Customer Service

Knowing your customers’ value and how much they bring back to your business is essential in understanding where your business stands and what it can do to increase revenue and sales. In this post, you will learn how to calculate customer lifetime value (CLV) and how to improve your business’ CLV by increasing customer retention and loyalty.

What is Customer Lifetime Value (CLV)?

Customer lifetime value (CLV) is a customer success metric that determines how much net profit your business is able to make from one customer over time. The CLV can tell you the dollar worth associated with a long-lasting relationship with any customer. This is a metric used to determine the value of your customers and how much money they bring to your business. This metric is key when it comes to bringing aboard new customers and deciding how much to spend on existing customers.

Why Measure CLV?

Going by this definition, the higher your business’ CLV, the more revenue each customer brings into your business. Therefore, with each customer’s value increasing, your sales and marketing teams can afford to take on new customers. In other words, your business can spend more on attracting new customers and retaining existing ones. And this is simply because each customer is valuable and brings more to your business. CLV is important because:

1. Acquiring new customers is expensive and difficult, at times
2. Loyal and recurring clients will be your best promoters
3. Current customers can help your business growth

So, calculating CLV can give you insights into the quality of your customers and what your business can do to increase revenue and sales.

Calculating CLV

Calculating your customer lifetime value can be tricky. Understanding the core components will prove helpful. We break this down into easy-to-follow steps. Calculate your CLV scores by following the below steps:

Step 1. Calculate Average Purchase Value

Value of each purchase.

Average Purchase Value = Total Revenue / Number of Orders

Step 2. Calculate Average Purchase Frequency

Frequency of each purchase.

Average Purchase Frequency = Number of Purchases / Number of Customers

Step 3: Calculate Average Customer’s Value

Value of a customer.

Average Customer’s Value = Average Purchase Value / Average Purchase Frequency

Step 4. Calculate Average Customer’s Lifetime Span

Number of years that each customer visits or uses your service.

Average Customer’s Lifetime Span = Sum of Customer Lifespans / Number of Customers

Step 5. Calculate Customer’s Lifetime Value (CLV)

Your Business’ CLV score

Customer’s Lifetime Value = Customer Value (step 3) x Average Customer Lifespan (step 4)

9 CX Strategies to Increase Customer Lifetime Value (CLV)

When thinking of ways to improve customer lifetime value, there are three main factors to consider:

1. Average Transaction Value
2. Number of Repeat Sales
3. Average Customer Retention Rate

By influencing or increasing these factors, your business’ CLV and customer experience (CX) will improve. So, what can you do to better these numbers?

1. Conduct Surveys and Ask Questions

One way to improve your product or service is by increasing the number of repeat customers and subscribers. To do this, you need to identify what keeps customers coming back and any significant deal breakers. The best way to learn more about what your customers like and expect is by asking them. Conduct surveys, ask questions, and collect voice of customer data. Learn more about your customers so you can serve them better and convert more into recurring customers.

2. Enhance Customer Service and Customer Success

According to a study conducted by PwC, 32% of customers will end their relationship with a business after a bad experience. And so, this goes without saying but improving your customer support and customer success services can go a long way in retaining customers and making them advocates for your brand.

Consider investing in omnichannel and multichannel customer support. By increasing the number of channels that customers can use to connect with you, you can appeal to a wider customer base and offer more responsive service.

You may even find it useful to utilize self-service options such as knowledge bases and support centers, automate IVR services, chatbots, trouble tickets, and more. Self-service options give users the ability to solve their problems themselves and on their own time. Read our post about customer service trends to determine where your business is lacking.

3. Design Relevant and Easy-to-Use Products and Services

How relevant your business and products are can greatly impact how prospects view and interact with your services. Stay relevant, discuss current issues, and offer up-to-date information and features. If customers find more relevant usage elsewhere, they will go to a competitor without hesitation.

4. Develop a Customer-First Strategy

To enhance CX for your business, you need to create a customer-first strategy. Such a strategy requires your sales and marketing teams to take time to understand the customer, their needs, pain points, and preferences. And then develop a strategy that supports them and their needs.

5. Consider Usability Testing

Usability testing is a kind of market research. In usability testing, your marketing and services teams observe how users interact with your product, software, or service. You can test specific processes (sign-up, purchasing stage, etc.) or the entire system. Usability testing lets you identify areas that need improvement; specifically what processes and features are not clear or easy-to-use. Then, you can create better products and software that make customers more comfortable and less confused.

6. Cross-Sell and Up-Sell

Most sales teams already know that cross-selling and up-selling can greatly improve customer retention. Offering additional services and add-on features is a good way to reduce cart abandonment and build customer loyalty. Furthermore, offering products and services that are relevant to your customers will make a great difference. Customers appreciate personalization and customized recommendations and see them as an effort to really help improve their lives.

7. Create Valuable and Engaging Content

Keep your customers engaged by creating and sharing valuable and informative content. Utilize your blog page, emails, and social media platforms to educate and inform your customers and also establish your business as a trustworthy and credible one. Show readers that your employees know the industry and are developing first-class products.

8. Consider Loyalty Programs

Invest in customer loyalty programs to keep your customers coming back for more. Discounts, member-only promotions, etc., will help retain valuable customers. Treating them with special care and effort will give them more reasons to stay.

9. Continue to Delight Your Customers

Lastly, don’t stop delighting your customers once you lock them down. Keep them happy. Surprise them with small gestures; these can be holiday greetings, birthday vouchers, gift cards, etc. These little gestures can go a long way in securing customer loyalty.

