Why are things like loyalty reward programs so popular with businesses? The reason is that businesses know that loyal customers can be essential to success. Customer loyalty can help drive business. Businesses are realizing now, or they should, that it is more cost-efficient for companies to keep their current customers than it is to bring in new ones.
If you want to focus on growing your business, your attention should be with keeping the current customers happy first and then trying to acquire new ones.
This is where a concept like a Customer Lifetime Value comes in. Customer lifetime value (also referred to as CLV) is the total amount of money that a customer is predicted will spend at your company, on your products or services. By calculating this number you will be able to see where you should put your marketing money, whether it’s to draw in new customers or retain your current ones.
In short, this calculation lets you know how valuable a specific customer’s relationship is to you so that you know how much money you should invest in that relationship.
If your business is not using your CLV information, you could be falling behind the competition. This information can tell you a lot about customers and is an essential part of your overall marketing strategy. The fact is that the higher your CLV, the more profitable you will be. Once you calculate this number, you can create a marketing strategy that will really work for your business.
An example of this is if you are a coffee shop, you are looking at those customers that are there so often the employees know their usual order. That’s guaranteed money that you are getting every day, rather than someone who just randomly stopped in for whatever reason. To calculate your CLV, you want to take a look at the actual purchases over time to predict their future spending habits with you.
Now that you know how important it is to your business, it can help to learn how you can improve it to be more profitable. The biggest way to keep customers loyal is excellent customer service. As great as your products are, sometimes things happen and how you respond to that can make the difference. If your loyal customer is satisfied with how their customer service handled this situation, they will still return to your business.
Customer satisfaction keeps your loyal customers loyal.
Customer lifetime value can be one of the most important aspects of your marketing strategy. Some businesses like to focus on growing their business with new customers, often forgetting about the loyal customers who keep their company alive.
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You are only hurting your business by not considering this very important group of customers, the ones who remain loyal to you through the long haul. Fairweather customers may come and go, but loyal customers are people that you can rely on in the long term because of their regular business.