Digital advertising and direct mail marketing may seem worlds apart, but the smartest marketers now know that, whatever medium they use, they must play the long game to generate sustainable growth for their business. That means focusing on Customer Lifetime Value, or CLV. It’s time for digital marketers to prioritize long-term relationships over one-time transactions, something direct marketers learned long ago. What’s old is new, as it were.
With those shifts, marketers’ obsession with micro-measurement must evolve. Just as vanity metrics like video views and follower count are dismissed today, soon the focus on return on ad spend — How many leads or conversions did we get from this one campaign? — will be out. That short-term thinking will become a liability.
“If you don’t have some type of lifetime value calculation, even at a broad level, it will soon be impossible to compete,” George Popstefanov, founder and CEO of global advertising agency PMG, told Google.
That’s easy to say for global corporations, right? They have entire teams of analysts specializing in studying their customers’ increasingly complex buyer’s journey across channels, browsers and devices.
Luckily, you don’t need a roomful of MIT graduates to boost your CLV. Yes, data is the key to accurate measurement, but actionable tactics that any business can apply abound. We’ve found that the following three approaches are essential to any business owner’s goal to increase CLV:
Prioritize customer retention — not just acquisition.
Stop chasing low-value customers. Instead, get clear on your ideal customer’s buyer persona and woo those folks exclusively. As the saying goes, it’s easier to sell to an existing (high-quality) customer than convert a new one. Plus, it’s usually cheaper too.
For services, especially, focus on cross-selling and upselling. If your product has a short lifecycle, offer a subscription service to help your customers restock every n weeks automatically. Target specific segments of your customer base via email or Facebook ads with promotions related to their favorite events, products or services to keep them buying.
Inspire loyalty by surpassing customer expectations.
We’re in the age of customer experience. Your reputation — and, by extension, your bottom line — is in the hands of your customers. We all know customer service is important, and we’re all prone to stressing out over our reviews.
Brands with a high CLV, though, tend to take personalized service to another level. They credit their customers for their success and thank them publicly, especially on social media (e.g., user-generated content). A generic rewards program is unacceptable; instead, they offer exclusive deals (or add-ons) to their best longtime customers, tailored to their interests. If a customer is going through a rough time, they may even send a care package or gift to show just how much they care.
Run your business with your customer in mind.
From product or service development to customer service, your audience must remain front and center. Provide opportunities for customers to weigh in on your business frequently and establish multiple touch points for communication. “You need to truly understand who your audience is and the best way of interacting with them,” Popstefanov said.
Is that via live chat on your website? Direct messages on Instagram? Phone call follow-ups? The choice is theirs.