Customer Lifetime Value

 

Customer lifetime value (CLV also CLTV) is a metric that shows the total revenue you expect to receive from an individual customer over the life of their relationship with your business. 

There are often other options for naming this metric: lifetime consumer value (LCV), or lifetime value (LTV). The term was first used in the book by R. Shaw and M. Stone Database Marketing in 1988.

This performance indicator should be tracked so that the company can understand where to go next. A growing CLV means that customers are happy and will give you more money during the entire interaction, hence the company is doing well. On the other hand, a lower LTV means that the company gets less money from every customer it attracts, and it needs to fix something quickly.

Customer Lifetime Value is quite difficult to determine precisely since the calculation involves predicting the future, and this is a very difficult area not only in business but also in the lives of ordinary people. There are a large number of formulas for calculating CLV, and you can apply them depending on the specifics of your business and your goals.

CLV is also affected by two indicators: Churn rate and Brand loyalty. Churn rate shows the percentage of customers who abandoned your product or service during a certain period. Brand loyalty describes how committed your customers are to your brand. Building brand loyalty can help retain customers and reduce churn.

Here are some possible options of calculations of Customer Lifetime Value

If margins and retention rates are constant, you can use the following formula to calculate CLV:

The Customer Lifetime Value model has only three parameters: constant margin (the difference between price and net cost over a period), constant retention rates over a period (the company’s ability to maintain a long-term relationship with the customer), and the discount rate. The model assumes that if the client is not held, it is lost forever.

ACL (Average Customer Lifespan) =Sum of Customer Lifespans / Number of Customer

CV (Customer Value) = Average Purchase Value / Average Purchase Frequency Rate

The Average Purchase Value (APV) metric is

APV=Total Revenue/Number of Orders

The Average Purchase Frequency Rate (APFR) metric is:

APFR = Number of Purchases/ Number of Customer

A simpler calculation option for Customer Lifetime Value

ARPU is the average revenue per user. ARPU is considered to be for a specific period of time. You can calculate it using the following formula:

ARPU = Revenue / Number of users

To calculate the Churn Rate, you can use the formula:

Churn Rate = С1/С2 x 100%

С1- customers who rejected your product/service over a certain period of time; С2 – customers who have become users of your product/service over a certain period of time

The higher your customer churn rate, the lower your final Customer Lifetime Value will be.

Despite the large number of formulas for calculating CLV, this indicator is very important for the business. Thanks to it, you will be able to analyze the financial value of your client. This data will help you invest money in the right segment of consumers, as well as optimize your customer retention efforts. All of this will allow you to increase your profit.

To understand the importance of CLV metric I suggest you reading Customers for Life book by Carl Sewell and Paul Brown.

https://cutt.ly/J39uD22

Customer experience ROI building blocks

There's a natural flow to generating customer experience ROI. In laws of nature, short-circuiting the flow is self-defeating.
The building-blocks formula for sustained customer experience ROI is C5 + I2 + E2 = CX ROI.

1) Set the stage for CX ROI	C5 =	Customer voice Customer experience strategy Customer-centric culture Customer intelligence Customer lifetime value
2) Adapt your company to customers	I2 =	Improving customer experience Innovating customer experience
3) Engage employees and customers	E2 =	Engaging internally Engaging externally

C5

Customer retention and loyalty are outcomes of a system that has a distinct natural flow.

• Voice of the customer: Informs us about what “the boss” wants.
• Customer experience strategy: Sets the stage for cross-functional collaboration for CX excellence.
• Customer-centric culture: Defines the ways we think and do.

These 3 building-blocks work hand-in-hand, like a 3-legged stool. With any one of them missing, things will be lop-sided. They're the foundation that keeps your company from limping along in your quest for customer retention and loyalty business results.

Customer intelligence and customer lifetime value help you prioritize your efforts, resources, and roadmap components. Don’t fly in the dark! Connect the dots across information from your customers, and quantify the upside of keeping existing customers as well as the downside of losing them.

