3 Ways to Increase the Lifetime Value of Your Customers
As business owners, we all want to boost the profitability of our companies. The problem is, acquiring brand new customers can be expensive and time consuming.
Fortunately, there’s a great way to become more profitable than you are now without increasing the number of new clients you’re currently bringing in.
Increasing the lifetime value of your customers simply means that your existing customers pay you more for your services over the long term. Instead of paying you for one service one time, they pay you for multiple services now or over the next few months, years, or decades.
Increasing your customer’s lifetime value has a few great benefits:
Deepens customer relationships
Makes you more sustainable
Saves time and money
Keep in mind that the goal isn’t to squeeze as much value as possible from each of your customers, but to provide such great experiences and value to them that they’re happy to pay you to solve their additional problems.
So, how is it done? Here’s a few ways that we’ve increased the lifetime value of our clients at Knapsack.
1. Package or productize your services
Instead of offering Squarespace website design, development, SEO services, training, and logo design as separate services, we package them together at one single price. When you work with us you’re not paying for these separate hard-to-value services, you’re paying one simple price to get a great website.
This means that the value of what we’re delivering goes up. We can charge based on the value of getting a great website instead of the hourly rate of performing each of those services.
Consider how you could bundle the services you offer to be more valuable to your customers.
If you’re a print designer, don’t just offer “graphic design”. Instead offer one price to get a great brochure and include the copywriting, graphic design, and ordering all in one. The value to the customer goes up immediately which means you can charge more for your services.
Just be careful not to branch too far our from your core service or you can find yourself doing things that you’re not as skilled at, require too much additional equipment, or aren’t as profitable.
The free e-book Breaking the Time Barrier is only a one-hour read and is a great guide on how to package or productize your services.
2. Create a subscription service
A few years ago, we wanted to create something that would bring in recurring revenue for Knapsack and add ongoing value to our customers. The result was our monthly Squarespace website support subscription.
Our subscribers can ask us to make updates to their website every week and also get custom training videos on how to use their Squarespace site.
Is there something related to your current services that your customers need on a regular basis?
For example, if you own a landscaping business, maybe you could offer an annual subscription to refresh the mulch at your customer’s homes. This adds value to you (repeat business) and to your customer (they don’t have to think about it and they get a discounted rate).
A eye-opening book that helped inspire our subscription services is The Automatic Customer by John Warrillow.
3. Stay in touch by offering value for free
This blog and the accompanying email list were inspired by this idea. Our goal is to keep adding value to our customers after they work with us.
When you do this, it not only helps your customers be successful, but also keeps you top of mind. This means they are more likely to hire you for their next project and mention you to their friends who are looking for services that you offer.
What tips, tools, or other information could you continue to help your customers with after they work with you?
Consider setting up a monthly email or an automated set of emails that offer training or next steps that your customer can take after working with you.
Increasing the lifetime value of your customers can take time, but I can say from experience that it’s 100% worth it. Take the first step: Try productizing a service, creating a subscription, or staying in touch by adding more value.
Have you tried to increase the lifetime value of your customers? What has worked for you?