The Key To Customer Lifetime Value (CLV) Is Customer Retention

The Power of Customer Retention

Customer retention isn’t just about keeping customers happy—it’s about fostering loyalty and building a long-term relationship with your existing clientele.

Ultimately, building the customer lifetime value (CLV). Let’s look at some of the key benefits:

• Loyal customers spend more: Returning customers are 60-70% more likely to purchase again.
• Higher frequency of purchases: Retained customers tend to buy more often.
• Word-of-mouth marketing: Loyal customers are likely to recommend your business to others.

Retention vs. Acquisition

Besides that, according to Invesp: Acquiring new customers is 5-25 times more expensive than retaining existing ones. 

This highlights a key reason why focusing on customer retention is not only more cost-effective but also essential for sustainable business growth.

The reality is, customer acquisition often requires significant investments in advertising, promotions, and other marketing strategies. In comparison, maintaining a relationship with existing customers can be far less costly, but with higher returns over time.

Customer Lifetime Value (CLV): Measuring What Matters

CLV is an essential metric that calculates the total revenue a customer generates during their relationship with your business.

Why CLV Matters:

• Helps allocate resources effectively.
• Guides decisions on marketing spend for acquisition vs retention.
• Enables retailers to identify high-value customers for special treatment.

CLV Formula

Here’s a simplified way to calculate CLV in Malaysian Ringgit (MYR):

CLV Breakdown:

• Customer A: Low CLV – MYR 600
• Customer B: High CLV – MYR 4,800

A high CLV customer is more valuable over time, so you’ll want to prioritise retaining these customers!

However, There Comes The Cost of Chasing New Customers

Acquiring new customers can be expensive, and your ROI might not always be as high.

Let’s compare:

In a nutshell, focusing on customer retention can be more cost-effective and yield higher ROI compared to customer acquisition. While acquiring new customers is important for growth, retaining existing ones leads to better conversion rates, lower costs, and stronger long-term relationships.

How Exabytes New Retail Enhances Customer Retention

Exabytes New Retail empowers retailers with cutting-edge tools to enhance customer relationships. Here’s a look at some of the key features:

Exabytes New Retail Features

• Personalised Marketing Automation
  Sends tailored messages based on user behaviour to keep your brand top of mind.

• Custom Audience Segmentation
  Group customers based on past purchases, preferences, and activity for more targeted marketing.

• Behaviour-Triggered Campaigns
  Automatically engage customers when they reach certain milestones (like abandoned carts).

With Exabytes New Retail, one of the features it offers to you is that it can set a campaign to automatically send a reminder or offer after a specific time, like this:

Long-Term Success: Focus on Retention

Investing in customer retention ensures that your customers keep coming back for more. But how do you know if it’s working?

Customer Retention Metrics to Track

• Repeat Purchase Rate: Percentage of customers who buy more than once.
• Customer Satisfaction Score (CSAT): Measure of customer satisfaction after purchases or interactions.
• Net Promoter Score (NPS): Gauges the likelihood of customers recommending your business.

A high repeat purchase rate signals good retention practices, while a high NPS means your customers are loyal and spreading the word about your brand.

Exabytes New Retail has the tools and solutions to get you covered on this too.

Ready to turn your focus to customer retention and CLV?

Exabytes New Retail offers the tools to enhance your customer relationships and boost your bottom line. For more information on Exabytes New Retail, reach out to us directly at: wa.me/60380842306 or visit our official page: www.exabytes.my/exabytes-new-retail