After All, It’s All About Customer Relationships

Your customers drive your business’ growth. Without them, your business can easily fall behind and into the shadows. Try these CX strategies to improve the way customers interact with your business and give them a reason to come back for more. Competition is everywhere and so it’s up to you to make your business stand out. How far are you willing to go?

Learn more about how Global Call Forwarding’s communication features can help your business communicate better. Reach out to us today to learn more!

Customer service has always been central to the success of any business. However, the COVID-19 pandemic has greatly impacted how businesses offer customer support as well as customer service expectations held by consumers. Now, more than ever, each business needs to evaluate how they are engaging their customers and offering care and support. Here is where ensuring your reps and employees practice empathy in customer service becomes crucial.

What is the Role of Empathy in Customer Service?

The first thing we should learn about is the concept of empathy. It is the process of imagining or putting oneself into another’s shoes in an attempt to better understand the other and what they are going through. And so, empathy should be understood as one of the most important traits when interacting with customers. But what does empathy in customer service look like? And as a Chief Customer Officer, how can you train your team and yourself to be more empathetic?

What is Customer Empathy?

Customer empathy is the process of understanding your customers by digging deeper into their pain points, concerns, motivations, and more. This means taking a step forward instead of simply saying “I understand” and proceeding with stock responses.

Empathy in customer service, therefore, means taking the time to understand each customer individually. What are their concerns? What is their situation? How can your product help them specifically? And so on. By paying attention to these questions and each customer individually, your team can provide a more holistic and meaningful customer experience.

Why You Should be More Empathetic When Dealing with Customers

According to research conducted by PwC, about 32% of customers will end their relationship with a brand after having one bad experience. Customer service expectations have increased and customers no longer tolerate bad-to-moderate service. They expect businesses to go above and beyond and, specifically, to be considerate and empathetic.

Being more consciously empathetic in your customer interactions can prevent the loss of potentially valuable customers. If your business does not take steps to improve customer experience by creating products and services that are customer-focused, your customers will not hesitate to go to your competitors.

6 Signs Your Business is Lacking in Empathy

In order to determine whether your customer service team is lacking in empathy and needs to up its game, look closely at how your team is performing. Some key indicators include:

1. Low customer satisfaction scores
2. Negative customer feedback
3. Multiple call transfers among agents
4. Long wait times
5. Bad customer reviews
6. Low customer retention rates

9 Ways to Practice Empathy in Customer Service

Customer service and customer interactions happen in a variety of ways and across different platforms. Among these are:

• In-person meetings
• Phone and video conversations
• Live chat
• Email interactions
• Social media platforms

Your customer service must be consistent across these platforms so that each customer leaves your business happier and more satisfied than when they arrived. How can you and your team be more empathetic in customer interactions? Here are some helpful tips:

1. Maintain Eye Contact

This one goes without saying — Always maintain eye contact. It is often considered rude if you are paying attention to anything other than the person you are interacting with. This becomes even more important when you are engaging with customers on video calls. It is easy to get distracted and focus on the slide share or other materials, but take time to look at your customer and listen to them. Make them feel seen and heard.

2. Adopt Active Listening

Don’t just assume that you know what the customer is going through and that it is a common issue. Even if the issue is one of the most common complaints you receive, try to treat it with a new perspective. Your customer may have tried different methods to resolve the issue. This could provide you with more information and insight.

Once they have described their issue, repeat it back to them so they know you were paying attention to every detail. Listen actively so you can provide helpful advice that they haven’t tried before.

3. Have a Positive Attitude

No matter what the situation, try to adopt a positive attitude throughout the interaction. Chances are your customer is really upset about the issue they are facing and their frustration may leak into their interaction with you. Don’t let that color the way you respond to them. Take a moment to understand what they may be going through and focus on solving the problem for them.

4. Be Patient and Respectful

Similar to the above tip, strive to be patient, kind, and respectful in your interaction. Give them time to speak (or vent, if they are really upset), avoid getting frustrated yourself, and focus on the end-goal which is resolving their concern so they can continue to enjoy your product or service.

5. Avoid Biases

As with any interaction, avoid making assumptions and biases based on your own perceptions. This means respecting the person for who they are and what they are trying to achieve. Don’t assume they don’t know anything or that they know everything. Always ask for clarification instead of making an assumption.

6. Be Careful When Cultural and Language Barriers are Involved

This is another area of concern where empathy in customer service is essential. When cultural and language barriers are present, there is room for confusion and misunderstanding. Take time to understand your customer. If you are struggling, ask to put them on hold, and find a supervisor or rep who can help. Make sure to get back to your customer soon, don’t keep them hanging on hold for long. Also, keep international phone etiquette in mind when calling customers in different regions and parts of the world.

7. Ask Follow Up Questions

This is a good way to show your customer that you are interested and invested in this conversation. Ask follow-up questions that are relevant and can help narrow down the issue at hand. This can also help you offer more personalized solutions.

8. Match Your Customer’s Tone

Whether it is through email or phone conversations, try to match the tone and enthusiasm of your customer. Don’t be too formal if your customer appears informal and casual, and vice versa. Personalize your interaction with each customer to connect with them in a better way.

9. Build a Bond, Be Flexible

Look for common interests. For example, the online pet company Chewy’s customer service agents always ask customers about their pets and share stories about their own pets. This is a good way to create a bond with their customers and talk about something both parties love: their dogs or cats!