Strong customer retention practices can be a crucial driver or growth and scale- but are often neglected in many businesses. In this report, Steve Jones discusses how to calculate the lifetime value of your customers and how to use this data to secure future growth.
Acquiring customers is an important step in achieving organic growth- but unless a business understands how to work out customer lifetime value, it's likely they're underestimating their growth potential. The desire to focus on customer acquisition is natural, but since acquiring a customer costs x5 more than retaining one, customer retention is often the more efficient option. In many ways, it's also the more reliable and insightful option. It's much easier to make an accurate assessment of existing customers' likely spend with the business compared to potential ones, providing much-needed visibility over what future revenues might be.
Businesses with a data-driven customer acquisition strategy should be able to build good intelligence on the lifetime value of their existing customers. Most have the data to know how much regular customers spend over set periods of time. What is important is to focus on the breakdown between one-off customers and regular returners, and to consider the propensity to buy more of the same products and to try new products or services. Working with this data to develop metrics is the best way to direct your customer retention activities, and a focus on customer service such as through net promoter score (NPS) will give you continual customer feedback.
In this report, Steve looks at the impact of accurate customer lifetime value calculations on driving decisions around retention, including where he has seen it work to deliver fantastic growth. Click the button to download our full report about using customer data to fuel rap organic growth.