A blog about relationships
CLV, or customer lifetime value, geez what a mouth full. If the customer lifecycle is essentially the different stages of your relationship with a customer, then CLV is really just a term used to describe how much revenue a customer will generate for your business during the course of that relationship.
It’s an important metric, vital to recognizing the benefits of nurturing and converting customers in effective ways, as well as maintaining that relationship and building loyalty. It’s also a great way to approach your email marketing strategy.
The terminology itself feels a little impersonal to me. After all, shouldn’t your clients be more than revenue over a period of time? In the case of email marketing, in particular, the goal is to build an almost intimate relationship with your subscribers, hence the high levels of personalization we strive for. So let’s forget some of the marketing speak for a sec, and look at this as if it were a real relationship.
Remember, it’s not the size of your database, it’s how you use it.
There are generally 5 stages in the customer lifecycle. I am going to compare these to a relationship because that is essentially what you are doing. You are building relationships with your customers.
Reach – Putting yourself out there.
Reach is step 1 of the relationship, getting noticed. It’s tough out there and staying in every night isn’t going to get it done. Dozens of brands are competing for your potential subscriber’s attention and you need to stand out if you’re going to stand a chance.
Your website and social media are going to be paramount here. Things like search engine rankings and paid advertisements are essential too. Anything you can do to get the “face” of your brand front and centre will extend that reach and get your potential subscriber’s interest, which is exactly where it should be.
Acquisition – Get their digits
Once you’ve got their attention, it’s time for Step 2, acquisition AKA get the digits.
So they’ve made it to your website or social page, they’ve done some browsing, read the “about us”, maybe even liked a post. Things are going great so far, now it’s time to pop the question. You just want to keep the conversation going, you need them in your database, but how do you ask? More importantly, how do you get them to say yes?
Sign up forms on websites and social channels are nothing new, but what can often be overlooked is the hook. Something that’s going to incentivize a potential customer to sign up. You’re asking them to give you their personal contact details, there needs to be a good reason to say yes.
Initial discounts on products and services for new members is an effective way to approach this. Using a pop up sign up form on your website can be great to grab potential customers attention as well, but you need to be careful, it should never feel invasive. Don’t be afraid to turn on the charm and make the copy on these pop-ups exciting.
The example below from PipCorn is a great example of a non-invasive popup, with to the point, yet delightfully confident copy.
Conversion – Let’s work on making that lasting first impression
Conversion, this is where the real work begins. How are you going to convert your subscriber to an actual customer? Now that you have that email address, it’s time to slide into that inbox and make an impression.
Your subscribers need to feel valued, there has to be a good reason they trusted you with their inbox in the first place. It’s not just important to serve your database engaging content, it has to be relevant, targeted and consistent. You need to split the focus between marketing your brand and adding value to your subscriber’s inbox.
The conversion stage is really where we win with email marketing. It’s about serving hyper-personalized and relevant content to the right people at the right time. Your subscribers should be excited when your email hits their inbox and an effective welcome campaign is a great way to immediately convert a decent percentage of new registrations.
This welcome campaign from Under Armour with the offer of free delivery entices an almost immediate purchase from the subscriber.
If you provide your subscribers with great content and tactfully promote your products and services, your conversion rates will be fantastic. From sliding into their inboxes to sending out purchase orders, a modern love story.
Retention – the hard work starts here, nurturing and building that relationship
It’s official, you’re in a relationship. You have an engaged subscriber that is also an active customer. Sadly, the honeymoon phase isn’t going to last forever and at the end of the day, successful relationships take work. If you’re going to maintain and grow this relationship, you’re going to have to step it up.
This is where value-adding content is going to be especially important in your email marketing strategy. You need to regularly take the focus off promoting your products and services and remind your subscribers why they fell in love with your brand in the first place.
A great way to do this is to highlight the ways your brand is socially responsible. Highlight things like socially conscious manufacturing processes or charitable endeavours your brand heads up. Provide content that adds value such as useful blogs or tips. Share industry knowledge that is actually relevant and meaningful. Directly to their inboxes.
This is also the perfect stage of the relationship to implement cross-selling and upselling strategies. By anticipating your subscriber’s wants and needs, you not only increase purchases, but your customers will feel like you’re actively responding to their interests.
Loyalty – you are now in it for the long haul
Loyalty, the final and most rewarding step of the customer lifecycle and our relationship metaphor. This is the equivalent of “I’d like you to meet my parents”.
If you continuously provide your clients with amazing customer experience and add value to their experience with you, you’ll gain lifelong brand advocates and supporters.
At this stage in your relationship, your subscribers adore you and can’t wait to tell people.
You should incentivize brand advocates wherever possible, competitions and promotions that encourage social sharing and engagement are an amazing way to do this. The below campaign from Youfoodz is a fantastic example of a referral campaign that a loyal customer would take advantage of.
Sadly, this is where my little metaphor starts to fall apart. The customer lifecycle is best seen as a never-ending cycle, where the final step of loyalty leads to greater reach and begins the process again.
However, not every customer lifecycle is never-ending and more often than not there is a finite amount of time that a customer will spend with your business and a finite amount of revenue they will generate for your business. So how do we calculate this CLV, or customer lifetime value?
Quite simply, by taking the average amount of revenue a customer spends with your business over a period of time and multiplying that value by the average amount of time that a customer spends as a patron of your business. From there you subtract all of the costs involved to acquire that client and what you’re left with is CLV. We will be looking at this in a bit more detail in another blog later this month.
In all honesty, that sounds like a lot of work. Calculating and quantifying this is difficult, to say the least. You have to consider marketing, sales, and the cost of actually getting your product to market. So how does this fit into email?
The great news is that when it comes to email marketing, it’s fairly simple to calculate CLV as you can directly track the revenue your database generates directly against the cost to market to them in the first place. This gives you the tools required to take advantage of a strategically planned customer lifecycle and directly measure your CLV with email.
So take the plunge and put your brand out there with email. Just keep in mind that your subscribers are more than just their CLV, and building real relationships that add value to their lives is the best way to get from reach to loyalty.
If you need any assistance around CLV and email get in touch with us and one of our unicorn account managers will be happy to help you.