There was an article recently that cited a study from Econsultancy and Sitecore that highlighted what companies and advertising agencies are doing across multiple industries to increase customer lifetime value. I have written many times about the importance of lifetime value (LTV), and how it is the core of whether your company or product is successful. The article points out that 75 percent of global company marketers agree that LTV is crucially important. I think it is important to understand what companies in other industries are doing to optimize lifetime value so rather than just following your peers, you can build an advantage over them.
A single customer view
The most common response when asked, “What is the most effective tool to optimize LTV ?” was a single customer view. The recognition that key insights are being missed also supports recent findings showing that marketers are struggling to develop a holistic view of their customers. For example, you may have data from inside your product how consumers act, survey data from your users, focus test results and feedback from customer service. What you may not be doing is integrating all of this data to understand the customer experience and their frustrations. Many companies just look at the in-product metrics but by looking at the data holistically you are more likely to find the levers to optimize best your product.
Improved customer experience
Respondents to the survey also voted improved customer experience as the most important factor moving forward to improve lifetime value. Customer experience incorporates everything from packaging (both digital and physical), interface, and perceived value. While it seems logical that improving customer experience would increase loyalty, and thus retention (a key element of LTV), many companies neglect the customer experience for short term improvements in monetization or virality.
Companies cite improvement to customer service as the most effective tactic they currently employ to increase LTV. Although, as I wrote previously, you need understand how to cost effectively optimize customer service, a better customer service experience will often enhance lifetime value. It is often your most engaged users who will contact customer service, so a strong experience could increase their monetization and virality.
Another initiative to increase LTV identified by more than a third of respondents was personal interaction. Personal interaction can be as simple as welcoming someone back to a website or game by first name or as complex as using machine learning to create a custom landing page based on what is most likely to interest him/her.
Cross-selling and up-selling
One initiative cited by almost 30 percent of companies in the survey was cross/up-selling. My immediate response is, “Why not 100 percent?” It is much more cost effective to leverage an existing customer than to try to acquire a new one but many companies are focused just on new user acquisition. By providing options to your customers to buy additional products or consume more, you directly improve the lifetime value.
- Increasing LTV is a priority for companies across industries and by observing initiatives outside your industry you could find techniques that your direct competitors are not employing.
- Enhancing customer service is the most-used technique across industries to improve lifetime value.
- Creating a single customer view, a holistic view of customers that incorporates varying types of data, is the technique that the most companies have identified moving forward to increase LTV.