If you care about your customers, you care about customer lifetime value, right?
Wrong.
Customer lifetime value (CLV) is so underrated. It has such an impact on the growth of your business, but many firms continue to neglect this metric. However, it doesn’t necessarily mean you don’t care about your customers.
Customer lifetime value tells you how much money you can expect to make from a customer. This sum covers what’s expected to be spent with you over the business relationship.
So, the longer a customer continues to purchase from a company the higher the lifetime value.
Are you set up to actively measure your CLV? Do you know why it’s important?
In the mortgage world, this relates to borrowers. Over their lifetime they can be very profitable to your business- but that’s only if you manage to keep them.
Why should I care?
Company growth is closely connected to CLV – it’s an important metric to measure that a lot of businesses just ignore.
If you want your firm to drive leads and keep your best customers, then understanding customer lifetime value needs to be high on your list. You and your team need to understand what it means and how to measure it to truly understand how valuable each customer is to your business growth.
Break it down
Customers- they’re your bread and butter. Getting the most out of your customers is part of measuring their lifetime value. If you can attribute a sum to a customer group, then you’ll be able to calculate their value to your business over their lifetime.
This understanding helps plan your marketing, sales, communications and support strategy. If you can identify which segments are worth the most, your teams know how much time and resource to spend on certain customers.
Think about it like prioritizing hot leads ( you can get handy automated tools that do this for you, you know). You want to know which borrowers are more likely to want to transact with you i.e. remortgage or even borrow more money.
The Importance of the CLTV
Stop ignoring the future value of your current customers.
Firms spend 5 to 7 times more on customer acquisition than what they spend on customer retention initiatives. Even if you have a successful lead acquisition funnel you need to think about how you’re going to keep those customers over time and encourage repeat purchases.
Most firms associate growth with onboarding new customers. Big mistake.
If you’ve been reading our blogs, you’ll know our mantra “your best customer is the one you already have”.
They are less expensive, more profitable and more likely to refer your firm to their friends and networks.
Are you taking the correct measures to ensure you’re reducing your churn? Or are you operating more like a leaky bucket?
Bigger is better
The higher the number the bigger the profits.
The average client tells 3-11 people about your company. The better your customer service, the more referrals you’re likely to receive from your current customers. So, how many people a year does your customer tell about your business?
Referrals and repeat business are incredibly valuable to business growth. If you think about it, how likely are you to try a product or service if someone you know has recommended it to you?
How many borrowers choose a mortgage product from the same firm used by their parents or friends?
Simply, each additional year you retain a single client, the bigger the lifetime value. No brainer really.
Spend some time calculating your customer lifetime value. And if you’re not already, think about investing more on retention initiatives to show your customers exactly how much you care.
