Do you the LTV, that's the lifetime value, of each and every one of your customers?
More importantly... do you know how to increase it?
More importantly... do you know how to increase it?
One of the really important metrics to look at is what is the average life time value, or LTV, of your customers. This is a really important figure as it ties together how long customers spend with you and how much they spend while they're a customer. This is especially important if you have any sort of recurring revenue element to the product or service that you are providing.
If you're not already measuring what the life time value, revenue-wise, is with the customer, then it's definitely something you should be checking out. Also think about, not just how much they are spending with you, but over what period of time they're spending that with you. Once you know those metrics, you can get on board with the three areas that I'm going to suggest that you might want to work on to ensure that you maximize the return with each and every one of those customers.
If you're not already measuring what the life time value, revenue-wise, is with the customer, then it's definitely something you should be checking out. Also think about, not just how much they are spending with you, but over what period of time they're spending that with you. Once you know those metrics, you can get on board with the three areas that I'm going to suggest that you might want to work on to ensure that you maximize the return with each and every one of those customers.
Make sure you've got a contract
1. The point of signup.
This is something that people often miss; this is where you lay out how the relationship with your customer is going to work. This is important because it allows you to ensure a couple of key things were in place to allow you to maintain the life time value of that customer. So two key things to make sure you've got in place at the point of signature are, firstly, to have a contract.
It's amazing how often people have a contract, but they're not 100 percent sure what's actually in it. One of the first things that I always look out with my customer is what is the term of the contract? And what is the cancellation period? This is super important because if you're going in and you're actually investing a significant amount of money and actually getting a customer on board, when you do make that sale, you want to make sure that you know exactly what period of time that customer is tied in for. Is it an annual contract or a rolling 30 days? I always think that an annual contract is a better approach and there's some really good reasons for this. Firstly, it gives you the opportunity to show some fantastic value to your customer. Secondly, if they're going to really make that commitment to come on board, actively engage with the product or service and really make the most of it, then you want more than a 30-day commitment. The third thing about that is, is it leaves you very little time to respond if you have a customer interested. So thinking about the length of contract on a recurring revenue product is always a good idea. The other thing to think about is how you're going to build in your annual price increases. If you have a setup where actually people have an annual contract, which renews automatically if people don't cancel, then you want to make sure that you have the opportunity to add those price rises in as appropriate. Quite often, these are on the first month of the year, and they're based on changes on the retail price index - a great reason. As a business, your costs have gone up, your electric, your overhead, so on and so forth. As a consumer, we recognize that that might mean that there's a small change to what we actually need to pay at that point in time.
This is something that people often miss; this is where you lay out how the relationship with your customer is going to work. This is important because it allows you to ensure a couple of key things were in place to allow you to maintain the life time value of that customer. So two key things to make sure you've got in place at the point of signature are, firstly, to have a contract.
It's amazing how often people have a contract, but they're not 100 percent sure what's actually in it. One of the first things that I always look out with my customer is what is the term of the contract? And what is the cancellation period? This is super important because if you're going in and you're actually investing a significant amount of money and actually getting a customer on board, when you do make that sale, you want to make sure that you know exactly what period of time that customer is tied in for. Is it an annual contract or a rolling 30 days? I always think that an annual contract is a better approach and there's some really good reasons for this. Firstly, it gives you the opportunity to show some fantastic value to your customer. Secondly, if they're going to really make that commitment to come on board, actively engage with the product or service and really make the most of it, then you want more than a 30-day commitment. The third thing about that is, is it leaves you very little time to respond if you have a customer interested. So thinking about the length of contract on a recurring revenue product is always a good idea. The other thing to think about is how you're going to build in your annual price increases. If you have a setup where actually people have an annual contract, which renews automatically if people don't cancel, then you want to make sure that you have the opportunity to add those price rises in as appropriate. Quite often, these are on the first month of the year, and they're based on changes on the retail price index - a great reason. As a business, your costs have gone up, your electric, your overhead, so on and so forth. As a consumer, we recognize that that might mean that there's a small change to what we actually need to pay at that point in time.
Make your customers sticky
2. Ensure your customer is successful at utilizing your product.
This is important because if a customer's having a great experience with you and your product or service, they're likely to stay. The longer they stay with you, the more money they're going to be paying to use that product or service. There's a few key areas that we really need to focus on to make sure that happens. The first is onboarding, especially in that first week or two. It's super important that we get customers up and running with our product as quickly as possible. This is especially important if you are dealing with software, because if at the end of that first couple of weeks, they haven't had a good experience, they're not going to want to continue with you and their excitement about coming on board with you is going to start to diminish. It's really important you've got a clear onboarding process that works with that customer side by side and potentially with their people to actually get the product implemented and in use within their organization. Remember they are making a time investment to actually make the change and implement something new within their organization and quite often, that time investment and the change management alongside that is actually a bigger investment than the money. The more that we can help and bring our expertise of ensuring our product is set up and working perfectly as quickly and as smoothly as possible, the more likely it is that someone's going to want to stay with us for the long haul.
Once you've got a customer onboarded, it's really important that we make them sticky, you might've heard this before, but making your customer sticky is about making them want to stay with you. So then, you need to start thinking about what does your customer service look like? Is it purely reactive so we only talk to customers when they get in touch with us? Or is it actually proactive and dependent on the value of the contract and the value of the customer? You might want to consider how you're going to do some proactive outreach to make sure that they're maximizing their investment, getting the most out of everything that you can offer. If there are any glitches along the line, we're proactively resolving those rather than waiting for them to get in touch. A really good indicator here can be to look at some RAG indicators: Red, Amber & Greens.
