This article was based on the interview with Anthony Coppedge of IBM by Greg Kihlström for The Agile Brand with Greg Kihlström podcast. Listen to the original episode here:
Customer lifetime value (CLV) should not be solely focused on extracting value from customers. It should consider the benefits and value delivered to customers.
Customer lifetime value (CLV) is a crucial metric for organizations to understand and measure. It helps determine the overall value that a customer brings to a brand over the course of their relationship. Traditionally, CLV has been viewed from the perspective of the brand, focusing on how much money or value can be extracted from a customer. However, this narrow perspective fails to consider the benefits and value delivered to customers.
Solely focusing on extracting value from customers can have several downfalls. Firstly, it can lead to a transactional approach to customer relationships, where the primary goal is to maximize revenue rather than prioritize customer satisfaction and loyalty. This can result in short-term gains but may harm long-term customer relationships and brand reputation.
Additionally, solely focusing on extracting value fails to recognize that customer loyalty and advocacy are directly linked to the value and benefits they receive from a brand. When customers feel valued and receive exceptional experiences, they are more likely to become loyal advocates who promote the brand to others. This word-of-mouth marketing can have a significant impact on a brand’s reputation and customer acquisition.
To truly understand CLV and maximize its potential, organizations should consider the benefits and value delivered to customers. This means shifting the focus from solely extracting value to creating value for customers throughout their journey. By prioritizing customer satisfaction, organizations can build stronger relationships, foster loyalty, and increase customer lifetime value in the long run.
There are several ways to deliver value to customers. Firstly, organizations should strive to understand their customers’ needs, preferences, and pain points. By gaining deep insights into customer expectations, brands can tailor their products, services, and experiences to meet those needs effectively. This personalized approach enhances the overall customer experience and increases the perceived value customers receive.
Furthermore, organizations should focus on providing exceptional customer service and support. Prompt and helpful responses to customer inquiries and concerns can go a long way in building trust and loyalty. Brands should also invest in continuous improvement and innovation to stay ahead of customer expectations and deliver new and exciting value propositions.
Another essential aspect of delivering value to customers is transparency and communication. Brands should be transparent about their products, pricing, and policies, ensuring customers feel informed and empowered in their decision-making process. Regular communication, such as personalized offers, updates, and relevant content, can also contribute to delivering ongoing value and maintaining customer engagement.
In conclusion, customer lifetime value should not be solely focused on extracting value from customers. Instead, it should consider the benefits and value delivered to customers. By prioritizing customer satisfaction, tailoring experiences, providing exceptional service, and fostering transparency and communication, organizations can create long-lasting relationships, increase customer loyalty, and ultimately maximize customer lifetime value. When customers feel valued and receive significant benefits from a brand, they become advocates who contribute to the brand’s success through their loyalty and positive word-of-mouth.
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