LTV

Proactively seeking customer feedback on engagement experiences is vital to improving your customer service department. Providing customers with an easy way to give feedback can help minimize the risk of issues slipping through the cracks. 

Before a company can act on the customer feedback, it has to collect it. Surveys by phone, email, or a “Contact Us” page on the website are all good methods of keeping your company aware of what customers are saying. Companies need to remember that feedback matters greatly when it comes to customer satisfaction. 

Featured Image Source: Royalty-free stock photo ID: 1022439973 by fizkes Shutterstock

About the Author

Alma Causey

Alma Causey is a freelance writer by day and sports fan by night. She writes about tech education and health related issues and is an avid football fan. Her motto is: Live simply, give generously, and watch football. She is currently associated with the <a href="https://www.salesmate.io/">Salesmate</a> Team.

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