Boosting The Customers Lifetime Value With A Beautiful Emotional Spin

Existing customers can generate significantly more revenue for your business than new customers. Still, improving customer loyalty and retention is not always the focus of our marketing efforts. Sending handwritten business letters, and other old-school marketing efforts geared toward customer retention are often overlooked. But, these tactics are important when increasing your bottom line.

Learn more about why existing customers are the lifeline of your company, and how marketing measures for existing customers pay off.

Customer retention increases your customers’ lifetime value

There is a belief that acquiring new customers is the best way to grow a business. While this strategy makes sense on paper, it doesn’t always take into account customer attrition. If more customers leave your company than sign up, you will not grow effectively.

Remember, it’s less expensive to entertain a loyal customer than acquire a new one.

Calculate your CAC

Many companies use the customer acquisition cost (CAC) model to determine the price of a new customer.

Calculate your CAC using the following equation:

(The costs associated with acquiring customers/ by the number of customers acquired in the same period)= customer acquisition cost.

In other words, if your company spent $5000 on marketing in 2017, and acquired 500 customers in 2017, your CAC is $10.00.

It can be detrimental to a business to have a high CAC. It’s especially dangerous to have a high CAC if you have high customer turnover.

Focusing solely on new customer wins is unsustainably expensive, and assumes that an existing customer will remain loyal without intervention from an organization. That’s why businesses also need to factor in the lifetime value of a customer.

Improving the lifetime value of a customer

In marketing, the customer lifetime value refers to the profit attributed to the entire relationship with a customer. It’s a way to determine if you are making more money on a customer than spending on their acquisition.

The more loyal your customers, the longer their lifetime value will be. And, according to Bain & Company, an increase in customer loyalty by only 5% can increase the profitability of a company by 25-95%.

And, there is always room to improve the lifetime value of a customer. To do this, a business must shift focus toward current customers.

Why the existing customer matters

It is estimated that 70-80% of companies’ marketing efforts are focused on attracting new customers.

But, studies show that it costs five times as much to attract a new customer as it does keep an existing customer. And, that an existing customer generates on average as much revenue as five to seven new customers.

Additionally, the probability of selling to an existing customer is 60-70%, whereas the probability of selling to a new customer is only 5-20%. Using this data, it can be argued that existing customers are actually a more strategic channel for business growth.

How can you implement and monitor a new strategy, knowing the importance of keeping current customers?

Five tactics that help you improve the lifetime value of a customer

1. Start by thinking differently: The goal is to maintain the bond between existing customers and the company. In order to do this, companies must pursue marketing strategies that foster relationships. By providing sentiments that are unique in the marketing world, and specific to your customers, you can show your customers mean more to you that a transaction.
2. Communication with existing customers: Communication is critical to maintaining customer loyalty to a business or brand. Reach out to customers to thank them for business, to congratulate them on important milestones, or to keep them in the loop. Remind them that you know they are your client, and you appreciate them.
3. Unique content with added value: Good content marketing is another key element of customer retention. In order to stand out from the competition, and the flood of information available on a daily basis, marketers must work harder to provide high-quality content. Part of this delivery needs to take into account attractive forms and mediums. With a large portion of digital communication being filtered by social media and spam filters, marketers must work harder to find mediums that customers are still open to communication though.
4. Show personality: Adding a personal touch is always a great option. Customers don’t’ want to be sold in bulk. They want to feel like individuals. High-quality, handwritten business letters are one way to show a unique flair. This concept of personalization differentiates you from your competitors.
5. Emotional connection to existing customers: An emotional relationship with the customer is essential if one has a lasting interest in the business relationship. Generating positive emotions, positively surprising and enthusing customers can make a significant contribution to increasing customer loyalty, and thus make a measurable contribution to increasing the company’s profitability.

Handwritten letters are great to increase customer loyalty

It should be noted, sending handwritten business letters will achieve each of the aforementioned strategies.

Handwritten business letters are unique, personalized and show genuine gratitude to your customers. They are also surprisingly rare in an increasingly digital world. Nothing can replace the one on one sentiments of a handcrafted letter, but for scalability, Pensaki’s handwritten business letters are a great second option.

Pensaki uses an automated system to scale handwritten letters for business purposes. Each detail, from the cursive letters to addressing the envelope is tended to with care. And, our services are 100% online, which means you can directly send 1 or 10,000 letters quickly and cost-effectively. Our turnkey service means you have customization options and full visibility about your order status, and shipment dates.