Lifetime value (LTV) is a very simple concept. This is the total amount of profit or revenue – it is up to the company to determine which variable is most important to work on its strategies – obtained from a single customer during its entire lifetime. That is, a specific customer who buys your products annually will have a higher LTV than someone who buys every two years.
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Why is Lifetime Value important?
It's important to have your customer's lifetime value at the tip of your pencil for very simple and practical reasons. First, because the cost of attracting a new customer can be five to seven times higher than that of keeping a loyal one, as pointed out by marketing theorist Philip Kotler in the late 1990s.
Another reason is that the probability of selling to an existing customer is 60 – 70% higher, as the article says Don't Get Lazy About Your Client Relationships published in Forbes, which cites data from the book Marketing Metrics. In contrast, the chances of selling to someone who has never used your product and/or service are 5 to 20%. In addition, existing customers are more willing to try new products compared to the public that does not consume your brand. There are estimates that point up to 50% more prone.
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How to increase my client's Lifetime Value?
To increase your customer's LTV, you need to know them better than anyone else. That is, knowing your desires, needs, socioeconomic position, where you live and the entire booklet of your persona and/or target audience. What's more, hearing opinions about your product is essential to grow as a brand and gain competitiveness in the market.
By making a careful assessment of the answers obtained, the brand's strategic decisions will have a technical-numerical basis, which will actually serve the customer and will have many more chances of retaining him. After all, with the exception of price issues, nobody switches brands if they are fully satisfied with what is being offered.
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