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In today’s dynamic market, the costs of marketing and advertising for your Brand are going sky-high. Also, you put endless efforts into acquiring new customers along with massive customer acquisition costs.
This all will not reap many benefits if you are not successful in retaining your acquired customers. Also, your existing customer base should be encouraged to return to your brand for repeat purchases. Here, you will realize that customer loyalty programs play a great role in persuading your customers to return to your brand repeatedly.
What is Customer Lifetime Value
How about we use simple maths to understand the core concept of the subject? The calculations go something like this – Let’s say that your brand is spending $1,000 to acquire 1 customer. Now your best hope is that you provide the finest quality products or services as well as your brand has to make sure to satisfy the customers enough to keep them coming back for more. This will result in a strong lifetime bond or a relationship with that customer.
This in turn should not only help you to recover your cost of $1,000/- but to even gain a fruitful ROI throughout your customer’s relationship with your brand. This is termed as Customer Lifetime Value. The value that a customer brings to your company through their repeated interactions and engagements with your brand.
The longer the customer stays with your brand, the higher their LTV and wait for it… the higher your company’s ROI will be. Considering that these repeat purchases from these customers should be fairly frequent and that the average order placed by them is higher in value to give a consistently better lifetime average.
Hence, Customer Lifetime Value is increasingly becoming the most monitored and is evidently an important metric when it comes to evaluating the success of a Business and predicting its future progression too.
How a customer loyalty program can make a difference?
Loyalty programs have been around for various years and give several benefits to the organizations, such as:
• Retaining your existing customers
• Reward customers for their loyalty
• Reducing your acquisition costs
• Boosting your customer lifetime value
• And much more.
Research shows that being a part of the company’s loyalty programs motivates at least 54% of the entire customer base to spend more with the company.
On average, customers engaged with your loyalty programs spend at least 10x more than their first purchase with the company, thus proving that it can be more profitable to retain an existing customer than to acquire a new one. Studies also show that even if you increase customer retention by just 5%, it can help you shoot up your revenue to a whopping 25-95%.
With loyal customers, your brand can leverage their trust in your brand. So much so that organizations have successfully witnessed a massive 60-70% increased probability of selling more profitably to their loyal customers as compared to the new customers.
How does a Loyalty Program Play a Vital Role In Improving Customer Lifetime Value?
The core reason why customer lifetime value is getting a lot of importance is that it helps an organization understand the profitability of customers. It also brings to light whether or not the increased overall revenue from these loyal customers is proportionate to justify the sales and marketing expenses.
So, now to make a customer profitable, the most primitive and instinctive response is to have them return to your brand repeatedly, to make them always choose your brand over the competition, and that too over an extended period. Thus comes to light the customer loyalty programs that can help you engage your customers effectively.
With its interactive and innovative loyalty technology, it gives them exciting opportunities to earn endless rewards options with every repeat purchase. Eventually, having a great loyalty program can make your customers feel valued and cared for.
It leads to customers trusting you more, thus forging an unbreakable bond with them that gives life to a long-term profitable relationship with them. This is how loyalty programs tend to play a vital role in improving the clv i.e. Customer Lifetime Value.
The best practices to optimize the CLV
Now that we understand the crucial role that a customer loyalty program plays in improving the customer lifetime value, it begs the question of how loyalty programs help to optimally increase the customer lifetime value.
To start with, your organization should invest in an end-to-end next-gen loyalty solution from an industry-leading organization such as Giift. Our next-gen innovative loyalty solutions are customized according to your brand’s current requirements and future needs thus ensuring you a fruitful outcome. Furthermore, we will be your one-stop shop for all your customer engagement needs.
GiiftLBMS, a points accrual and customer management system that will take care of everything for you. From program creation to the onboarding of your esteemed customer base with the help of an omnichannel interface.
And from driving customer engagement to a complete CRM solution, we will be here for you every step of the way. We empower you to cover the entire process with just one solution. According to us, this is the best way to optimize customer lifetime value.
Why should you consider Giift to optimize your customer lifetime value?
At Giift, we believe that the best solution is the one that is tailor-made for your business. It should be well-integrated with your organization’s mission and vision and is on point to achieve the company’s goals.
We have years of experience in disrupting the loyalty space in every industry possible, from banking and financial services to hospitality and airlines and from telecom and retail industries to gas and oil industries and counting. So give us a call and let us lead your company to the top of your industry.
