Brands facing stagnant revenue or high churn rates often conclude that more new customers will solve their problems. A paradox, especially because a customer making one purchase does not make them a profitable customer.
Maximizing your customer lifetime value (CLV) is the most data-based way to increase profit, and businesses in all industries should make it a priority metric. Here are some ways that brands in SaaS, restaurants, gyms, and retail can maximize their CLV. (Note: Most tactics are applicable across the board.)
SaaS businesses have access to vast troves of customer data. Not just the name/email kind—usage statistics provide excellent insight into where your existing customers find value. This provides the opportunity not only to market those high-value features to prospective users but also to build your product around what your customers use and create new features that anticipate their needs.
Combine usage data with some interviews with individual customers, and your product team can develop a roadmap that serves your customers (and makes it less desirable for them to leave!). It’s a roadmap will bring your organization true ROI, instead of teams making the best guess at what they think users want.
Email marketing is not a free, see-what-happens testing vehicle. It’s a vital communication path, as it’s often the only medium brands can use to directly contact their customers.
That’s why it’s crucial that your email marketing efforts are intentional and strategic. If someone unsubscribes, your opportunity for upsells or re-engagements evaporates.
The first thing to do is segment your list by factors your business model deems relevant, such as engagement, demographics, or purchase history. This allows you to sort your email list into the 20% least profitable customers; the middle 60% of mostly happy customers that may need convincing to upsell; and the top 20% who are returning engaged customers.
Then you can target your email content to each segment. However, don’t automatically assume that you should hit your bottom 20% with some promos. This can often backfire and lose money; we’ve seen this happen IRL.
Instead, determine whether they’re worth the effort to try to retain/upsell, and if so, develop meaningful emails around that. Likewise, don’t neglect the other two customer segments. You’ll find a lot of opportunity to retain happy customers by providing information or offers that speak to their needs.
Restaurants can implement some easy tactics for earning customer data and gaining insights. A POS interface that emails a receipt gets you that prized email address. Waiting systems that text when a table is ready, wifi setups, website pickup or delivery orders, and even a simple ordering app are all ways to engage customers and collect information.
Next, take a look at what your most popular menu items are. Are there certain days that are more popular with one item over others? Are there days that are slower? What do customers spend, and what’s their purchase frequency? Use this information to tailor offers that suit both your business and your clientele.
The restaurant business has always been a tough one, but focusing on CLV can help pad your profits and extend your longevity. Restaurants can leverage email marketing even without the app-building abilities of giants like Starbucks.
If your restaurant uses an online reservation system, you should have access to the emails and/or phone numbers of those who visit. Create special post-purchase drip campaigns that invite diners to revisit, perhaps through booking through a special link that provides a small discount or freebie. Have the email come from the manager or owner, and personalize it so the email is warm and inviting.
You can also do the same with customers who frequently order takeout or pick-up. Identify who they are and see what sorts of offers would create a better experience and entice them to return.
Gyms try all kinds of innovative approaches to maximizing CLV, including the famous Planet Fitness Pizza Mondays. Perhaps the hardest aspect for gyms is that their profitability relies on their customer base making lifestyle changes that are difficult to stick to (looking at you, New Year’s resolutions).
The key for gyms and fitness providers is integrating into existing behaviors. Gamifying is a well-known engagement tactic, and with fitness, more engagement equals a higher retention rate. For example, gyms create challenges that sync up with wearable fitness trackers and let individuals or teams compete against each other.
Push notifications are also an excellent way to maintain contact without overwhelming clients with emails. Push notifications can notify clients of class cancellations, open spots on a waiting list, or even that a piece of equipment is ready for their use.
As gyms learned during the pandemic, big life changes can upend fitness behaviors. Just as many businesses are developing hybrid or remote options for work, consider offering your gym members virtual classes so that they can still use your services even if they can’t make it into your physical location.
Flexibility with pricing can help as well. Perhaps virtual-only, hybrid, and in-person-only memberships have different pricing options that are more enticing to new and relapsed customers. And if you’re already using software or push notifications, you can easily expand functionality to put a class event on a customer’s calendar or remind them when class is about to start.
Staying flexible with your customers and accommodating their needs will make them less likely to cancel and maximize your gym customers’ lifetime value.
Customers are more likely to respond to retail emails if you show them things they’ve either already looked at or are similar to what they’ve already looked at. This kind of hyper-personalization is more engaging than a blanket blast email. In fact, almost 79% of consumers say they are only likely to engage with a brand using coupons or offers if those promotions are directly tied to how they have interacted with the brand previously.
This presents a massive opportunity for retail to convert abandoned carts, make a second sale, or continue engaging longtime customers.
Customer service is not a “cost center,” it is a core vital sign of your business. 80% of customers say they would continue doing business with a brand if there is an emotional connection with a customer service agent. However, only 30% of those people felt that companies they interacted with in the prior year fostered such a connection.
Similarly, 66% of customers say they would be more loyal if a company provides good customer service, 65% would recommend the company to others, and 48% would spend more money.
Poor customer service can demolish a customer relationship in a moment. And while there may be some costs to delivering a seamless experience, they will be well worth the loyal customers.
To fortify a business that creates growth, profitability, and longevity, CLV should be a priority focus for brands across industries. The more you learn about your customers, the more exacting and tactical you can be. So remember, next time you think “We need more customers,” ask yourself instead, “How can we retain the customers we already have?”