Customer Lifetime Value (LTV): What It Is and Why You Should Care
Customer Lifetime Value, or LTV (sometimes referred to with the acronym ‘CLV’), is the projected profit you expect to gain over the course of your entire relationship with a customer. Customer lifetime value is often talked about in SaaS sales, but it’s a metric that’s also key to the strategies of many leading wholesale companies. As you already know, you want to maximize every single relationship you have with retail buyers, i.e. keep your customers’ LTV as high as possible. For wholesalers, this is not just a consideration of how long you’re able to retain a customer, but also whether or not you can achieve consistent and/or increased revenue from that customer. In short, your customer LTV has a huge impact on a sustainable bottom line. Let’s look at some of the top ways you can increase the LTV of all your retail buyers.
How to Increase Customer Lifetime Value
1. USE TECHNOLOGY TO MAKE IT EASIER FOR YOUR CUSTOMERS TO WORK WITH YOU.
It’s time to bring wholesale sales into the 21st Century. Wholesale brands investing in technology to improve their efficiency and customer experience will ultimately come out on top, and there are numbers to back it up. According to a global survey conducted by Avanade, 56% of buyers reported paying more for a product because of a better customer experience, and 61% of companies who improved and expanded upon the ways they interact with customers saw an increase in customer loyalty. There are a couple ways to accomplish this. To start, you can equip your reps with mobile order writing technology. By putting a digital catalog, customer order history, and a digital order writing solution at their fingertips, they’ll move faster at store visits and trade shows, taking up less of your customers’ time and fulfilling orders more quickly. You can also offer a simple B2B eCommerce platform that fulfills many buyers’ desire to place orders whenever and wherever they want. Providing the convenience of a mobile/web eCommerce portal can increase both sales and retention rates--the building blocks of your customer LTV.
2. OFFER A MORE EFFICIENT ORDERING PROCESS.
At a trade show I attended recently, a buyer was staring forlornly at a paper order form, explaining to her colleague that a salesperson had written her order incorrectly. This kind of situation is both extremely common and very much avoidable. By getting rid of paper order forms and digitizing the ordering process, customers won’t have to deal with these costly errors.
3. HAVE EXCELLENT CUSTOMER SUPPORT.
Customer retention rates hinge very much on the service your company is able to provide. To go back to the story of the aforementioned disgruntled buyer, it turns out that it was actually the last day of the show, and the exhibitors in question had already packed up and left. The buyer said, “I tried calling, but got no answer. I just can’t stand it when companies aren’t available, you know?” She got a commiserating nod from her colleague before they walked off. This vividly illustrates how lack of customer support can mean the difference between a repeat purchase and never seeing a customer again. In a rapidly changing wholesale landscape that’s focusing ever more on making the customer experience more in line with its B2C counterparts, customers will be much less likely to put up with this inconvenience. Always be available to your customers to deal with any problems they may have. Likewise, your customer service team should be proactively offering support to customers when they need it.
4. BUILD A PERSONAL RELATIONSHIP.
To ensure your customers stay with you as long as possible, work with your sales reps to build positive, trusting relationships with them. Your reps should get to know them personally and ask them the right questions. If you’ve had customers with you for a long time, reward them for their loyalty with special discounts, promotions, etc.
5. PUT MORE FOCUS ON UPSELL.
Concentrate on your bigger customers with focused upsell campaigns. In order to increase their LTV, you’ll not only want to make sure they stay with you longer, you also want to increase their average order size.
6. NEVER STOP ADVANCING YOUR BRAND.
It’s impossible to maintain consistent order values and strong customer relationships with a brand that isn’t constantly growing. Make sure customers know that you’re brand is here to stay, and--more importantly--that it has a strong following. This involves continuous product innovation and upgrades, strong marketing strategies, and engagement with end customers. Stay in constant communication with both end customers and retailers.
7. STREAMLINE THOSE REORDERS.
How long does your product last on the shelves? When will your customers likely need new shipments? Keeping track of this information will allow you perhaps schedule more reorders more frequently than you have in the past. Whether it’s optimizing your reporting or providing your retailers with a B2B eCommerce platform for 24/7 reorders, you’ll maintain higher average order values to increase your overall customer LTV in the long run. Customer lifetime value is a metric that every wholesaler should be cognizant of. Figure out what works for your business in terms of tracking this metric, and lay out actionable strategies to get those numbers up. For more wholesale metrics information, check out our posts on fill rate and visit-to-order time. Questions about LTV? We’d love to hear from you in the comments.