A cogent approach to maximizing revenue over time is to focus on customer lifetime value. This shrewd focus would ensure businesses prioritize retaining current customers while ploughing further afield the bourgeoning marketplace to mop up more prospects and pull them into the sales funnel. This is a revenue growth approach your business can’t afford to pass up.
Customer lifetime value is the estimated monetary value of all the purchases a customer is likely to make over a long period, say over a decade if he or she is retained. Hence, beyond pulling in a first-time purchase from a prospect having them around in good numbers over multiple years is a strong factor in determining business sustainability.
Of course, this is why you should be bothered if a customer stops patronizing your business – apparently, no business can survive on such a leaky bucket sales reality.
Therefore, beyond prioritizing stronger supply chain relations, you must work to develop stronger bonds with your current customer base. It is suicidal to think your customers would keep trickling back to patronize your business without an effort by your firm to engage them. There are hundreds of alternatives to your business offerings. The competitors pushing these new products or service offerings are willing to go the extra mile to poach your customers.
It takes simply one or too bad products after purchase experience, some shoddy treatments at the stores and careless handling of complaints to turn these customers off.
Meanwhile, a high customer churn can be compared to a poorly sewn wound. With precious blood oozing unstoppably from the wound, there won’t be healing. In other words, a business can hardly scale nor drive ups its revenue if it is consistently losing customers. Precisely, acquiring a customer involves costs that come in the forms of marketing awareness, activation expenses and time; having to go through these processes over and over again would weigh on the total marketing budget as well as drain the business’ capital base.
Most importantly, a business must pay close attention to its customer defection rate. It must take serious marketing actions to rein in the defection. The key marketing strategy for bucking the trend of customer defection in a business is a timely pivot to relationship marketing.
Relationship marketing requires a business to take intentional steps to create and maintain friendly engagement with a customer. This is a value-engendering approach to unmasking the customers, getting to know them down to acceptable details of major emotional attributes and catering to them accordingly. Effective customer relationship efforts boil down to:
- Following up with a customer after a purchase to find out how they feel about the services or products. This can be done through a phone call, texting or an email and social media space exchange. It does mean that customer data should be responsibly sought for use after each purchase.
- Providing a feedback loop that a customer can use to reach out to the business in the case of any complaint arising from an after-purchase experience.
- Partnering with the customer to scale their product use experience by continuously working with them to discover ways to deliver a better value and meet their purchase aspiration.
The results of these relationship marketing activities can be astounding. Benefits include an opportunity to upgrade the customers’ current package especially if the business operates in the service sector. Another benefit is the strong bond that develops between the business and the customer network which would ultimately spill over into wider word-of-mouth opportunities. These expansive benefits procure more sales opportunities for the business. It further helps future-proof the business. It also adds efficiency to the business use of marketing budget.
