CLV marketing: How to optimize the value of your existing clients (Updated 2023)By Emily Dyrland
It’s exciting to acquire new customers. There’s the competitive-spirit rush on the sales floor, being celebrated by peers, and ringing the sales bell. These external motivators along with the promise of commission drive sales professionals to make those pitches and close deals. New sales, however, are only a very small slice of the pie. Looking at the big picture, Tim Riesterer, chief strategy officer at Corporate Visions says 70 percent to 80 percent of all revenue and growth come from existing customers. In exceptional times, such as the early days of the pandemic, this was up to nearly 100 percent due to so much global uncertainty in business. This makes it more important than ever to understand how to increase the customer lifetime value of existing clients with CLV marketing.
According to Riesterer, resources are disproportionately weighted toward acquisition. The thrill of something shiny and new wins out every time. Salespeople tend to favor finding new clients over working with existing customers who aren’t a large revenue source. These less lucrative customers get handed off improperly when they really need to be nurtured by the sales team member who has disregarded them. It’s time to break these habits because according to George Leith, former chief customer officer at Vendasta, it is far less expensive to keep a client than it is to find a new one.
Table of Contents
- What is customer lifetime value?
- How to increase customer lifetime value with CLV marketing
- How to talk to existing customers to promote client growth
- Marketing to existing customers: Dos and Don’ts
- DO: Personalize your communication
- DO: Provide value to existing clients regularly
- DO: Respect preferences when marketing to existing customers
- DO: Encourage two-way communication
- DON’T: Forget to show appreciation
- DON’T: Overwhelm with communication
- DON’T: Neglect post-purchase engagement
- DON’T: Ignore complaints or negative feedback
- How to increase sales with existing customers: Final thoughts
What is customer lifetime value?
Customer lifetime value, commonly abbreviated as CLV or sometimes CLTV, is a valuable metric that defines the total revenue a business can reasonably expect from a single customer account throughout its relationship with the company. This concept encourages a forward-looking perspective that goes beyond the rush of the initial sale, emphasizing the long-term profitability of marketing to existing customers and maximizing existing client growth.
Understanding CLV is invaluable for making informed decisions about customer acquisition, retention strategies, and resource allocation. For example, if the CLV of a client is significantly higher than the cost of acquiring them, it signals a healthy client-agency relationship with a solid positive ROI.
By assessing CLV, marketing agencies can prioritize efforts toward nurturing high-value customers and designing personalized campaigns, leading to more effective targeted marketing to existing customers. It enables businesses to focus not just on the here and now, but to consider the broader, longer-term picture of their customer relationships.
A robust understanding of this metric can help agencies identify how to increase sales with existing customers through CLV marketing. Maintaining loyal customers is just as important, if not more so, than acquiring new ones, making CLV marketing an important approach to help your agency reach its growth targets.
How to increase customer lifetime value with CLV marketing
By now, you know what customer lifetime value is. Next, we’ll walk you through how to increase the customer lifetime value of existing clients so you can start growing your revenue—and profits—without costly acquisitions. With the right strategy, you can turn your existing customers into valuable long-term partners in a relationship you both benefit from. Here’s how.
Rank existing customers
One of the most difficult but important parts of managing a sales team is ensuring they are connecting with all of their customers. This includes both prosperous accounts as well as difficult ones. Leith shares his contempt for salespeople who don’t do a thorough job of touching base with all of their existing customers.
“If you look at successful companies, at a high level they’re talking about net dollar retention, but you don’t manage a sales team on net dollar retention because it leads to unintended consequences. For example, if I have a book of 75 customers, I can hide the fact that I haven’t contacted some of those customers with what I’m bringing in from my high-growing clients. This is the classic 80/20 rule, 80 percent of your business comes from 20 percent of your customers. By measuring or celebrating lagging metrics like net dollar retention, the day-to-day activities of that team can be masked. I could have one customer knock it out of the park and have 10 customers that I didn’t spend any time with. So it comes back to business management 101, you have A accounts, B accounts, which you’re working to make A accounts, and you have C accounts that you’re really trying to figure out, but you have to touch them all.”
Net dollar retention is a metric that shows changes in recurring revenue such as churn, upgrades, and downgrades. As Leith describes it, net dollar retention is the destination, but as a sales leader, activity and contact metrics, as well as the amount of time spent with each account, should be your leading metrics.
Introduce them to client growth experts
No one likes to be passed off to the next customer service representative because what you need isn’t technically “their department”. If customers are just handed-off after the deal is closed it’s likely they will be dissatisfied with their experience. Many require frequent check-ins to ensure they aren’t on the verge of churning due to pain points they’re experiencing. Kalungi found that Software-as-a-Service (SaaS) companies that target small- to medium-sized businesses (SMBs), will commonly have a monthly churn rate between three percent and seven percent. Overlooked customers will undoubtedly churn and switch to competitors who offer similar products and services. To mitigate this risk, there should be an overarching objective among all experts involved in the customer journey.