• Customer intelligence: Paints a picture for accurate actions.
• Customer lifetime value: Motivates & prioritizes action.

E2

Always think about the entire system. "The system" is the only "silver bullet" for CX ROI. Example:

1. While you are setting up a shared vision (CX strategy/culture) . . .
2. You may collect existing customer comments (customer voice) and
3. Connect the comments to operational data (customer intelligence) and
4. Prioritize the comments based on customer revenue or cost (CLV) and
5. Engage some teams in resolving the blaring issues (improvement) and
6. Inspire some teams in creativity around the blaring opportunities (innovation)
7. Share selected comments on your intranet site (engaging internally) and
8. Adapt your customer engagement to be sensitive to the blaring issues/opportunities (engaging externally).

Like any system, removing a component will eventually render it useless. Make sure your customer experience management journey keeps all the system components in top form, and reflects the left-to-right flow of the CX ROI building-blocks model.

 CX ROI Maturity

3 levels of ROI maturity

http://clearactioncx.com/customer-experience-maturity-assessment/

 CX ROI Mini-Assessment

7 keys to breaking through plateaus

http://clearactioncx.com/customer-experience-enablement-mini-assessment/

 Return on CX Investment

"Middleware" is essential to CX ROI

http://clearactioncx.com/return-on-customer-experience-investment/

https://clearactioncx.com/customer-experience-roi-building-blocks/

Customer Experience Strategy: Do This, Not That

Customer experience strategy is the foundation to achieving business results — not only as ROI for your customer experience efforts, but also for your business as a whole. In this season of planning for the new fiscal year, it will pay to get it right.

In a customer experience (CX) conference, several roundtable options were aimed at about a dozen attendees each, yet 57 people — with standing room only — piled into the CX ROI roundtable. The pressure to demonstrate business results is high, but year after year, studies show that less than half of companies aiming for CX excellence actually have a CX strategy! Top obstacles to customer experience success are typically cited as lack of CX strategy, lack of cooperation among organizations, lack of CX processes, and correspondingly, lack of budget.

Top obstacles to the success of customer experience goals — ClearAction Business-to-Business Customer Experience Management Best Practices Study, 2010-2013.

The stunning consequence of customer experience strategy sloppiness is described in the Forrester 2013 State of Customer Experience report: "Despite 90% of respondents saying that CX is a top strategic priority for their firm, a shocking 86% said their companies don’t actually expect to get much value from it."

For other endeavors in business, would we settle for such half-heartedness or incompleteness in our annual operating plans? Whenever the answer is yes, certainly we can agree on a low likelihood of success. But don't throw the baby out with the bathwater just yet — you have an opportunity to be wholehearted and complete going forward!

Here are 3 keys to getting it right for 2015: be holistic, bust silos, and integrate.

1) Be holistic: For something as important as THE source of your company's funding — customers — think big and comprehensively. Piecemeal attempts yield piecemeal results.

DO THIS: Deploy an end-to-end system that connects customers' feedback to internal improvements and innovations, and then to customer engagement. Nothing in business is an island — think of customer experience management as a system of interconnected efforts that must be synchronized and fully deployed before lasting results are reaped.

NOT THAT: A program or technology is not a strategy — market research, CRM, references, engagement, and repurchase/renewal efforts are components that must be connected in order to "move the needle" for CX ROI. Our 4-year study indicates that ongoing coordination among managers of all these CX programs is a CX ROI success factor.

Furthermore, don't forget the "middleware" — customer intelligence connects the dots across disparate sources, customer lifetime value (CLV) prioritizes efforts and motivates action, CX improvement must be systemic to prevent recurrence of issues, CX innovation must be anticipatory of customers' expectations and contribute to customers' capabilities, and engaging internally must be in alignment with all of the above. Our 4-year study shows that this middleware is not typically part of what's considered to be a "CX strategy".

