Before we go any further, let’s be clear on what CLTV means. Essentially, customer lifetime value indicates the total worth of an individual customer over the total lifespan of their relationship with a company.
According to Econsultancy’s research, a growing number of companies are prioritising CLTV. However, the majority are still at the beginning of the journey, with only 1% saying their approach to CLTV is mature, and 44% saying it is developing.
So, what can companies do to boost CLTV? Subscribers can find out more on this topic in the Customer Lifetime Value report. In the meantime, here are a few key points from the report
Prioritise CLTV as a recognised KPI
As it stands, 67% of client-side professionals say that their company is not yet measuring CLTV as a core KPI. This is largely because CLTV is a highly-defined KPI, which requires understanding and buy-in from every department within the organisation.
So, as well as investment from senior management, a bottom-up approach is also needed to ensure that new employees are equipped with the right skill-set and vision to make things happen.
Essentially, it is only with the right company culture that businesses can prove the viability and profitability of CLTV as a core KPI, before work even begins on properly implementing it.
Understand how to nurture customers
Another reason CLTV is not a priority for companies is due to a fixation on customer acquisition instead. But while it is of course important to acquire new customers, when it comes to maximising budget, companies should understand that prioritising CLTV can in fact deliver a higher return on investment.
In order to ensure the possibility of future, repeat, and (ideally) multiple purchases, companies need to extend beyond conversion rate optimisation to extract the most value from existing customers.
In this case, it is key that companies have an understanding of how to nurture existing prospects, as well as the tools to be able to get them to return. This means looking beyond single, one-time purchasers, which are unhealthy for the company’s profitability,
Individualise the customer journey
Limitations in the effective use of data often prevent companies from achieving a single customer view. As a result, companies are unable to generate the insights needed to personalise the experience, and to create highly engaging and relevant content (which impacts upon CLTV).
Companies also need to recognise that customers are becoming increasingly channel-agnostic, which means each and every moment that the consumer interacts with the brand provides a unique opportunity.
For more on this topic, subscribers can check out Econsultancy’s Customer Lifetime Value report in full.