Marketing to high-value customers who stay loyal to your brand over the long term is an excellent way to grow your business.
Marketing strategies often focus on gaining one sale from a customer, and especially in competitive markets, any sale feels like a win. But what happens after you sell to a customer once?
It’s wise to assess how your customers behave over the long term and develop plans to make the most of ongoing customer relationships.
Efforts to engage your most valuable customers are essential to growing your business. To identify these customers, you need to look at customer lifetime value.
What is customer lifetime value?
How many of your customers have been buying from you for years? When you plan your marketing, these people may not be top of mind because they are already loyal customers. However, you can better target these high-value customers when you start paying attention to how much your company makes from each customer over their lifetime.
Customer lifetime value is another way of looking at who your most valuable customers are and how you should be investing your marketing dollars.
How you can benefit from understanding customer lifetime value?
It costs money to acquire new customers. It can cost five times more to bring in a new customer than to simply retain an existing one (customer acquisition versus customer retention). Consider that any revenue you bring in from a customer needs to cover your customer acquisition cost before you begin collecting profits. The longer a customer stays with you, the more chance you’ll recoup your cost and generate profits.
Customer lifetime value is a critical data point you should be mindful of when marketing. As much as we may celebrate attracting new customers, it’s vital to your business to take care of the customers you already have.
Customer lifetime value strategies can help you attract more of your ideal customers and deepen the value of your relationship with them. Plus, existing customers are more likely to buy from you. There’s a 60 per cent to 70 per cent probability you will sell to an existing customer compared to just five per cent to 20 per cent for new customers. So, investing in your high-value, loyal clients makes good sense.
It’s all about understanding your customers and finding ways to attract and retain the ones that benefit your business most over time. What appeals to them about your business? How can you ensure you meet their needs?
10 tips to increase your customer lifetime value
To assess long-term customer value, you’ll need to explore ways to build brand loyalty and customer retention. Your top customers, who value your brand and can be counted on to buy from you often, can be a significant income source for your business.
Here are 10 practices to build into your retention strategy:
1. Feature your best customers
Encourage your customers to share their experiences with your brand online; then look for ways to highlight or share their posts. This type of engagement can reinforce your connections to existing customers. In addition, user-generated content can be compelling in attracting new audiences who are likely similar to your best customers.
2. Create memorable experiences
Stand out from competitors with experiences that your customers appreciate and remember for next time. Every interaction with your company will affect your customers’ perception of your brand, from your messaging to how you follow through after a sales transaction.
3. Make it convenient
Customers who want to spend money with your business won’t do so if you make it complicated or frustrating. Don’t make it hard for people to love and use your product
or service. Test your online transactions, check shipping times and do what you can to help make it easy for your customers to keep choosing your company.
4. Focus on relationship building
Building relationships over time takes trust. When customers see your company will be there for them with solutions, a high-quality product and experience, and support if something goes wrong, they’ll trust you can take care of them in the future. Sometimes you make an extra effort to make a customer happy, knowing you will likely keep them for years.
5. Offer excellent service
Supporting your customers well is an excellent strategy for customer retention. Doing it right means offering the best service you can at the time of purchase and all points of the customer’s journey with your company. Sales transactions, customer communication and even social media inquiries are places your company can shine. Read our blog to learn how to turn website visitors into happy buyers.
6. Show gratitude
We’ve all seen promotions run by companies trying to attract new customers. Try flipping the script and create offers that reward long-term customers for their loyalty. When your company is ready to release an upgrade or new feature, try giving your existing customers access before opening it up to everyone else.
7. Listen to your best customers
Your high-value customers can be an excellent source of ideas to engage others like them, so look for ways to consult them on how you can best meet their needs. Ask their opinion, engage with them genuinely and incorporate their suggestions where practical.
8. Build what they need
Learn everything you can about your best customers and what they need so you can innovate with them in mind. Then, create products and services that support what they need now and in the future. You’ll already have a receptive potential market.
9. Deliver quality
It’s not that difficult to sell to a customer once, but if you want to invest in long-lasting relationships with your customers, you’ll need to provide a quality product or service. Every time they use your product, they’ll think of your brand, so do what you can to ensure you’re selling something they can count on.
10. Expand billing options
If you offer a service-based or subscription service, try encouraging your customers to increase their commitment with three-, six-, or 12-month billing options. You can even offer a discount. Again, predictable revenue is valuable to your business growth, and you’ll gain more time to make a positive impression on that customer.
Tackling the unknowns when targeting long-term customers
There’s no perfect formula to use when targeting customers. Aim to balance attracting the sales you need today with creating concrete plans to keep your highest value customers happy. This mindset can influence what you sell, the promotions you run and the behaviours you reward with your loyalty programs.
However, your analysis is only as good as your data. Your current data may represent the customers you’ve been targeting for years. You may need to expand your marketing to engage new audiences to see what happens. You may discover customers in a different demographic who spend more over the long term. Download our buyer persona template to craft a detailed profile of your ideal customers and ensure your marketing targets the right audience.
Your business can grow predictable income from your best customers to drive the future growth of your company. Book a consultation with a Postmedia expert to explore how you can shift to targeting high-value customers you can engage over the long term.