Do: Think of it as centering your business on customers and centering your employees on customers. As the source of your company's lifeblood, why would you center it on anything else?

2) Bust silos: Customers think of a company or brand as &#quot;one&#quot;, so it pays to manage customer experience accordingly.

DO THIS: Get your C-team "on the same page" with customer-centered CX terminology, vision, and strategy. Unify your business units and support functions in their views and roles, and understanding of their joint responsibility for the ripple effect on CX goals of their handoffs and decisions and mindsets.

Align data and methods across your whole company, allowing flexibility as needed to address customers' needs, while simplifying and creating consistency that will serve customers', employees', and shareholders' well-being alike.

NOT THAT: Silos built-in to your CX effort waste a lot of opportunity. While pilots of methodologies and technologies are useful, lay the change management groundwork for pilots to be rolled out horizontally and vertically, to minimize silos in the way you manage customer experience.

The same goes for data, systems, and methods — design it right the first time, and iron-out the legacy kinks. For sustained CX ROI, manage business in the ways that customers need us to portray ourselves.

3) Integrate: Since customers are integral to business success, integrate their viewpoints into everything you do.

DO THIS: Weave CX goals into all of your strategies, plans, rituals, processes, policies, and day-to-day work — at every level of management and across all the business lines, accounts, and support functions. Rituals include staff meetings, ops reviews, all-hands meetings, performance reviews, succession, planning and budgeting, and so forth.

NOT THAT: Customer experience is not an interaction, touch-point, usage instance, event, aura, or domain exclusive to front-line employees. Everything across your company can influence the experience your customers have. Like healthy habits for physical bodies, the best results come when health-centered actions and thinking permeate every aspect of your life. If you want long-lasting CX differentiation and ROI, build it into the way you live.

A sensible approach to CX strategy is what's needed for sustained CX ROI. In fact, companies that view customer experience as a determinant of corporate strategy #8212; rather than a subset of corporate strategy, or unrelated to it #8212; appear to have cracked the nut for drawing strong value from CX efforts. Be holistic, bust silos, and integrate customer experience insights in all you do as you plan your company's future.

Notes:

1. Customer Experience Strategy is one of the six domains in the body of knowledge advocated by the Customer Experience Professionals Association (CXPA).
2. The concept of “Do This, Not That” is borrowed from the popular book “Eat This, Not That“, where the weaknesses of common practices and myths are brought to light and sensible replacements are recommended.
3. Other articles in this series:
   • Customer-Centered Culture: Do This, Not That
   • Voice of the Customer: Do This, Not That
   • Customer Journey Maps: Do This, Not That

Contact the author, Lynn Hunsaker, to find out how to customize these practices to your situation.

9 способов увеличить потребительскую ценность пользователей при помощи службы поддержки

Потребительская ценность клиента (Customer Lifetime Value, CLV) является наиболее значимой метрикой для SaaS-бизнеса, так как используется для расчета множества критично важных показателей:

• степени лояльности пользователей;
• объема инвестиций, требуемых для привлечения и удержания клиентов;
• потенциальной прибыли с клиентской базы;
• капитализации компании;
• финансовой ценности лидогенерации.

CLV также позволяет группировать и дифференцировать сегменты пользователей по поведенческим паттернам с целью стандартизации маркетинговых затрат.

Ниже представлена популярная формула расчета потребительской ценности клиента:

Потребительская ценность клиента = Средний доход от клиента (в рублях) × Коэффициент удержания (%) : (1 + Ставка дисконтирования (%) - Коэффициент удержания (%)).

Рассмотрим пример расчета CLV при среднем доходе от клиента в 20 000 рублей, показателе удержания в 75% и ставке дисконтирования в 10%:

Потребительская ценность клиента = 20 000 рублей × 75% : (1 + 10% - 75%) = 42 857 рублей.

Изучив эту формулу, можно понять, что CLV увеличивается либо за счет повышения прибыли с клиентов, либо коэффициента их удержания. Следовательно, маркетологи облачных сервисов должны не только разрабатывать способы измерения CLV, но и определять стратегические задачи для увеличения этого показателя.