“If the onboarding team is not aligned with the promise that has been made by the rep that closed the deal, you’re going to have big problems. You might spin a lot of cycles, you might have a very frustrated team on either side of that equation. You really need to go in as a team,” says Leith, “Depending on the complexity of your solution, it usually takes a village, meaning a team approach. You need to have a level of communication between all parties and a clearly defined cadence of how that team approaches the customer.”
Think back to your most recent check-up at the dentist. Every step sets the stage for the next expert to enter. From the greeting to the cleaning, to the assessment, and payment, there is a congruent flow. You probably had a good experience, at least as good as a trip to the dentist can be because there was an expert at each step. These experts communicate information during the transition and ensure that you’re comfortable before leaving you.
This is similar to many larger sales teams. There are the initial contact teams who drum up clients with cold-calls. Then you have a team who has done more research into your company. Once a sale is made there is usually an onboarding team who trains new clients and gets them comfortable with the software. Your team is winning when they’re seeking to understand the customer and build that trust daily. The brand experience needs to mesh with the brand promise made during the acquisition. If the message is disjointed you’ll experience churn, keep the message consistent based on the multi-team objective.
Invest in personalized CLV marketing
All clients appreciate and respond to personalization, including your B2B existing customers. The underlying idea of personalization in CLV marketing is that customers are more than just numbers—they’re unique individuals with distinct preferences and behaviors. As a result, they appreciate and respond positively to experiences that feel thoughtfully customized to their particular needs and desires, bolstering their affinity towards your agency as their go-to digital solutions partner.
Harnessing the power of personalization in CLV marketing to existing customers starts with effective data utilization. This includes using marketing management software to collect, analyze, and act based on customer data, which can provide insights into their interests, buying behaviors, software usage patterns, and more. With this knowledge at hand, your marketing team can create finely tailored messages, personalized promotions, and bespoke experiences, all aimed at meeting the customer where they are and increasing the customer lifetime value of existing clients.
The real beauty of this personalized approach is its ripple effect. When customers feel truly valued—when they feel that their unique needs are understood and met—they are far more likely to remain loyal. This strengthened loyalty not only contributes to a higher customer lifetime value but also promotes customer advocacy and positive word-of-mouth, leading to a broader impact on your brand’s growth trajectory without any investment in new client acquisition.
By investing in personalized CLV marketing, businesses can enhance customer satisfaction, foster lasting relationships, and ultimately learn how to increase sales with existing customers. It’s a strategy that goes beyond short-term gains, instead laying the foundation for long-term, sustainable success.
Thoughtfully upsell and cross-sell to existing clients
Building on the value of existing customers is a critical facet of optimizing CLV, and two effective strategies to achieve this are upselling and cross-selling. Statistically, these existing clients are more likely to buy from you again, since they’ve already demonstrated trust in your agency. That’s why upselling (offering a higher-priced, premium version of a tool or service) and cross-selling (proposing related or complementary tools or services) can be one of the most effective CLV marketing techniques.
However, to increase sales with existing customers and retain their trust and loyalty, it’s important to go beyond merely pushing more products or services on them. Upselling and cross-selling efforts shouldn’t just be augmenting your bottom line; instead, your suggestions should be rooted in trying to maximize customer satisfaction and for sustainable, mutually beneficial, and long-lasting relationships.
Any upsell or cross-sell CLV marketing proposition should genuinely add value to the customer’s experience, fitting seamlessly into their requirements and contributing positively to their engagement with your agency.
To generate client growth with existing customers, try to regularly identify potential solutions in your portfolio that can address problems or pain points they face. This customer-centric demonstrates your agency’s commitment to serving the customers better, showing that you’re not merely interested in their marketing budget, but genuinely invested in their satisfaction and success.
Encourage existing customer advocacy
One of the most powerful marketing resources a business has is its base of satisfied customers. These happy customers not only contribute to your revenue but can also serve as compelling brand ambassadors. It’s: people trust the word of their peers, their friends, and their colleagues more than any advertisement.
Implementing a structured customer advocacy program is a strategy that motivates your existing customers to become vocal proponents of your brand. This could be realized through a variety of methods. For instance, a well-structured referral program can incentivize customers to share your brand with their network. You can also encourage customers to leave reviews or participate in case studies to offer authentic, first-hand testimonies of their experiences.
The beauty of customer advocacy is twofold:
Firstly, it nurtures deeper relationships with your current customers, which is a great way to increase the customer lifetime value of these existing clients. They feel more engaged and appreciated, which in turn makes them more loyal. Plus, if you provide incentives such as a referral program, you’re creating an extra reason for them to stick with your agency over the competition.
Secondly, it can fuel client growth among other SMBs who trust these organic, peer-to-peer endorsements, boosting your overall profitability without the need to pay for client acquisition.
