5 proven tactics to boost CLV and transaction density on your products and services
When starting a business, the three main pillars of success usually revolve around business development, growth, and creating a strong customer satisfaction rate. Once you start gaining traction from consumers, the next step is asking yourself how can I increase customer lifetime value? Many businesses focus on bringing in new customers, and neglect the importance of CLV for their existing consumers. Many studies have shown that you can have a greater increase in revenue by keeping existing customers coming back for more.
So you may be wondering, what is Customer Lifetime Value?
The answer is pretty simple. Customer Lifetime Value refers to how much revenue a single customer contributes to your business throughout their lifetime. Take for example Netflix, a lot of their revenue is produced from recurring customers that are consistently finding a reason to stay subscribed. The service keeps updating to better benefit them, and keep a strong customer base for the business.
Let’s break down five simple ways to increase Customer Lifetime Value for your business, and continue growing your company’s success.
#1. Perfect the Consumer Recruitment Stage
If a customer is looking to buy your product or service they need to feel value from the beginning. Every industry is going to look different depending on what you are selling, and how you choose to grow your business to stay relevant to your customers. Once you catch the attention of your audience, you can use certain tactics to make them feel good about their purchase. This can include a free trial, subscription-based services with zero dollar cancellation, or a package of services that all work together seamlessly.
In the beginning, it’s important to make the process easy for new buyers to feel safe and secure. Once they purchase once and are satisfied, you can move forward with optimizing CLV. Everything you are offering should have a snowball effect for consumers. Either it’s a recurring service they want, a monthly subscription for a product, or a reliable product that they can recommend to others.
#2. Create Content that Keeps Customers Engaged
If your customer purchases a product from you, and never hears from you again. You’re likely going to fall off their radar! This is the step where email marketing, a strong website, and social media marketing all come into play. When creating email campaigns you can provide value to your customers in a reliable way. These can include a Call to Action (CTA) and other promotions that encourage buyer engagement. Maybe there’s a special offer going on, a new product service, or a reminder of something left in their shopping cart. Customers crave authenticity and trust. Try to stay away from boasting about your business, and move towards the psychology of the buyer. What do they need, and how can you keep providing value for them moving forward?
#3. Don’t Neglect the Importance of Customer Service
When you think about the customer journey, it needs to be easy every step of the way. If customer service is poor, the likelihood of a consumer switching to another company is highly probable. It’s important to focus on a quick response rate, and good damage control skills if things do go wrong. You know the phrase, the customer is always right? For many of us business owners, that can sometimes feel like a hassle. Regardless, it’s important to keep your customer satisfied and be ready to assist them if they have any issues. Once you build this trust, your customer success rate will increase drastically. You will notice consumers stick around because they know you will be there to help if anything goes wrong.
#4. Build Strong Relationships and Listen to Customer Feedback
It may be easy to build your business model, and just want to coast on cruise control for a while. The truth is every successful business is constantly evolving. As you build relationships with your customers, you want to curate a strong bond. They should feel connected to your brand, mission statement, and overall purpose. When you build strong relationships, your consumer creates a connection with your business. This automatically increases CLV, as you’ve given your customers every reason to stick with you. As your business grows, pay attention to the feedback you receive. It’s important to make changes based on the response you get, and always be proactive with ways to make the experience even better for the customer.
#5. Boost Transaction Density
Transaction density is another piece of the puzzle when it comes to increasing your sales and growing your business. Transaction density is about increasing the overall size of your transactions, so preexisting customers are spending more with you. This doesn’t always mean raising your prices, but implementing tactics that encourage a higher spending rate.
A few ways to go about this are:
- Use add-ons to your advantage: ask customers if they need another relevant item at the checkout, or offer them a discount on bundle orders.
- Display related items: if you’ve ever been on Amazon you’ve probably seen the section that reads “customers are also buying,” next to the product you’re looking at. This increases the chance that customers will purchase something they may not have otherwise.
- Optimize Sales and Promotions: this might sound counterintuitive, but consumers are pulled in when there’s a sense of urgency. Everyone wants to take advantage of a good bargain, especially if it’s their first time purchasing with you.
- Offer Higher-End Items: When you diversify your prices, your transaction density will automatically go up. If you have an average of $25 dollars, but you offer higher-end products or more expensive upgraded packages, your overall average will increase over time. Your consumers receive more value, and your business revenue continues to grow. It’s a win, win!
I know this article has been jam-packed with information, but this is a good overview of some helpful ways to build longevity in your business. It’s important to anticipate how your products and services can provide value to your customer for years to come. When you create trusted customers, you build reliable revenue with a steady growth rate. Make sure to adjust your business model to prioritize CLV and transaction density!
If you are looking for more helpful business tips, check out my other blog posts. I’m here to help you every step of the way!