Reasons for the Importance of Customer Lifetime Value for a Brand

In determining short-term and long-term marketing goals, it is necessary to have a good understanding of the financial calculations of your investment. Customer lifetime value is one of the factors that can encourage decision making to spend less time to get customers with lower values.

Customer lifetime value (CLV) is one of the most important metrics in e-commerce. This is related to customer satisfaction with a product that will benefit long-term business continuity, especially for financial purposes.

Benefits of Customer Lifetime Value for a Brand

Usually, a high CLV value is often an indicator of market satisfaction with the company's products. Therefore, companies can assess CLV as one of the considerations before carrying out a marketing strategy. Here are some of the benefits of CLV for product and company development.

1. Impact on the bottom line

CLV can affect the profitability of your company's business. If you only work for conversions, relying on new customers, then you will earn a smaller margin on each sale.

2. Generate stable cash flow

Getting repeat orders from existing customers will bring regular cash flow so you don't have to worry about part of the company's revenue.

3. Enable the company to grow big

With a larger margin, you can invest more. Either expand the market abroad, develop new products, hire services that can help increase sales.

4. Proof that customers like your brand and products

A high CLV value indicates the number of people who make product transactions. Not only about product quality, but also indicators of customer satisfaction with the service of a brand. This is a means of discussing with investors for the development of the company.

How to Boost a Brand's CLV Increase

Increasing customer age, marketing frequency, and how many orders can increase CLV value. Not only a sales trick, the values ​​formed are also the result of customer loyalty to the company. Here are some things to consider to be able to encourage an increase in CLV.

1. Retain customers

Make a marketing strategy that is soft selling. The trick is to create strategies that are educational, inspiring, and informative. Use social media to entertain so that customers will feel happy when they see content created by the brand so that it has a good impact on the company's brand awareness.

In addition, your company can send emails with information on the various uses of the products offered so that customers are expected to be interested in buying.

Treat loyal customers specifically because repeat customers can add value to your company. Also segment customers according to their interests, tastes or preferences and tailor offers to them.

Take advantage of feedback as an opportunity for companies to connect with customers, because discussion and input from feedback will keep customers coming back. All marketing and communication strategies will add to the positive impression of the customer experience.

2. Attract customers to keep buying your product

If your product focuses on a more specific target market, it will make it difficult for customers to stay longer. If the customer no longer needs your product, the customer will switch to another product.

For example, baby products sold by a brand will not be able to keep one person as a permanent target consumer for the next five years. The reason is, customers will no longer buy your products because their children have grown up.

In order to drive more orders, you must draw as much time as possible to keep buying products from your company. Meanwhile, the product's usage period that is not too long will make customers leave.

Usually, brands can send emails to customers as reminders and information about what products are offered. You can also attract customers' attention by giving special coupons for their next order.

3. Persuasion of customers to shop with a larger nominal

You can attract customers to shop more and generate more revenue. One way that can be done is to offer free items or bonuses when customers place orders above a certain nominal.

In addition, you can group products by use or event as an indication of when the product can be used. Not only product type and usage, product usage time also makes it easier for people to find various products they are looking for.

CLV goes hand in hand with customer satisfaction and loyalty to a brand. Loyalty can provide financial benefits so brands that have a high CLV value can last longer while minimizing marketing costs.

As business competition becomes increasingly competitive and the need for business continuity increases, companies must pay more attention to consumers. Through the Customer Satisfaction & Relationship Program, about the essence of Customer Satisfaction and Customer Loyalty and their impact on long-term business profitability.