While conversion and average order value (AOV) are common focal points when discussing marketing and sales strategies, customer lifetime value can have just as significant an impact on a business’s success. The amount of money a business makes on each customer they acquire is a vital metric to track, as it represents the return on investment for marketing campaigns and product/service costs.
While ways to increase conversion and order value are easy to find, it can be more difficult to find information on how to increase, or the importance of, customer lifetime value. This is unfortunate, as acquiring a customer can be 5-25x more expensive than retaining and growing more value from an existing one. As a result, we are going to go over strategies to increase customer lifetime value.
To improve their customer lifetime value, businesses should:
- Improve customer service management
- Utilize heatmaps to understand consumer interests on-site
- Offer flexible payment options
Let’s dive into each and discuss how to implement them and how they will impact customer lifetime value.
Improve Customer Service Management
One of the best ways to retain customers, and increase the amount they spend over their lifetime with a business, is to give them an experience that makes them want to come back. Customer service can very easily push customers away from a company, but it can just as easily turn a one-off purchaser into a loyal customer.
There are a few ways that businesses can improve their customer service department and retain more customers. These are:
- Increase the frequency of customer service training
- Adopt a customer service management platform to expedite the handling of customer inquiries and complaints
- Utilize customer surveys to get information on how to improve
All of these are likely to give customers a reason to return and purchase again, increasing customer lifetime value and providing better word-of-mouth marketing for new customers, too.
Utilize Heatmaps to Understand Customer Interests
The importance of customer lifetime value extends beyond just customer service, though. One of the ways to maximize customer lifetime value is to ensure a clean, user-friendly experience on a business website or app. The issue is it can be hard to know when a website isn’t optimized well unless one is an expert. Additionally, even when business owners know they should work on their site, they aren’t sure exactly what needs improving.
Heatmaps are a software tool that mark areas on a given webpage that are clicked more often and color-code this information in a “heatmap” style that can mark “hot” and “cold” regions on the page. This gives business owners a better understanding of where in the purchase process consumers are dropping off and where they can put vital information or links to get them a higher click rate.
Offer Flexible Payment Solutions
The most effective way to increase customer lifetime value is to offer a level of convenience and flexibility that other firms don’t. Giving consumers the ability to break up their purchases, and plan them however they need, provides a unique value that can be the deciding factor for where they choose to do business.
While more and more retailers are opting to offer instant installment financing, getting involved with a fintech firm that can offer more long-term payment options like store credit cards and leases can give merchant’s the edge in retaining customers over time. Not only does it make it more likely for consumers to return, but it also provides an average 20-30% increase in conversion and a 30-50% increase in AOV, making it the most effective approach to boosting revenue on the list.
All that a merchant needs to do to get started is to pick the fintech partner that fits their needs. Luckily, Skeps has options to meet the needs of any business.
Leverage the Importance of Customer Lifetime Value With Skeps
Skeps offers a comprehensive, end-to-end consumer financing platform that helps businesses modernize their entire payment process. Working with an entire network of established lenders, we go above and beyond one-click payment, also offering a one-click application process for several different types of consumer financing, including:
- Installment financing payment plans
- Co-branded credit cards
- Consumer loans and leases
If you’re looking to partner with a forward-thinking fintech company that will keep consumers' eyes on the purchase while offering best-in-class financing, Skeps is the perfect fit.