The notion of “Customer Lifetime Value” (CLTV) is a concept and calculation that helps organizations determine the dollar value associated with their long-term relationship of any customer, determining just how much that customer relationship is worth. Used by marketing managers, MBA’s and executives, CLTV is a prediction of the net profit associated with the entire relationship with a customer. While the calculations can be a bit arcane, the idea of customer lifetime value is an important one because it encourages firms to shift their focus from customer acquisition to the long-term health of their customer relationships.
More and more CMO’s are retooling their efforts to more ardently optimize customer lifetime value, and that means keeping customers engaged and compelling them to purchase again and again. But it can be an uphill battle. According to Ernst & Young, the world’s third largest professional advisory firm, just 25% of US consumers consider brand loyalty as something that impacts their buying behavior. Research from Nielsen, the global marketing research firm, found that 78% of consumers are not loyal to any particular brand.
It is becoming more and more important for businesses to communicate with their customers in a more personal and effective ways in order to build brand loyalty and customer lifetime value. Engaging existing customers with relevant messaging and meaningful content is not only what customers expect, it’s what they demand. And while organizations often invest in advanced technology to automate and improve brand and marketing initiatives, these investments often fall short; not because of a lack of functionality, but instead because of the lack of a strategic approach to customer lifetime value.
Customer-facing communications are on the front line of how companies retain customers and build relationships. It is ironic that companies invest heavily in marketing campaigns and sales strategies designed to acquire a new customer, while at the same time often doing very little to extend the lifetime of that customer once they are enrolled. We help companies do this by improving existing customer communication points that are often transactional or operational in nature — outbound correspondence associated with onboarding, enrollment, renewals, and statements. These and other customer-facing communications are rarely considered key marketing assets, but they should be. One recent study by research firm InfoTrends found that transactional documents are opened and read by 90% of recipients. What other form of marketing communication can claim that kind of customer-open rate?
Companies Building Customer Value
Companies of all sizes and types find value by reevaluating and reworking their existing communication processes with a different view of customer-facing communications and how they influence customer lifetime value. This benefit can be found by adopting a cloud-centric approach to branding, engagement and customer experience management that involves every aspect of a marketing communication strategy.