Closing a sale is not the finish line. The real goal is building long-term, mutually beneficial relationships with your customers, relationships that add up to a higher customer lifetime value over time.
What is customer lifetime value?
Customer lifetime value (CLV) is the total amount of money a customer is expected to spend with your business across their entire relationship with you. Knowing your CLV helps you make smarter decisions about how much to spend on acquiring new customers versus retaining the ones you already have. Shopify offers a clear breakdown of the concept if you want the full definition.
What is the customer lifecycle?
The customer lifecycle maps every step a customer takes as they move through your sales funnel, from first contact with your marketing, through the sales process, and into ongoing customer service. Mapping it out gives you a clear view of where things are working and where customers are falling away.
How to calculate customer lifetime value
Here is a handy infographic to help you calculate your customer lifetime value:
Why does customer lifecycle management matter?
Picture this: you are driving solid traffic to your website but conversions are flat. Your customer lifecycle is where you find the answer. If you spot a big drop-off after the education stage, that is a signal to revisit how you are explaining your product or service to prospects.
Monitoring each stage of the lifecycle lets you pinpoint exactly where your sales process needs work. Fix those gaps, and you improve the customer experience, which, over time, pushes CLV higher.
The more clearly you understand your customer lifecycle, the better placed you are to improve your process and build the kind of lasting customer relationships that drive real business growth.
Want to use email to improve your customer lifetime value? Get in touch with us to find out how TouchBasePro can help.
Frequently asked questions
- What is customer lifetime value (CLV)?
- CLV is the total revenue a business can expect from a single customer over the entire course of their relationship. It helps you decide how much to invest in acquiring and retaining customers.
- What is the customer lifecycle?
- The customer lifecycle maps the stages a customer moves through, from first marketing contact, through the sales process, and into customer service. Tracking it helps you spot where customers drop off and where you can improve.
- Why is customer lifecycle management important?
- It shows you exactly where your sales process is losing people. If customers consistently drop off at a particular stage, you know where to focus your improvement efforts, which ultimately raises CLV.