The process can be different, depending on the industry, customer needs or desired outcomes. This being said, it’s extremely important to put together a strategic onboarding process to encourage new users coming back for more, and thus increase their lifetime value to your company. It’s here that your customer really engages with your product and where you can make the greatest positive impact. It should be among the top priorities as poor onboarding occurs to be the leading cause of churn, 23% to be more specific.
When it comes to Customer Success, onboarding is the process you should spare no effort on in order to ensure sustainable business growth. Below, we’ve listed 14 proven tactics to increase your average CLV and generate more revenue from your existing customers. Increasing your CLV can be as simple as switching your billing cycle from monthly to yearly, or as tough as overhauling your customer support process.
#Expanding client base how to
Each can provide important data on how customers are responding to your product and how to efficiently adjust your marketing efforts. Customer Lifetime Value Formulaįor more valuable insights, customer lifetime value measurement should be done using both: an average revenue and an average profit. That number only gets higher as the client gets to pay more over time, the expansion revenue from existing customers exceeding the churn. The average customer lifetime value of that client would be $2,400 ($100 times 24 – the number of months that person has been a customer). We’re going to be using a single customer as an example, one who stays with your business for 2 years, and who got a subscription plan priced at $100/month. Let’s say you run a classic, pure-play SaaS service with monthly billing.
Since each client becomes more valuable, it means your company can afford to spend more to acquire new users and retain the existing ones. So, a high CLV means each customer will bring in more revenue for your company. Here’s the simplest customer lifetime value definition – it’s a metric that shows how much net profit your company can make of one customer over time. Here’s where the term customer lifetime value comes forward.
There are two ways to grow your business. The first is to acquire new customers. The second is to focus on retaining existing clients and increasing their lifetime value (CLV).ĭata shows that the second is a far more effective strategy for producing a steady, predictable increase in revenue.Despite this, sources disclose that 44% of companies spend more time and money on acquiring customers, whilst only 16% of businesses focus on reducing churn, putting upfront the old wisdom that it’s cheaper to retain and delight an existing customer than to find a new one.ĭon’t forget – the longer you can keep a customer, the greater is the provided value during their lifetime relationship with your brand.
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