Customer service: what is customer lifetime value? New times, new habits. In any company, regardless of the sector, getting new customers is essential. However, today it may not be as important to get them as to retain them (we have already told you on some occasions the price of recovering lost customers: up to five times higher than getting them to stay with us).
In this sense, although it is important to get new clients, it is not convenient to do it at any cost: if any company spends more on a potential client than what this user will spend in the future, the investment is not worth it. This is where the protagonist of our post today comes into play: the Customer Lifetime Value (CLV). What is it and how to calculate it? Read on, we’ll tell you here!
Customer service: what is the Customer Lifetime Value?
Customer Lifetime Value (CLV) is a long-term metric used by the customer service team of companies to know and establish the value of a customer over a period of time.
The CLV allows companies (and the agents of a contact center) to know the needs of the client, their behavior, their experience buying products and services and, in this way, be able to measure the value that it brings to a business and create an omnichannel strategy with one goal: customer satisfaction.
For this, it is also essential to analyze and understand the Customer Journey Map. In other words, the customer journey throughout the process of purchasing our products and services.
Defining the CLV or customer lifetime is important because it helps us answer different questions, such as:
- Are the clients we are capturing profitable in the long term?
- Is our investment in resources enough to build loyalty with our customers according to their CLV?
- What strategies should our contact center agents carry out in the future to achieve good retention rates?
Customer service: how to calculate the Customer Lifetime Value?
We said it a few lines above: the Customer Lifetime Value (CLV) is another of the contact center metrics or KPIs for customer service that are basic for companies and can help solve problems and provide a good shopping experience to the user.
Now, the question is: how can we calculate the CLV? To do this we need to obtain data from each client, have a technology that facilitates our work, define what values will be part of the CLV and finally, the buyer persona or user persona (which allows us to be clear about who our ideal client is and if resembles the current customer and its life cycle).
In this way, the calculation of the CLV in a simple way can be done through the following formula:
CLV = (average customer purchase value x re-sale rate) * customer lifetime – customer acquisition costs
Customer service: what to do once the CLV has been calculated?
We said a few lines above that the Customer Lifetime Value is very important to measure the value that customers bring to a company over time. This makes it so important to measure it both to optimize the costs of a company and the relationship with customers.
Through the CLV we can know if the loyalty strategy that we are carrying out is correct or if, on the contrary, we have to modify our omnichannel strategy through the different communication channels (phone calls, emails, social media, etc.).
Customer service: EVOLUTION, the best software to take care of your users
Knowing and calculating the Customer Lifetime Value is basic. But for any company it is no less important to provide the best service to each client. And this is where our omnichannel contact center software EVOLUTION comes in.
Request a demo and find out how we can help you deliver a memorable customer experience!
