As a marketer or business owner, it’s easy to find yourself constantly focusing on new business. You create lead generation campaigns and actively seek out new opportunities to sell your product or service. However, by focusing too much on this, you may well be neglecting a key segment of your target market – existing customers.

It’s so easy for brands to take returning customers for granted and focus their efforts solely on new business. However, existing customers can prove far more lucrative in the long run, paired with the fact that it costs up to five times more to attract new customers.

Back in 2014, a survey among company marketers shows the factors that can improve Customer Lifetime Value in the future.

Chart source: Econsultancy/Sitecore via MarketingCharts

It’s therefore no surprise that marketers are increasingly turning to a useful metric which can transform their marketing efforts. CLV or Customer Lifetime Value shows how much profit a single customer brings to any business over a period of time.

This therefore enables brands to establish the individuals that are most valuable to the business so they can be nurtured. Taking this customer centric marketing approach can not only enhance your marketing efforts but also dramatically increase ROI.

So, how do you work out your CLV? Well it’s relatively simple once you have the data, here’s a useful article which takes you through each step.

Once you have your CLV, you’ll be able to clearly segment your customer base and understand who exactly your most profitable customers are.

This understanding will help enhance your digital marketing strategy and here’s how.

You can get more personal

Breaking down your customer base and reviewing their spending habits can be invaluable when it comes to digital marketing. This is especially true nowadays when personal marketing is key as blanket sent emails, for example, don’t cut the mustard anymore.

When it comes to email, for example, you’ll be able to speak directly to the recipient in a friendly and personal way. You’ll be able to talk about their past purchases and anything new that they, specifically, would be interested in.

By taking the personal approach with your valuable customers, you’ll stand out from the crowd and show a vested interest in them. Take EasyJet, for example, who nailed this with their 20th anniversary campaign.

Using data which had been collected over 20 years, the airline sent each customer a highly personalized email. The data helped them to create a story for each individual, highlighting the places they’d travelled to with EasyJet. For example:

“Remember your first every trip? It was 8th July when you left Luton behind and stepped off the plane in Faro.”

“You’ve also taken the window seat 70% of the time. Well who doesn’t enjoy a room with a view?”

Does it get much more personal? EasyJet then went on to recommend a new destination based on previous trips for each customer. The brand reported that the open rate was 100% higher than that of their typical newsletters.

This shows that using CLV to get personal can transform your marketing efforts and ensure they get noticed.

You can build profitable relationships

Another key advantage of CLV is that you can nurture your most valuable customers and build more profitable relationships. Once you have established who those customers are, think about the ways in which you can build on your existing relationship.

There are plenty of ways of doing this but you must ensure that your efforts are always sincere. Don’t bombard customers with useless communications, just to remind them that your there. Like any relationship, it must be a two way thing.

So, show that you value them by asking their opinion and encouraging them to tell you about what they like/dislike about your product or service. Not only will this help you to improve but will also show that your care about their opinion.

Another way to demonstrate that you are approachable as a brand is to take advantage of social media. Hold regular Q&As and polls to encourage interaction with customers. Be sure to answer direct enquiries and posts to show that you are an engaging brand that cares.

BT are particularly good at this and have not only built stronger customer relationships but also made significant savings. The telecoms giant uses social customer service to deflect expensive calls and point customers to appropriate live chat assistants. This strategy deflects 600,000 calls a year which has lead to annual savings of £2m.

Furthermore, the use of social channels such as @BTCare has positively impacted customer satisfaction levels. BT’s in house metric, The Net Easy Score (based on how easy it is for customers to interact with the brand) has noticeably risen.

This therefore demonstrates how being approachable and open on social media can help build those important customer relationships. So, think about where your target market is and the channels you can use to really speak to and interact with those high value customers.

Targeting becomes way more efficient

Unlike traditional lead generation campaigns, understanding your CLV also helps to improve your ability to target. The data you have on your existing high value customers can work wonders and help you target effectively.

Once you have profiled who your target customers are, think about how you can reach them. This may be in the form of an app, a loyalty program or an email newsletter. There are plenty of methods that can really pay off and help you nurture your existing customers.

When targeting individuals, try and offer something of value that is relevant to them. This may be a discount on the face cream that said customer bought six months ago or a reminder to buy a greetings card for an upcoming birthday. By helping to make their life easier, your targeting will become much more effective.

Conclusion

Taking the steps to work out your CLV can benefit your digital marketing efforts insurmountably. You’ll not only save on expensive lead generation campaigns but will also make your communications much more personal and meaningful. Nurturing existing customers also makes them feel special and appreciated when done well.

This customer centric approach will be reflected in your digital marketing efforts, making them much more efficient and cost effective. When you develop this effectively within your strategy you should also see a clear increase in ROI.

 

About the Author: Ryan is a Digital Marketing Specialist at the Bradford based Digital Agency Harrison Mann. Being in the digital marketing field for 7 years now, he enjoys keeping up to date with the latest in all things digital and search. As a silent type, Ryan expresses plenty of his thoughts through writing.