Итак, как же использовать службу поддержки для увеличения потребительской ценности клиентов?

Оптимизация прибыли

Кросс-селлинг и апселлинг

Общаясь с клиентом напрямую, менеджер облачного решения может узнать ценную информацию, позволяющую значимо увеличить продажи. Например, пользователь может поведать о том, что ему не хватает функционала текущего подписного плана — следовательно, представитель бизнеса может предложить ему перейти на более продвинутый тариф, докупить расширение к текущему плану или воспользоваться другим сервисом компании.

Увеличение ценности продукта за счет повышения его качества

Высококлассный клиентский сервис является дифференцирующим оффер элементом, который позволяет повысить цены без потери позиций на рынке. Более того, сервис технической поддержки можно эффективно использовать как канал для донесения полезной информации (например, по решению определенных проблем или эффективному использованию продукта), повышающей ценность торгового предложения.

Рефералы

Используйте прямую коммуникацию с рефералами (партнерами) для генерации лидов — просите клиентов рассказать о вашей платформе тем, кто может быть в ней заинтересован, или предоставить их контактную информацию. Согласно исследованию Уортноской школы бизнеса (The Wharton School of Business), клиенты, привлеченные по рекомендации или участвующие в реферальных программах, на 20% более лояльны к бизнесу и имеют более высокий показатель удержания по сравнению с другими покупателями.

Увеличение конверсии

Исследование Sand Hill (исследовательская организация в области SaaS-бизнеса) показало, что предоставление высококлассного клиентского сервиса увеличивает конвертацию лидов как в пользователей пробного периода, так и в постоянных клиентов.

Оптимизация показателя удержания

Услуги менеджеров по работе с клиентами

Поскольку аккаунт-менеджеры помогают клиентам получать максимальные выгоды от работы с сервисом, их наличие в штате компании увеличивает ценность торгового предложения и его релевантность потребностям целевой аудитории. Более того, менеджеры по работе с клиентами увеличивают показатели приверженности и удержания, так как их услуги высоко ценятся потребителями.

Установление контакта с неактивными пользователями

Сначала узнайте причину, по которой пользователь перестал быть активным, а затем сделайте все возможное, чтобы вернуть его.

Получение обратной связи

Устанавливайте обратную связь с клиентами после каждой продажи и транзакции — размещайте форму обратной связи на веб-ресурсе и в письмах постконверсионной рассылки. Получать feedback от наиболее значимых клиентов/о наиболее значимых транзакциях рекомендуется посредством живой коммуникации.

Не бойтесь показаться назойливыми — все люди хотят чувствовать себя значимыми, посему если вы вызовите у пользователей чувство важности, их восприятие будет исключительно положительным. Помните, что выражая заботу о потребителях, бизнес увеличивает лояльность клиентов и их степень удовлетворенности продуктом.

Сбор рекомендаций и пожеланий

Клиентский сервис также является подходящим каналом для сбора рекомендаций от текущих и потенциальных пользователей. Главное — не забывайте благодарить и связываться со всеми, кто поделился мыслями по поводу улучшения вашего бизнеса. Их лояльность и желание помочь являются бесценными.

Внедрение живого чата в конечный продукт

Окна для связи с представителями поддержки, размещенные непосредственно в интерфейсе облачного решения, являются эффективными инструментами увеличения CLV по двум причинам:

• Во-первых, упомянутый выше способ связи с техподдержкой снижает загруженность других каналов клиентского сервиса, тем самым увеличивая качество и продуктивность отдела работы с клиентами.
• Во-вторых, общаясь с пользователями, когда они взаимодействуют с платформой, специалисты поддержки оказывают более эффективную помощь. Следовательно, увеличиваются фактическая ценность оффера и положительное восприятие потребителей.

Высоких вам конверсий!

По материалам semrush.com, image source Tom Barnes