Customer lifetime value (CLV) is a prediction of the total value that a customer will bring to a business over the lifetime of the relationship.
CMO's today recognize that growing the online CLV is a strategic imperative. The majority of customer interaction with a brand going forward will be via digital channels. Just in the retail sector alone, digital channels are responsible for nearly 10% of direct revenues and over 50% of indirect revenues today.
It's all very well thinking about how your online business is going to acquire more customers. But if your conversion rate is only 1% then the wastage in time and resources is enormous.
The so-called 80-20 rule (aka; the Pareto principle) also helps highlight that most of your online business (roughly 80%) comes from a only a small number of engaged visitors (roughly 20%).
CLV is therefore the lens through which we should be looking at future business growth. And our main question should be: how do we optimize customer acquisition spending for maximum CLV?
3 Ways to Build Customer Lifetime Value using DCX:
1. Understand your customers' digital experience
A central pillar of sustainable CLV is brand loyalty. A recent Econsultancy report found that an overwhelming 89% of company respondents believed that a great customer experience is key to driving brand loyalty.
But the only way to really understand your customers is to empathize with their experiences. To see through their own eyes. In the academic world this is known as Standpoint Theory. This states that "our locations within society shape the way in which we understand and communicate with ourselves and the world around us". What does this mean for online businesses and CMO's? That you can only really understand your customers' pains and frustrations by standing in their shoes.
Back to the digital world then; Digital Customer Experience (DCX) platforms can provide this level of granularity into the experience of individual customers by recording their every online move - mouse move, click, swipe, scroll and attention.
This individual-level data can then be analyzed in its own right or automatically compiled to provide a customer experience map for every website page. The same technology can then be used to iron-out hidden or unexpected usability hick-ups that are impacting online customer experience.
2. Personalize your online offering
As any marketer is aware, not all web visitors are equal. From our 80/20 rule it should be obvious that online visitors need to be segmented - and you need to start paying greater attention to those with higher 'conversion' potential.
- Are there specific customer segments looking for a quick deal?
- Are there specific demographics that want to compare prices before they checkout?
- Do some segments insist on reading customer reviews before making a purchase decision?
Every company should first identify its customer segments using tools such as Adobe Analytics or Google Analytics. Once identified, the next step is to drill down into how those specific segments behave and interact with your site using your DCX platform. Once you've identified their behavior - begin to create personalized experiences that maximize the value from your most profitable target segments.
3. Mitigate customer support issues
If a website visitor has already had a negative experience then the damage is already done. Even if he makes a purchase this one time, it will probably be his last. The problem is that customer support can only react to customer pain. And its expensive. And sometimes - if not managed correctly, it can pour more oil onto the fire by adding frustration to the initial dissatisfaction.
Voice of Customer (VOC) feedback is often touted as the solution to customer experience optimization. But by the time a customer is frustrated, the feedback they provide is probably less than useful ("this site really sucks!!"). However, by connecting that feedback to the individual Session Playback recording in the DCX software you can immediately understand what caused that customer's frustration.
As a customer, how often have you been frustrated by having to explain your experience to a customer support rep? What if you're transferred again and again - each time having to hold, then explain the same problem to a different person? What if you don't even speak the same language? The solution is for customer support staff to begin analyzing the Session Playback recordings of their customers in real-time. This way, they will be able to quickly understand the issues and mitigate support issues far more effectively and efficiently.
Conclusion: Stop Acquisition $$'s Going to Waste!
- If a customer feels that their online experience is intuitive, fun and informative they will become lifetime customers.
- If a customer feels that their future support issues will be resolved without stress or frustration they will become lifetime customers.
- If a customer feels that you - the business, recognize them personally and understand their individual needs then they will remain lifetime customers.
We live in exciting times for brands. Digital Customer Experience technology offers a powerful way of answering customer expectations and ensuring that the money you spend on acquisition generates more lifetime customers - the real force multipliers for your business.
Book a Private Demo to find out how Clicktale's digital customer experience solution can help you transform more website visitors into lifetime customers.