Are there indicators that we can check to actually ensure that people are engaged with our product or service? If it's a piece of software, can we see how often they're using and accessing the service? Can we see that all of the users are actively engaged? Think about the indicators that can give you some sort of status alert and actually let you know when a customer's slipping into red, because that allows us to proactively do something about that sooner rather than later.
Another great idea is to look at NPS, our 'net promoter score'. This is important because it allows us to survey our customers and actually find out what they think, honestly and openly. That then becomes a measure that you can work to improve on year on year. Regardless of the size of your business, the measure is the same. So whether you are a very small business or a multi-national, actually, the way that that works is identical. So it does mean that being a smaller organization doesn't preclude you from giving an amazing service experience to your customers.
This is important because if a customer's having a great experience with you and your product or service, they're likely to stay. The longer they stay with you, the more money they're going to be paying to use that product or service. There's a few key areas that we really need to focus on to make sure that happens. The first is onboarding, especially in that first week or two. It's super important that we get customers up and running with our product as quickly as possible. This is especially important if you are dealing with software, because if at the end of that first couple of weeks, they haven't had a good experience, they're not going to want to continue with you and their excitement about coming on board with you is going to start to diminish. It's really important you've got a clear onboarding process that works with that customer side by side and potentially with their people to actually get the product implemented and in use within their organization. Remember they are making a time investment to actually make the change and implement something new within their organization and quite often, that time investment and the change management alongside that is actually a bigger investment than the money. The more that we can help and bring our expertise of ensuring our product is set up and working perfectly as quickly and as smoothly as possible, the more likely it is that someone's going to want to stay with us for the long haul.
Once you've got a customer onboarded, it's really important that we make them sticky, you might've heard this before, but making your customer sticky is about making them want to stay with you. So then, you need to start thinking about what does your customer service look like? Is it purely reactive so we only talk to customers when they get in touch with us? Or is it actually proactive and dependent on the value of the contract and the value of the customer? You might want to consider how you're going to do some proactive outreach to make sure that they're maximizing their investment, getting the most out of everything that you can offer. If there are any glitches along the line, we're proactively resolving those rather than waiting for them to get in touch. A really good indicator here can be to look at some RAG indicators: Red, Amber & Greens.
Are there indicators that we can check to actually ensure that people are engaged with our product or service? If it's a piece of software, can we see how often they're using and accessing the service? Can we see that all of the users are actively engaged? Think about the indicators that can give you some sort of status alert and actually let you know when a customer's slipping into red, because that allows us to proactively do something about that sooner rather than later.
Another great idea is to look at NPS, our 'net promoter score'. This is important because it allows us to survey our customers and actually find out what they think, honestly and openly. That then becomes a measure that you can work to improve on year on year. Regardless of the size of your business, the measure is the same. So whether you are a very small business or a multi-national, actually, the way that that works is identical. So it does mean that being a smaller organization doesn't preclude you from giving an amazing service experience to your customers.
Upsell and cross-sell
3. Look to sell more
The third thing that you can do is you can look to sell more. Of course, I always love to sell more. You can look to upsell and also cross-sell, this is about making sure that at appropriate times in the journey with your customer, that actually you offer them other opportunities to invest with you. Interestingly, this thing we don't always do, because we're kind of like, well, "They're already our customers, they won't be interested." Actually, there's so many of the things that you can sell to existing customers. It might be training, it might be coming to an event, it might be sponsorship, it might be some additional functionality within the software, it might be an add-on service that you can give, it might be consultancy. There's all sorts of different things that you might want to think about how you can add on to not only enhance your customer's experience, but also to increase that overall investment that they're making with you. As part of this, it's really helpful if you've got a services team who are really tuned in to your customer's needs and can make sure that they're not only having a great experience today, but also suggest other things within your portfolio that might be helpful to them. Often, this is a sales through service approach, and it can be really helpful because customers are far more receptive to actually having those conversations with people who they're already working with on a regular basis. So, upsell and cross-sell.
And I'd love to know about anything that you've done that's increased that value for you - let me know in the comments.
The third thing that you can do is you can look to sell more. Of course, I always love to sell more. You can look to upsell and also cross-sell, this is about making sure that at appropriate times in the journey with your customer, that actually you offer them other opportunities to invest with you. Interestingly, this thing we don't always do, because we're kind of like, well, "They're already our customers, they won't be interested." Actually, there's so many of the things that you can sell to existing customers. It might be training, it might be coming to an event, it might be sponsorship, it might be some additional functionality within the software, it might be an add-on service that you can give, it might be consultancy. There's all sorts of different things that you might want to think about how you can add on to not only enhance your customer's experience, but also to increase that overall investment that they're making with you. As part of this, it's really helpful if you've got a services team who are really tuned in to your customer's needs and can make sure that they're not only having a great experience today, but also suggest other things within your portfolio that might be helpful to them. Often, this is a sales through service approach, and it can be really helpful because customers are far more receptive to actually having those conversations with people who they're already working with on a regular basis. So, upsell and cross-sell.
And I'd love to know about anything that you've done that's increased that value for you - let me know in the comments.
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