5 Strategies to Increase Customer Lifetime Value

Increase customer lifetime value by focusing on five strategies; building long term relationships, creating strong brand loyalty, up-selling and cross-selling at every opportunity, using the right incentives, and offering superior service across multiple touch points.

‘The purpose of a business is to create a customer and grow that customer’ – Peter Drucker

For those unfamiliar with the metric of Customer Lifetime Value (CLV); it is used to identify approximately how much a customer is worth to your company. It’s calculated by working out the total profits generated over the duration of your relationship, minus expenses and is concerned with nurturing customer loyalty and retaining customers beyond their initial purchase.

See also: Beginners Guide to Customer Lifetime Value

Today’s post is about how retaining customers for longer and increasing the average dollars of each sale can increase your customer lifetime Value to new heights. Keep reading for five practical strategies you can use to improve your CLV:


1. Build long-term relationships

There was a time when hiring salespeople who’d do anything short of holding customers at gunpoint to get a sale was a good idea. However, when your aim is to boost CLV, you want to bury that sort of short-term thinking in the ground and find stellar salespeople who can build long-lasting customer relationships, which are your company’s foundation.

Try these three unique tips to build long-term relationships:

  • Be honest – This means always having your customer’s best interests at heart, regardless of whether you get a smaller sale, or lose a sale to a competitor. You and your customer are both aware your agenda for building a relationship is to generate business. Shifting your agenda to something altruistic will show the customer you see them as more than just a pay cheque.
  • Share – You have a plethora of skills and knowledge beyond the breadth of what you’ve been tasked to provide. Share it for free to boost your client’s confidence in your abilities, while also exposing them to a range of other products and services.
  • Be a partner – Create a strategic partnership or alliance with your customer’s business. A mutually beneficial relationship is the best and easiest way to build trust. Create a lifetime customer by referring their business, acquiring their products or using their services.


Building long term relationships is a simple, effective method for increasing your CLV. While it may take a little extra time, care and consideration, it’s a great way to increase revenues from existing customers without simultaneously increasing your expenses.


2. Create brand loyalty

Anyone who says ‘brand loyalty is dead’ lives in a world where Apple doesn’t exist. Apple is a leader in brand loyalty because of its consistent quality, customer service and the values it totes in its mission statement. Brand loyalty increases your Customer Lifetime Value because it encourages trials of a new product, facilitates repeat purchases and therefore extends the lifetime of your customers. Three major determining factors of brand loyalty are the quality of products, customer service and ‘shared values’.

It goes without saying customers will keep returning if you’re offering consistently high quality products or service, with exceptional customer service. For example, Clickfox’s study revealed poor customer service (48%) and low brand quality (35%) are the biggest deterrents when it comes to brand loyalty.

In other research, 64% of participants said shared values were the primary reason for maintaining a relationship with their brand. ‘Clearly communicating your brand’s philosophy or higher purpose’, or in layman’s terms, showing your heart is in the right place has become very important to today’s consumers. So choose a philosophy, which reflects your consumers beliefs and demonstrate them through sponsorship, events or anything you can think of. Be sure to brand all marketing efforts consistently, so consumers keep returning to what’s comfortable and familiar.

Keep your product quality high, provide exceptional customer service and repeatedly demonstrate your company’s mission statement to build brand loyalty and elevate your company’s CLV.


3. Always upsell and cross-sell

The difference between me walking out of McDonalds with a cheeseburger and me walking out with a cheeseburger combo and an apple pie is sadly not self-control. Rather, my purchase decision rests upon the words, ‘Would you like a combo with that?’ McDonalds has it all figured out. When you increase the average dollars of each sale, you make more over the customer’s lifetime.

Upsell and cross-sell to give your CLV a quick boost. To avoid confusion, I’ll establish the difference between upselling and cross-selling. When you upsell, you increase the value of the same product or service, for example upgrading a cheeseburger to a combo. You sell a more expensive model or additional features, which add value to the product, whereas when you cross-sell, you’re selling additional products to the customer, i.e. apple pie.

One critical thing to remember when upselling and cross-selling is to always provide honest, targeted information. Unrelated recommendations damage the credibility of relevant ones, so resist the urge to cross-sell a bunch of products at the same time. Relay the benefits tailored to the customer, and don’t over promise what your service or product can deliver.

The concept of upselling and cross selling to increase the revenues is not a new one, it’s just most businesses don’t do it well. Upsell and cross-sell with honest, targeted delivery, and you’ll find your average sale increasing without having to bump up any expenses.


4. Choose the right rewards and incentives

Companies spout all kinds of offers to get attention, but you need an incentive scheme, which not only grabs your customers’ attention, but holds it too. Your rewards system can increase your CLV by promoting customer loyalty and increasing profitability in the long-term.

Therefore, stay away from discounts, and instead offer exclusive products or value-added services. A study by Chubbies found the lifetime value of customers acquired through discounts was lower than customers who weren’t acquired this way. As if that wasn’t enough to turn you off, studies have shown discounts decrease the perceived quality of items, while free gifts maintain quality perceptions and increase deal value.

Thus, when you’re choosing your incentive scheme, always remember to:

  • Communicate – Raise awareness and
    educate your customers on potential rewards. Many customers aren’t aware they even exist.
  • Make your rewards attainable – Achievable rewards are engaging for high-value customers, provided they are equitable and competitive with others in the industry.
  • Make them complimentary – Choose rewards, which compliment your brand. i.e. don’t give away chocolate if you’re a health and fitness brand.
  • Use free gifts – Use products as rewards to encourage trials and increase successful cross-selling.


Choosing the right incentive structure means your customers won’t be the only ones reaping the rewards. Steer clear of heavy discounts and use your rewards system to increase customer retention, and boost your CLV without compromising your bottom line.


5. Use multiple touch points to deliver superior customer service

According to a study by Harris Interactive, 56 per cent of participants would switch to another company if an alternative offered more options to connect with them. If you’re looking to increase customer loyalty and subsequently your CLV, manage and organise all available communication channels well.

Having multiple points of contact, whether it’s via face-to-face, telephone, web or social media allows customers to choose how they’d like to be contacted. Sixty per cent of consumers don’t want to be contacted over the phone about special offers, information and upgrades, while 75 per cent prefer contact via email or text message.

Social network tools give you the opportunity to connect and engage with your customers at any time of day, whenever it’s convenient to them. Not only this, moving traffic to other channels minimises costs and increases purchase paths, although the downside is lost opportunities for cross-selling.

That being said, having multiple touch points prevents potentially loyal customers from leaving due to unwanted contact by phone, email or face-to-face interaction, and raises your company’s Customer Lifetime Value when executed well.


Increase customer lifetime value and increase revenue

When you increase your company’s customer lifetime value, you’re increasing customer loyalty, general profitability and marketing allowance in one fell swoop. While you don’t need to stop pursuing potential customers altogether, remember to focus on building up the customers who already like you. Apply these five tips to your business strategy to boost your Customer Lifetime Value and feel the positive effects ripple throughout your company.

Gordon Tan

Gordon Tan is an entrepreneur based in Australia who has started and sold multiple technology companies with a combined value of $150m. This included a client satisfaction benchmarking platform which gave him first hand insight into the best practices of over 6,000 businesses. After retiring at 35 he is now a recognised thought leader on winning and retaining clients - His two passions: making clients the heartbeat of a business no matter what the product or service and this blog.

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