When running a start-up, it’s easy to get caught up in the rush acquiring and then welcoming your new customers to the business. Generating new business is always vital to any business.
However, if you work concentrate solely on winning new customers, you can end up ignoring the customers you already have that might have a lot more to offer. Here, we’re going to look at a new KPI to track, and how lifetime value of each customer can be a better focus for the business’s longevity.
WHAT IS IT?
To make sure you’re using it correctly, learning how to measure customer lifetime value is key. As the name suggests, this is the overall lifetime value of your customer relationships: i.e. how much they are likely to spend on your business, including the costs of acquiring them. Overall, it shows you how much each and every one of your customers contributes to your business’s profitability.
Do you know the current average lifetime value of your customers?
MAKE SURE YOU ARE WINNING THE RIGHT CUSTOMERS
When you’re working on lead acquisition, it’s essential that you take the time to appropriately qualify your leads. When you gain new leads, you need to work out how likely they are not only to convert but if they’re also likely to become one of the business’s more recurring customers. If you can take the time to qualify them, you can start estimating how much their customer lifetime value will be and ensure that your sales team’s efforts are directed in the right place: winning those customers who are likely to spend more.
TAKE THE RELATIONSHIP SERIOUSLY
The biggest mistake business owners are making, on the whole, is spending all their time chasing new customers when return customers can be a lot cheaper to win back. The right platform for CRM for small business can help you do that. By keeping a record of each client and customer that your business has interacted with in the past, you have a better idea of each individual’s purchase habits and are also able to get in touch at the right points to tempt them back with new offers suited specifically to them.
KNOW WHEN TO USE INCENTIVES
A good CRM system can help you know when is the right time to retarget old customers, but it’s a good idea to make sure that there’s an incentive to bring them back as well. For instance, a lot of businesses have now implemented loyalty systems, that make use of points that can be earned exclusively by spending on their products and services to offer deals that aren’t available elsewhere.
Referral systems also work by much the same concept, but they instead incentivise customers to spread the word of the business to their contacts. Either way, you reward their loyalty.
Winning over new customers is important, of course, but don’t fail to spot the additional value that lies within all of your existing customers, too. Start focusing on improving the lifetime value of your customers can you can start to see some major revenue increases.