How to talk to existing customers to promote client growth
Everything from the tone of voice to the frequency of reaching out and down to the words used really matters in the customer journey. Riesterer says the talk track or script that is used to speak with existing customers can’t be the same as what would be said to new acquisitions. The story has to be told in a different way than it would with an acquisition. Leith focuses on the details, “I find that words really matter,” he says. “If you look up the definition of communication in the dictionary it isn’t just saying words. Communication is delivering a message that the audience can understand. We have to be very careful because a simple phrase like ’passed’ or ’handed-off’ has unintended consequences.”
Once you’ve been working with a client and proven that you’re able to help them, it becomes about leveraging that trust.
“The first thing is to establish impact and investment, document it, and show them that. Then the second thing is you tell them you have this unique perspective that competitors don’t, you have an inside view. Here are the things going on on the outside and the other companies we work with and we see these things inside because we work with you. Here are our thoughts moving forward. Identifying emerging trends talking about the hard truth”
Marketing to existing customers: Dos and don’ts
Successfully marketing to existing customers requires a careful balance of personalization, value creation, communication, and respect for their preferences. Here are some of the key dos and Don’ts to help guide your approach to CLV marketing:
DO: Personalize your communication
Personalization is more than using your customer’s first name in an email. It involves tailoring your marketing messages and offers to their specific needs, preferences, and behaviors. Use data and insights to create relevant and meaningful engagements.
- Do consider their purchase history, preferences, and behaviors when creating offers.
- Don’t generalize or use a one-size-fits-all approach.
DO: Provide value to existing clients regularly
The key to customer retention is consistently offering value. This can range from providing excellent customer service to sharing insightful content or offering loyalty incentives. When it comes to CLV marketing, the job is never done. Think of it as an ongoing approach to relationship management rather than a one-off campaign.
- Do look for ways to provide value outside of transactions.
- Don’t only communicate with your customers when you’re selling something.
DO: Respect preferences when marketing to existing customers
Give your customers control over how they engage with your brand. Respect their communication preferences and privacy.
- Do offer options for how frequently they receive communications or the type of content they’re interested in.
- Don’t ignore their feedback or communication preferences.
DO: Encourage two-way communication
Great CLV marketing involves listening, not just talking. Encourage customers to give feedback and show that you value their input.
- Do have channels where customers can easily provide feedback or voice concerns.
- Don’t treat communication as a one-way street.
DON’T: Forget to show appreciation
Existing customers want to feel valued. Small gestures like thank you messages, birthday greetings, or loyalty rewards can go a long way in helping you increase the customer lifetime value of existing clients.
- Do make your customers feel appreciated and valued for their loyalty through CLV marketing efforts.
- Don’t take your customers for granted.
DON’T: Overwhelm with communication
While communication is key, overwhelming customers with too much information or too many promotions can backfire. Everyone is busy, and it’s important to demonstrate that you respect their time.
- Do use your customer data to gauge the optimal frequency and mode of communication.
- Don’t spam their inbox or inundate them with irrelevant information just because.
DON’T: Neglect post-purchase engagement
The customer journey doesn’t end at the point of purchase; in fact, it’s just the beginning, especially when it comes to CLV marketing. Many businesses make the mistake of ignoring customers once the sale is made.
- Don’t assume that once a purchase is made, your job is done. Now is your chance to demonstrate that your agency is the last digital solutions provider they’ll ever need.
- Do engage with customers post-purchase, ensuring they’re satisfied with their new tool or service and offering help where needed. This can involve follow-up emails, customer satisfaction surveys, or even courtesy calls.
DON’T: Ignore complaints or negative feedback
Negative feedback is an inevitable part of doing business. How you handle it can make a significant difference in customer perception, loyalty, and lifetime value.
- Don’t disregard or dismiss negative feedback.
- Do treat all feedback as an opportunity to improve. Respond promptly and professionally to any complaints or criticism, showing customers that you’re committed to resolving their issues and improving their experience. A complaint is an opportunity to turn a dissatisfied customer into a loyal advocate by exceeding their expectations in your response.
How to increase sales with existing customers: Final thoughts
“Your cost to grow that existing client is much less than acquiring a new customer," says Leith. "It’s leveraging the trust, having a regular cadence with the customer, understanding what further pain points they’re experiencing. It’s an iterative process because you’re working with them regularly. You have a deeper layer of knowledge and proof points if you’ve been working with the customer for a long time.”
The small details in building relationships with all existing customers make a big difference on the sales floor. By focusing on the expansion of A, B, and C customers, businesses can more easily capitalize on that 70 to 80 percent.
Three questions to ask yourself:
- How do you measure the success of your sales team?
- Are you allocating enough resources to nurturing existing customers?
- Is your sales team making the effort to connect with all of their accounts?
“The motions salespeople go through are the same, regardless of the prospect,” Leith says. “The difference in working with existing customers is leveraging trust. There is an enormous opportunity in growth and expansion of a customer because you can leverage previous wins and you’ve built that trust.”