This post is by Hannah Steiman from Openview Labs
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For a business to be profitable, it must offset its business costs with the lifetime value of its customers. While multiple factors inform a customer’s lifetime value (CLV), none of them are quite as essential as customer success. Customer success is the foundation businesses can build their continued success on top of. Without a serious investment in your company’s customer success, your customers will inevitably grow frustrated with the customer experience. As a result, they will slowly, but surely, drift away from your company’s offerings in favor of an alternative that will provide them with the personalized experience they’re looking for.
What is Customer Lifetime Value?CLV measures the amount of profit a company earns from a single customer over the course of their relationship. Typically, companies use it to determine their customer acquisition strategy—the higher your CLV is, for example, the more you can feel comfortable
on marketing, sales, branding and incentives. However, CLV is also critical for planning your customer experience and CS strategy. And providing exceptional customer service can increase your CLV as well, creating a positive feedback loop that will benefit your company for years to come. A higher CLV enables you to invest more in customer success, which increases your CLV.
How does customer success drive CLV?If you’re hoping to boost your customer lifetime value, then here are just a few (of the many) reasons why customer success is the single most critical investment you can make to increase your customer lifetime value.
1. Customer success drives customer acquisitionMost U.S. adults want to do business with businesses that can offer consistent customer success both online and offline. Where bad service drives customers to talk about your company negatively, excellent customer success will encourage your customers to talk about your business and its services positively. To illustrate this fact, consider the results of a recent study that surveyed a representative sample of 15,000 people from 12 countries:
- 43% of all consumers would pay more for greater convenience.
- 42% would pay more for a friendly, welcoming experience.
- And among U.S. customers, 65% find a positive experience with a brand to be more influential than great advertising.