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How to create a strategy to build Customer Lifetime Value

How to create a strategy to build Customer Lifetime Value

By Stephen Haighton, Vice President, Sales Northern Europe, Chordiant.

Organisations are facing a number of challenges in today’s economic environment, not least the need to grow profit at a time when consumers are becoming increasingly price sensitive and demanding higher levels of service.

While product and price used to be the deciding factors in attracting and retaining customers, market saturation and fierce competition have eroded these advantages.

Customers now want a company that understands their needs and always acts in the consumer’s best interest. Not surprisingly in this ‘experience economy’, consumers perceive their relationship with a company as the critical factor in determining loyalty.

The focus among customer service and marketing teams is now very much centred on maximising Customer Lifetime Value, which can be defined as the total monetary value of an average customer spanning the period that a customer will stay with a company.

Providing high levels of service is key to maximising Customer Lifetime Value and there are several steps that companies must consider when looking to develop this strategy:

1. Understand your customers and their needs

To ensure customers feel valued, companies must fully understand what their customers want. This not only requires the right level of customer insight on an ongoing basis but also the ability to react to a customer’s needs during a real-time conversation.

Once organisations are able to understand the variations in customer psychology, they can design the optimal customer experience and, as a result, see improved sales conversion and retention rates.

For example, if a call centre representative notices that a customer has experienced a change in circumstances and can react accordingly, this could make the difference between successfully up- or cross-selling  a new product or losing that customer altogether.

2. Develop customer centricity, not product centricity

Often companies are product as opposed to customer focused and the quality and relevance of a good conversation with a customer is underestimated.

Companies must reassess this strategy and ensure that representatives only offer customers the products or services that are relevant to them at the right time.

This should not come at a cost to the company’s product strategy however and call centre representatives must have access to technology which allows them to accommodate both customer and company needs.

3. Maximise the availability of multiple channels for customer interaction

Customers are increasingly buying products online and expect high service levels at this channel as well as within a branch or over the phone.  The so-called “Generation Y” customers are going one step further and expect companies to provide services using smart phone technology.

This is likely to be a key focus for marketers over the coming years and many forward thinking companies are tapping into this trend by providing services through mobile applications.

Providing personalised customer service across all these channels is no mean feat however and it goes without saying that technology is the key enabler to meeting this challenge.  

4. Deploy the right technology

‘Intelligent conversation management’ technologies allow companies to amalgamate all information held on a customer so they can achieve a single view of their customers across all channels and converse with them appropriately in real-time.

This type of Customer Experience Management (CEM) technology which uses Next-Best-Action communication, helps to ensure that every interaction is appropriate and  enables companies to anticipate customer needs prior to an interaction and then deliver relevant and meaningful conversations in which each customer is treated appropriately and uniquely.

CEM through Next-Best-Action communication can help companies find the right proposition for the customer as it creates a mini business case to guide customer actions and communications for every channel and line of business and – in the case of inbound contact – for every response during a live interaction

Crucially, CEM takes the needs of the company equally as seriously as it does the customer, helping to ensure that customer offers and propositions, while tailored specifically for that customer, are also designed to support the business goals of the company.

5. Monitor the success of your strategies

It is critical that companies implement strong measurement tools to ensure that they can objectively assess the success of marketing initiatives and determine what improvements can be made.

By deploying a continuous method of feedback, businesses will be able to understand when to change and adapt strategies. This also helps to ensure that the investment in products and processes achieves the necessary returns for the business.

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