6 Powerful Methods to Maximize Customer Lifetime Value (CLTV)

How much is a customer worth to you? Predict this number and you know how much it is worth to spend on your customers to keep them around. Customer Lifetime Value, or CLTV is one of the most important metrics a business has for making smart decisions.

You also know, by raising your CLTV benchmark by X percent, how much more cash your business stands to earn over the long-term. The more you can influence this number, the more growth you can expect.


Figuring out how to maximize your CLTV is like discovering the philosopher’s stone of marketing. Turn lead into gold, cure illness, and grant immortality to your business – well at least grant it higher long-term profits.

The Factors of CLTV

To understand how to enhance your customer lifetime value, first look at the factors that go into driving CLTV.

Average Transaction Value x Number of Repeat Sales x Average Customer Retention Time

Increase any of these factors and your CLTV goes up. This means maximizing the lifetime value of each customer boils down to:

  • Up-selling
  • Encouraging more transactions in each sale, or cross-selling
  • Boosting the frequency of transactions
  • Driving customers towards more meaty purchases
  • Keeping them in the business relationship for more time

The final one is the most powerful way to maximize customer lifetime value. You can up-sell or cross-sell all you want, but only by focusing on customer retention strategy can you yield sustainable benefits to your CLTV. This is because when you develop effective strategies for boosting customer loyalty, you promote long-lasting relationships. And your customers will stick with your brand because they want to. They will willingly become a voice for your brand.

This translates to greater long-term profits without having to take a sales-heavy approach to every business transaction. Customer retention means longer business relationships and an easier time acquiring new ones as your existing customers authenticate your business.

source: https://www.ariasystems.com/blog/

As Dale and Ben Midgley write in Golden Circle Secrets, “Do what makes people feel good and they will continue to buy from you and to refer others to you who will also continue to buy from you.”

On the other hand, pushing sales too much can have a negative impact. Once you push your buyers past their threshold, they’re going to turn their attention to holding onto their wallets more than seeking out the products and services they need.

To maximize your CLTV, you’ll need to combine all of the formula factors in the right way to work for your brand and your industry. Here are the best methods to implement to get more out of your customers – without pushing them away in the process.

Best Techniques for a Higher CLTV

1. Better communications based on well-researched buyer personas and customer segmentation

How do you make someone feel special in any relationship? You listen to them. When it comes to marketing, ‘listening’ takes on a more active meaning but it is the same idea. Learn more about your customers through feedback channels, customer analysis and market research. Polish your buyer profiles. Then segment your buyers properly using marketing automation software so you can deliver targeted communications to your buyers.

2. Go above and beyond

Nurturing your existing customers can be as simple as going out of your way to do something special. It’s amazing how reaching out to people – not to sell but to connect – can have a positive impact on the relationship.

Send a personal thank you message. Offer a special gift or deal based on a customer’s unique preferences. Be creative. When you’re working with a higher CLTV, investing a few dollars in something special is well worth it to really wow a customer.

3. Loyalty programs

Businesses have been increasingly using loyalty programs as an effective tool for increasing CLTV, with a 20 percent increase in loyalty program membership over the past decade, according to Hotel Business Review . This approach rewards existing customers by giving them something back for staying in the business relationship longer. It also helps to identify who the most valuable customers are in the first place.

4. Value-driven cross-selling and up-selling

When you walk into your favorite coffee shop to get your morning coffee, you expect to be asked if you want something to eat with it. It’s part of the ritual between you and your barista. Good thing too. What’s more perfect than a buttery croissant with your coffee to start out your day?

When a cross-sell adds value to your customer, mention the option. Wine with cheese, socks with shoes.

When up-selling, make it worth it. 30 percent off when you purchase two items. A special discount for signing up for a year-long subscription. When you increase that average transaction value, you’re maximizing your CLTV. Make it worthwhile for your customers, and you may score some customer loyalty points in the process.

5. Stay relevant with your online presence

This is an effective method for boosting the number of transactions. The more relevant your brand is, the more you’ll be in your customers’ minds the next time they consider making a purchase. Publishing content consistently on your website and staying active on social media will let your customers know your brand is there when they need you.

6. Up your level of customer service

One survey found that half of B2C customers and almost two-thirds of B2B buyers left a brand because of a poor customer service experience. Every individual who interacts with your customers should be a customer expert pro. Make sure your customers have opportunities to provide feedback about their experience so you know where to improve.

Take a proactive approach to training and guiding your sales team to ensure their standards for customer service are through the roof. Also, empower them to go the extra mile to reward loyal customers. Sometimes the best way to delight customers is ‘in the moment.’ You don’t want your business to miss those golden opportunities to impress your existing buyers because your sales team has to okay a decision with another department.

Perfecting Your CLTV Formula

All of these methods will help you to maximize your customer lifetime value – and fortify long-term business growth. To get the most out of your CLTV optimization efforts, measure the impact to identify your strongest tactics.

Maybe your brand does benefit the most from focusing on transaction value. Some businesses may see the greatest impact from investing in better customer service, while others may benefit the most from improved customer segmentation and personalized communication.

The overall strategy you use depends on what works for you. Keep playing with the possibilities until you find your perfect CLTV formula.

This article originally published on PostFunnel.com

Michael Brenner  is a Top CMO, Content Marketing and Digital Marketing Influencer, an international keynote speaker, author of "Mean People Suck" and "The Content Formula" and he is the CEO and Founder of Marketing Insider Group, a leading Content Marketing Agency . He has worked in leadership positions in sales and marketing for global brands like SAP and Nielsen, as well as for thriving startups. Today, Michael helps build successful content marketing programs for leading brands and startups alike. Subscribe here for regular updates.

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