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Blog post By Paula Chiocchi on 2015-05-20
Late last year, I wrote about a topic that is important to all small businesses -- finding more customers. As we approach the middle of the year, I thought it made sense to follow up that piece with a post that focuses on keeping those customers you have worked so hard to land this year, and building CLV – customer lifetime value.
We’ve long heard about the costs of keeping clients vs. obtaining new ones. The common belief is that it’s 50% easier to sell to existing clients than to new prospects. According to Bain and Co., a 5% increase in customer retention can increase a company’s profitability by 75%. Gartner Group says that 80% of a company’s future revenue will come from just 20% of its existing customers.
Meanwhile, deepening connections is the key to keeping your all-important existing customers. A survey by Braun Research shows that nearly 6 in 10 U.S. small business owners (SBO) said establishing relationships with customers was the primary driver of repeat customers. No other responses in the survey came close to this, with “low prices” and “prime location” tying for second, with just 11% each.
So while the evidence to keep existing customers happy and engaged is seemingly overwhelming, just how should SBOs increase customer lifetime value? Here are five tips:
There’s no doubt that investing in relationships to build CLV increases loyalty and maximizes revenues and profitability. What do you do to drive CLV for your business?
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