Custer Lifetime Value (CLV) is the total revenue a business can expect from a single customer throughout their relationship with the company. Before we describe how to increase customer lifetime value, let’s first explore how to calculate it.

CLV can be calculated in a number of ways, but here is a simple formula:

(Average order value x number of repeat sales x average retention period) – average cost of acquisition and retention

CLV is not just a number. It’s a way to understand which customers contribute the most to your company’s success. And ideally, it informs a strategy for how to nurture your business’s most valuable customer relationships for revenue and long-term growth. While your marketing team can create campaigns and strategies aimed at encouraging loyal customers to repurchase, the contact center also has an extremely important role to play in building strong customer relationships and working to increase customer lifetime value. We know customers tend to be loyal to and repurchase from brands they trust. To that end, contact center agent training should focus on treating a customer sale or transaction as part of a larger relationship build, not just a one-off transaction. In fact, the contact center has a pivotal role to play throughout the customer journey . One way contact centers can help stem the tide of customer churn is by increasing customer satisfaction (CSAT) since this metric is directly tied to loyalty.

A second way is by capitalizing on cross-sell and upsell opportunities. Encouraging customers to purchase complementary or upgraded products can significantly increase customer lifetime value and their total spend. Strategies include offering product bundles with packages that offer better value when purchased together, premium add-on features or services, and limited-time upgrade offers. While discounts attract customers, they should be strategically implemented to avoid devaluing your brand. To that end, consider tiered pricing models to suit different customer budgets or time-sensitive discounts such as flash sales or limited-time promotions.

If you want to increase customer lifetime value, consider the following supplemental strategies to enhance customer engagement, loyalty, and overall spending.

1. Don’t underestimate the importance of customer onboarding

The customer onboarding process typically refers to the first 90 to 120 days of product ownership. As customers begin to use the product or service, they may begin to have questions concerning setup, billing, returns, and operations. Often, by the end of this initial 90- to 120-day period, customer profitability and CLV have become fixed. This is because by this point the customer felt what it’s like to be a customer of the brand, has developed an opinion, and has made the decision to either repurchase from the company in future or not. The potential for customer churn is highest at this point. The onboarding phase is an opportunity for the contact center to help emotionally bond the customer and the company. When this bond is formed, it positively impacts retention, loyalty, and CLV. And while self-help options may have a role to play, the importance of investments in human resources and training cannot be overstated. Proactive automated messages such as “Welcome to the Community! Here’s what you need to know to get the most out of your product” can be invaluable to those customers who need a little more guidance.

2. Don’t ignore social media as a customer support and engagement channel

Depending on contact volumes, assign a dedicated person or team to manage responses to direct messages and comments on owned social media platforms. The contact center team can act as an extension of the marketing team by encouraging customers to share user generated content about their positive experiences with the products on social media. For many brands, it’s worth investing in a social media monitoring tool such as Sprinklr or Sprout Social that can help you see what people are saying about your brand beyond your owned platforms. These tools can monitor customer sentiment and give you opportunities to jump in and engage with customers outside of your own channels.

3. Consider offering monthly or yearly subscriptions to increase customer lifetime value

You may think that monthly subscriptions are only for consumables like software, streaming services, or meal kits. While it’s true that not all brands are a fit for a subscription model, consider this opportunity more deeply. Even if your core product or service doesn’t lend itself to recurring subscription fees, are there adjacent services that do? Consider insurance products such as device protection for hardware devices. Even the automotive industry recognizes the recurring revenue opportunities of subscription models and many have begun charging monthly or yearly fees for services such as drive recording, remote start, connected navigation, and other “digital extras.”

4. Create loyalty programs

Reward repeat customers with exclusive discounts, early access, and special perks. Exclusive membership programs can provide benefits such as faster shipping, exclusive content or members-only discounts. These programs can also be tiered with different membership levels that allow customers to unlock more discounts and savings when they spend more.

5. Use data and customer analytics

Understanding your customers’ behaviors and preferences allows you to optimize their journey, leading to higher retention and spending. Ways to leverage data include predictive analytics to predict customer needs and proactively offer solutions. AI-driven churn prevention can help identify customers at risk of leaving and engage them with special offers or personalized outreach.

6. Encourage customer advocacy and referrals

Happy customers are your best brand ambassadors. Encouraging advocacy and referrals can expand your customer base while increasing the value of existing ones. Referral programs can reward customers who bring in new business with discounts, store credit, or exclusive perks. You can also offer incentives for customers to leave positive reviews on your website or third-party sites. Forums, events, and exclusive online groups can help build a sense of community around your brand, increasing the chance that customers will continue to repurchase.

To increase customer lifetime value you need a combination of enhancing customer experience, fostering loyalty, making strategic use of data, and continuously improving your offerings. By implementing the strategies mentioned above, you can create long-term customer relationships, maximize revenue, and sustain business growth. Focus on delivering exceptional value at every stage of the customer journey, and you will see a significant increase in CLV over time. For more information about how to increase customer lifetime value, contact us.