Lifetime Value (“LTV”) of a customer is the projected revenue that a customer will generate during their lifespan with your company. Once you understand how much a customer could potentially spend over the course of a lifetime, you’re able to allocate resources such as customer acquisition and retention programs to keep your customers calling back.
The simplest way to estimate lifetime value is to plug actual or estimated numbers into the following equation:
(Average Value of a Sale) X (Number of Repeat Transactions) X (Average Retention Time in Years for a Typical Customer)
An easy example is to calculate the lifetime value of someone with a gym membership who spends $60 every month for 3 years. The value of that customer would be:
$60 X 12 months X 5 years = $3,600 in total revenue, $720 per year
Those that own gyms understands that if they spend less than $720 through free trials, newly acquired customers will be profitable shortly thereafter.
One of the most effective ways to boost LTV is to create an experience that makes boaters want to come back and tell others why they should choose you. Since it costs six to seven times more to gain a new customer than to keep an existing one, retention equals profit and a word-of-mouth customer has a 16%-25% higher lifetime value than those acquired from other sources.
Turn Customers into Evangelists.
Customers buy things. Brand evangelists preach about the products they’ve purchased and about the experiences they had when buying.
Brand evangelists are highly satisfied customers who can’t wait to sing your praises and tell others about your dealership. These are your customers that go far above and beyond the “customer” role of buying a boat from you. Instead, they make sure that everyone knows why they should also buy a boat from you!
Brand evangelists spread the love about your dealership and employees, yet they don’t cost you a dollar.
Follow these 3 tips to create more evangelists for your brand:
1. Follow the Golden Rule: It seems so simple and we learned it in kindergarten, treat customers well. A study done by McKinsey and Company found that 70% of purchase experiences are based on how your customer feels that they are being treated. Connect more phone calls, pay attention to how you route calls, show an interest in the caller, and leave them with a great lasting impression. Read how to greet callers: https://blog.zenithdealersolutions.com/relationships-start-with-connections
2. Provide First Call Resolution: Answers caller’s questions on the first call. View customer problems as opportunities for conversion to brand evangelism. When you show empathy and alleviate pain points quickly, you build trust. Customers work with and speak favorably about brands they trust. A study from Maritz found that 83% of the customers who complained and had their problem addressed said they would be more likely to continue to do business with the company.
3. Gather Customer Feedback: Talk to your customers and listen to what they say. If you don’t have a formal process for collecting feedback from customers, begin by listening to their phone call interactions with your dealership. Is it an experience that you would be motivated to share with others?
Don’t expect every customer to become an evangelist but know that a few nudges in the right direction can make a huge difference for your business and your caller’s experience.