Build a Customer Lifecycle that Maximizes CLTV

Increasing customer satisfaction and repeat business over the long term isn’t easy or straightforward, but it is essential for sustainable business growth.

In this article, two seasoned customer success leaders explore the critical role that Customer Lifetime Value (CLTV, CLV or LTV) plays in your revenue strategy. They’ll also share three concrete methods to improve CLTV at SaaS organizations.

Our customer success veterans:

Why should RevOps leaders care about CLTV?

To recap, CLTV is the average amount of revenue you can generate per customer during an account’s lifetime. In short, the higher this value is, the more your organization can confidently spend on marketing, sales, and research and development (R&D) initiatives — which propels business growth.

So, although it takes an enormous amount of time and effort to land new customers, it’s just the beginning. It’s also essential to constantly measure CLTV and work to increase it to drive sustainable business growth.

All in all, CLTV is an essential key performance indicator (KPI) for every business. As a result, this metric is often showcased during board presentations and reviewed in detail during mergers or acquisitions.

The 3 Drivers of Customer Lifetime Value

Once you can track CLTV reliably, what can you do to increase this metric over time?

Key Driver #1: Optimize Your Onboarding Flow

It’s crucial to provide an effective and engaging onboarding process to establish lasting relationships and ensure customers become active users of your platforms.

Onboarding IS the key to driving CLTV.
Ehab AbuShmais – Growth Advisor

If the handoff between Sales and Customer Success is disjointed or cumbersome, you may be jeopardizing your customer relationships. To ensure a smooth transition, it’s important for the Sales team to continue working closely with customers until the Customer Success team has successfully taken over the reins. Even then, the Sales team should continue to maintain and nurture relationships with existing customers to maximize upsell and cross-sell opportunities in the future.

Key Driver #2: Analyze Usage Data

Customer usage data allows you to see how often customers log in, how long they spend on your platform, and what actions they take. By analyzing this data regularly, your Customer Success team can identify flight risks and upsell opportunities ahead of time. Consequently, they can reach out to customers proactively to prevent churn and increase revenue.

It’s also a good idea to use customer health scores to identify at-risk accounts and customers who might be a good fit for advocacy programs. To do this, define how your best customers use your platform — for example, you could determine how much time they spend on the platform and which features they use most. You can then score your customer database against these criteria and assign each customer a health score.

Think through what it means to evaluate value…. Then relentlessly monitor and track this
Ehab AbuShmais – Growth Advisor

Key Driver #3: Listen to your customers

Customer surveys provide a simple but effective way to collect priceless feedback. For example, you can use survey responses to identify opportunities to:

Improve your product
Help customers maximize the value of their investment
Elicit customer advocacy in the form of testimonials or case studies

It’s also essential to build relationships with multiple stakeholders at each account to:

Ensure company-wide adoption of your products
Facilitate better communication
Maintain long-term relationships even when client stakeholders leave the company

Consider using CLTV to drive customer segmentation

Effective customer segmentation is critical to RevOps success. And while some teams prefer to segment by product usage or company size, you may want to consider using CLTV to help you segment your customer base and define buyer personas based on revenue.

Should you invest in a 1st-party or 3rd-party customer community platform?

Before investing in a customer community solution, make sure to define your overall community goals and the features you’d like to provide to customers. You should also consider your company’s maturity, the resources available, and whether you have a dedicated community manager on your team.

Whatever route you choose, make sure someone on your team is responsible for monitoring community activity and fostering engagement. Remember, thriving customer communities provide an invaluable platform to engage and nurture client relationships and loyalty.

Increase your CLTV

CLTV is an essential KPI for RevOps leaders — one that holds the key to long-term sustainable business growth. To learn more about how to improve your CLTV, check out these other expert panel takeaways:

If you’re experiencing challenges with your tech stack or struggling to scale your current business model, connect with our team to discuss your challenges and unique growth opportunities.

How High Growth SaaS Leaders Build a Customer Lifecycle that Maximizes CLTV