How to Increase Customer Retention and Customer Lifetime Value

A customer that only purchases from you once if your product or service is expensive. You will, more often than not, end up spending more to get that single purchase than you earned from them. If every single sale was based around one-off checkouts, sooner or later, your company would be forced to close. 

Businesses survive and thrive because of repeat customers. Repeat customers don’t cost a lot to reengage, are likely to spend more, buy more frequently, and are also more likely to refer your business to their friends and family.

What is Customer Retention? 

When it comes to customer loyalty, there are two metrics that you will want to understand. The first is customer retention.

With your current onboarding process and marketing strategies, how long do your customers stay with you, on average? Naturally, older and more established businesses will have the data in order to accurately gauge how long a customer typically buys from you. 

Some businesses will have naturally short customer retention periods. You sell a product or service that is only needed once or twice per customer.

For example, if you are a landscaping business, customers typically only need you to design and bring that design to life once per home. There are ways to extend that retention, however. For example, you could also add gardening services on a subscription basis so that your customers can always have perfectly cared-for yards. 

The point is that just because your customer retention period is short does not mean that your overall business is a failure.

Keep in mind your business model and realistically how often a single customer would need your service or product. If you want to increase your retention period further, you will need to add more services. 

What is Customer Lifetime Value? 

Customer Lifetime Value, or CLV, is the metric that helps you understand just how much money a customer brings in, extrapolated over the future. You take the average amount that they pay per checkout, multiply that by how often customers on average buy from you a year, and if you have it multiply that again with the customer retention period. 

Working to increase CLV is one of the best ways to increase your company’s overall value. It is such an important metric that working to increase the CLV can actually help publicly traded companies increase their stock market valuation price. 

New companies will need to wait before being able to calculate an accurate CLV. Just remember to maintain essential data for the future, as it will help you make better decisions and strategize more effectively in the future. 

Which Industries are Easier to Increase than Others? 

Not every industry is the same, and neither is every business. You need to work on your own strengths. An orthodontist will have different customer retention than a clothing boutique, for example.

People don’t generally shop around for orthodontists, and if you provide good service and great results, they will often stick with you through thick and thin – even to the point of traveling to you instead of finding a new option after they move. 

With clothing boutiques, specialty stores, and even restaurants, it isn’t so simple. There is more competition and better competition. People tend to stick to one orthodontist once you have completed the onboarding and successfully proven yourself even just adequate because anything healthcare-related is very personal. People want who they can trust when it comes to their health. 

On the other hand, customers are also more willing to peruse and buy something from a small boutique than they are to try out a new orthodontist. The onboarding processes and retention strategies will be different, so customizing your individual business and model approach is essential. 

Where to Get Started 

The first place to start is behind the scenes. The best marketing solutions only work so far, after all, before customers realize that your business is not what they are looking for. Without a great business model, you will fail. 

This business model will depend entirely on your industry. A small boutique may find it worthwhile to offer a repair service, while a lifestyle store might benefit from a subscription service, and similarly, a dental clinic may benefit from including an online portal and personalization to keep patients reminded of upcoming appointments. 

You need to fulfill your customers’ expectations and then exceed them. If you don’t do this, you will have a hard time building up a healthy collection of repeat customers or patients. 

Don’t be afraid to ask existing customers, either. If you have a list of things you are thinking about adding to your business model, get in touch with your real customers to see what they would like to see done first. 

Another great tip is to either request feedback or to keep an eye on online reviews. Not every review is going to be a good representation of what your customers feel, so keep a list of points that are made.

You will find the most value in either middling reviews or reviews that are just a touch away from being perfect. These will usually say your business is great, but. The but is a good place to look, as they usually contain information that you can use to improve your business for the next time that they visit. 

Kick-Start Your Marketing to Boost Customer Retention

Once you have a more valuable and customer-retaining business model, you will then want to relaunch your marketing efforts.

Unless you have the budget to hire a marketing specialist or an entire team in-house, then the best solution for you right now is to find the right marketing agency for your business. 

1. Always Choose the Specialist 

If your business operates within a specific niche, you do not want a general marketing agency to work on your case. For example, suppose you own or manage an orthodontist clinic. In that case, any regular marketing agency will not know how to properly capitalize on your individual business model, nor know how to really capture the attention of your patients.

Certainly, they can learn, but you don’t want an agency to pull up a few online documents on how to market orthodontist clinics before they get started with you. You want your marketing agency to know the ins and outs of your business and have experience in growing clinics just like yours. 

For orthodontists, agencies like Hip Agency are the way to go. You can get access to all dental marketing resources from Hip Agency, and when you are ready can hire them to develop and kickstart or even entirely manage your marketing strategy from the outset. 

2. Invest in Value-Adding Content 

Value-adding content is a great way to get customers to return to your site and to offer additional reasons to stick with you. Blog content, guides, how-to, FAQ, and more are all excellent ideas.

Dentistry guides and tips on dental care for the whole family are a must. For other business types, it depends on what your customers are interested in. For example, a fashion brand can create styling guides and care guides. A bakery can help customers learn about different pastries and other baking secrets that will help them be more knowledgeable (and therefore appreciative) of the work and talents of your business.

This content should be interesting, it should be informative, and it should be related to your business. If you are a local, small business, you can even increase the content you offer to include local news. 

The point is to give customers reasons to return and visit your site without pressure. They’ll see your brand, they will associate you with positive emotions, and they will see you as an expert in your field. Combine that all together, and you have customers that trust you more and who see your products or services more often. 

What may start out as a thought about how their teeth could be better could become a conviction to go to your orthodontic clinic to finally fix their underbite or to fix that gap in their teeth. 

You need to give your customers, clients, or patients the time and space to come to those decisions on their own. Pushing too hard will turn them away; giving them gentle reminders and reasons to come back will allow them the space they need to choose you. 

3. Partner with Other Businesses to Increase Customer Retention

You cannot offer everything that a customer needs, but you can partner up with other businesses. This way, you can form symbiotic relationships with other brands that allow you both to benefit and add value to your customers or patients.

An orthodontist and a dentist work well together, for example. A designer and a supplier work well together. People trust you; therefore, they will trust who you refer. You can get a small percentage as a finder’s fee, and in turn, your partner can send customers or patients your way for the same benefit.

This option is great to “keep it in the family”. Your customer may go beyond your brand, but they will always be within reach and have every reason to return home.