RAVI BILOCHI | 2025-01-23 05:00:00+00:00
Customer Lifetime Value (CLV) is the total money a customer brings to a business throughout their relationship. Businesses often spend a lot of effort and money to attract new customers, but keeping existing customers happy is just as important. A happy customer stays longer, buys more, and refers others, increasing their overall value to the business. One of the best ways to achieve this is through good Customer Experience Management (CEM).
Customer Experience Management means ensuring that customers have a smooth, enjoyable, and satisfying experience at every step of their journey with a brand. This includes everything from their first interaction with the brand to post-purchase support. A business that treats its customers well earns their trust and loyalty, which in turn increases CLV.
Before discussing how to improve CLV, let’s understand what it means and why it is important.
CLV is a metric that calculates the total revenue a business can expect from a single customer during their entire association with the brand. It is important because it helps businesses determine how much they should invest in acquiring and retaining customers.
The formula for calculating CLV is:
CLV=(AveragePurchaseValue)×(AveragePurchaseFrequency)×(CustomerLifespan)CLV = (Average Purchase Value) × (Average Purchase Frequency) × (Customer Lifespan)
For example, if a customer spends ₹5000 per purchase, buys from you 4 times a year, and stays with you for 5 years, their CLV would be:
5000×4×5=₹1,00,0005000 × 4 × 5 = ₹1,00,000
This means that this particular customer will bring a total revenue of ₹1,00,000 to your business over 5 years.
A customer’s experience with a brand influences whether they continue doing business with it. If they have a positive experience, they will return, buy more, and recommend the brand to others. If they have a negative experience, they will leave and might even share their bad experience with others, damaging the brand’s reputation.
Customers appreciate it when businesses understand their needs and preferences. A simple personalised touch, like addressing them by name, remembering their past orders, or offering relevant recommendations, can make a big difference. For example, an online store can suggest products based on what a customer has previously purchased, making them feel valued.
Customers expect fast and helpful support when they face issues. Whether it is through phone, email, WhatsApp, or live chat, businesses must respond quickly and solve problems efficiently. Companies like Zomato and Swiggy have built strong customer loyalty by offering quick resolutions to complaints, ensuring customers feel valued and heard.
Customers interact with businesses through websites, mobile apps, social media, and physical stores. A seamless experience across all platforms is crucial. If a customer adds items to their cart on a mobile app, they should be able to view and buy them easily from their laptop as well. A smooth checkout process, clear product descriptions, and multiple payment options improve the experience.
Loyal customers should feel appreciated. Businesses can offer discounts, reward points, and special deals to frequent buyers. For example, Starbucks offers points for every purchase, which customers can redeem for free drinks. Similarly, Paytm and Amazon give cashback offers to encourage repeat purchases.
Businesses that listen to customer feedback can continuously improve their services. Feedback can be collected through surveys, emails, or app ratings. However, collecting feedback is not enough; acting on it is important. Flipkart, for instance, asks customers to rate their experience and uses this data to make necessary improvements.
Now that we understand the importance of customer experience in increasing CLV, let's look at some effective strategies businesses can implement.
A customer’s first experience with a business sets the tone for the future relationship. Whether they are browsing a website, calling customer service, or visiting a store, their first impression should be smooth and pleasant. Ensure websites are easy to navigate, payment options are simple, and product information is clear.
Businesses can use AI chatbots and automated responses to provide quick help to customers. AI can also analyse past behaviour to predict what customers might need next. Automated order tracking, personalised recommendations, and AI-powered support can improve the overall experience.
Employees are the face of a business. Whether they are salespeople, call centre representatives or delivery agents, they should be trained to handle customers with patience and kindness. A well-trained employee can turn an unhappy customer into a loyal one.
Customers feel more confident buying from businesses that have clear and hassle-free return and refund policies. Companies like Amazon and Myntra have earned trust by offering easy return options, reducing the risk of dissatisfaction.
Customers are more likely to stay loyal to brands they feel emotionally connected to. Businesses can achieve this through storytelling, social responsibility initiatives, and strong brand values. Brands like Tanishq and Amul use emotional marketing to create deep connections with their customers. Engaging social media content, relatable advertisements, and meaningful brand messaging can help in forming strong bonds.
Instead of waiting for customers to report issues, businesses should take a proactive approach. Sending order updates, reminding customers about pending payments, or informing them about service outages in advance builds trust. Proactive communication shows that a business cares about its customers’ time and convenience.
Small gestures, such as handwritten thank-you notes, surprise discounts, or free samples, can leave a lasting impression. These little efforts show customers that the brand truly values them.
Customer experience doesn’t end after a sale. Following up with customers, ensuring product satisfaction, and providing after-sales support improve long-term relationships. Businesses that engage with customers even after a sale are more likely to retain them for years.
Customer Experience Management is no longer just an option; it is a necessity for businesses aiming to maximise Customer Lifetime Value. Happy customers stay longer, buy more, and bring in referrals, ultimately driving growth.
By focusing on personalisation, seamless interactions, proactive support, and rewarding loyalty, businesses can create meaningful customer relationships that last for years. Implement these strategies, and you'll not only improve CLV but also build a strong brand reputation in the market.
At the end of the day, the better the experience you provide, the longer customers will stay with you, and that’s the real key to long-term business success.
CUSTOMER EXPERIENCE MANAGEMENT
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