All types of businesses need new customers to stay afloat. However, focusing on acquiring new leads or customers overlooks the importance of existing customer loyalty. Sometimes measured in terms of an average customer value (ACLV) rating, successfully retaining a loyal customer base arguably does a lot more towards improving profitability. This is especially true for those operating on a subscription-based model.
Indeed, an effective customer retention program will give any company an advantage when it comes to identifying and tracking customers, as well as selling more products to these consumers. Meanwhile, the improved conversion rate also lowers the need for a bigger marketing budget—helping you maximize your company’s resources. Studies have even shown that increasing customer loyalty by as little as 5% can increase profits by up to 95%, demonstrating the need to improve your ACLV rating. To help you out, here are just three of the most effective ways to help you keep your customers loyal:
1. Choose Rewards over Discounts
Companies use different types of deals and rewards to grab attention and get new customers. Typically, they’ll offer discounts on new products or services and hope that their customers will continue to use their product—even at full price. However, this only succeeds in compromising your bottom line, without guaranteeing that your customers won’t just jump ship to a competing product or service. This shows the importance of having well-thought-out incentives program that concentrates on rewarding loyalty to your brand.
Instead of more shortsighted discounts, offer exclusive products or value-added services for your loyal customers. Just make your rewards reasonably attainable, and ensure that your customers are aware that your offers exist. Once you have an appropriate incentive program in place, you’ll soon find that your customers aren’t the only ones benefitting from the rewards. Indeed, having a robust rewards system will contribute plenty towards keeping your customers loyal and improving your ACLV.
2. Improve Customer Service
Another sure way to boost your company’s ACLV is to improve your customer service. After all, nothing turns customers off worse than being treated badly by the company behind a product they use. To better serve your customers, you can start by being as responsive to their problems as possible. Always answer every email that you can, and make sure to acknowledge all of your customers’ concerns. For more difficult issues that require a more personal touch, make it easy for them to get help from actual people by phone. This means minimizing the use of overly complicated dial pad menus for phone-related support complaints.
Providing high-quality customer service factors greatly into improving your company’s customer retention rate. Even a superior product isn’t always enough to keep customers from defecting due to bad service. Remember that their average lifetime value is also about maintaining good relationships with your customers.
3. Minimize Failed Transactions
Another common occurrence that chases customers away is when their payment transactions fail to come through. The cause could vary from insufficient funds and expired credit cards, to credit reversals by an overzealous bank. This problem is usually a big problem for companies who provide products or services using subscription-based payment platforms. After all, they might have already delivered a product, only to have the payment withheld or reversed by a bank. However, having to keep track of all the re-billings, follow-ups, and other tedious tasks can stress your employees out and even stretch your operating budget.
Thankfully, you can now make use of more cost-effective Software as a Service (SaaS) solutions to streamline your subscription billing and minimize failed payment transactions. This cloud-based software automatically studies failed transactions and undertake actions to collect on the lost payment. What’s more, they are also easy to incorporate into existing billing systems, while requiring minimal human input once properly installed and setup. In the end, they succeed in minimizing the occurrence of failed transactions and increase your ACLV thanks to a smoother billing process.
A Final Word
Your company’s ACLV isn’t just a simple measuring unit for customer retention. After all, loyal customers do more than just purchase more products or subscribe to more premium service. They’re also more likely to refer your company to their friends and family—causing a positive feedback loop that further increases revenue. The lesson here is clear: never underestimate the value of loyalty. If treated well, loyal and dedicated customers will most likely become a reliable source of income for years to come.