Creating Customer Lifetime Value

Customer lifetime value (CLV) is the dollar amount that represents a customer’s worth to your business from first transaction to last.

CLV calculation=revenue x gross margin x average number of repeat purchases.

The CLV is a powerful metric because even small increases in CLV can lead to huge gains in overall revenue. For example, get 1,000 of your customers, who pay you $50 per month, to stay with you for a year instead of 10 months, and your annual revenue grows from $500,000 to $600,000.

But the benefit is not only incremental. First of all, customer profitability tends to increase over the life of a retained customer. Second, on average, it costs up to seven times less to sell to customers with whom you already have a relationship. After all, you’ve already attracted and educated them.

While customer acquisition will always be a driver for businesses, research has shown that customer retention is a faster route to revenue growth than customer acquisition.

An infographic from Invesp Consulting shows that increasing customer retention by 5 percent can lead to an increase in profits of 25 percent to 95 percent. The infographic also illustrates that the likelihood of converting an existing customer into a repeat customer is 60 to 70 percent, while the probability of converting a new lead is 5 to 20 percent.

Brands have learned that three key factors contribute to customer retention. They are: Keep the customer happy, reduce customer effort and deliver excellent customer service.

To improve CLV, companies should offer a mix of the following customer retention strategies:

  • Keep the customer happy
    1. Build relationships with customers through shared values that foster loyalty. Use social media sites to connect, like Facebook and Twitter.
    2. Through expertise and education, become the customers’ trusted advisor.
    3. Track customer satisfaction. Consider using a Net Promoter Score survey that primarily asks your customers whether they would recommend you to someone else.
    4. Make great customer service the norm. To go above and beyond, surprise your customers with small customer appreciation gifts, handwritten notes or even a personal email to say thanks.
    5. Re-emphasize your value: It’s reinforcing to know you’re getting the best bang for your buck.
  • Reduce customer effort
    1. Connect with customers on the channels they prefer.
    2. Optimize your onboarding. Give customers simple and clear instructions for product usage.
    3. Make it easy to reach you—a button on every Web page, for example.
  • Deliver excellent service
    1. Take a proactive approach to customer service to eliminate problems before they occur.
    2. Set customer expectations early and a little lower than you can provide to eliminate uncertainty about the level of your service and to ensure you always deliver on your promises.
    3. Go the extra mile.
    4. Personalize communications to strengthen the bond with your brand.
    5. Empathize with your customers/understand their pain points. They’ll appreciate and remember the respect you’ve given them.
    6. Ensure that customer care staff are empowered to resolve issues quickly.
    7. Be authentic and sincere when addressing customer concerns.

Remember: If you can keep your customers happy, you’ll keep your customers.

Small Gestures to Make Customers Feel Valued

We live in a data-driven and digital-first world, making it easy for companies to overlook the value of genuinely connecting with customers.

Even as consumers yearn for self-service options to speed up transactions with brands, and even as they opt to research products and services long before contacting a vendor about a purchase, they still welcome small gestures of appreciation from the businesses they patronize. What’s more, they develop loyalty to the brands that show them respect by going the extra mile to meet their needs.

Consider how top customer service companies like Amazon, Nordstrom and Hyatt Hotels work harder, smarter and more effectively to satisfy their customers, making them feel valued and prone to repeat business. For example, on top of offering incredibly fast response times and seamless returns, Amazon empowers employees to sacrifice an immediate sale or their time for the sake of resolving a customer’s issues. When customer satisfaction is a company’s primary focus, customer retention is often a given.

Businesses without the processes or machinery to compete with multibillion dollar companies like Amazon are not, however, without resources that can impact customer relationships just as notably and favorably. Sometimes a personal touch—from a friendly smile to remembering a customer’s name to a waived fee—goes a long way toward building a lasting relationship.

For example, some insurance companies give their associates the option of sending customers celebratory or sympathy cards, or the authority to send a hand-written message.

Developing the necessary customer-centricity that encourages customer devotion to a brand must start at the top of the company hierarchy. This is where strategies for understanding and meeting customer need must start and then flow to employees, aligning them with the vision. This may mean loosening the reins of scripted interactions, which also means boosting hiring practices to ensure that the right people are in place—with the right emotional predilections—to address customer concerns with aplomb.

Companies that limit customer service due to time or budget constraints are missing the opportunity to grow their business. Remember when Starbuck Chairman and CEO Howard Schultz closed all Starbucks locations for three hours during normal business hours to give employees a refresher course on the art of making expresso? He also discussed the importance of getting to know customers and greeting them by name.

Yet, simpler measures—like bringing hotel guests extra towels, or presenting restaurant patrons with a free drink on their birthdays—can be just as effective.

Don’t neglect to leverage your company’s data to deliver personalized services. For example, your customer relationship management (CRM) solution makes it easy to map a customer’s phone number or email address with a customer record. Airlines do this all the time to automatically alert passengers of a flight delay or cancellation. When a passenger calls in, an automated system recognizes them and can quickly offer assistance.

If you notice a gap between customer expectations and the customer service you provide, make it a priority to get a leg up on your competitors by showering your customers with tokens of appreciation for the value they provide to your business. Small gestures will go a long way toward enhancing the customer experience and reducing customer churn.

Five Ways to Please Disgruntled Customers

Moment after moment, day after day, customer care agents are presented with a string of opportunities to promote customer engagement.

In the contact center, many such moments are a challenge. Emotions sometimes take center stage. Customers may call feeling disappointed about a purchase, stressed about a bill, or worried about missed deliveries. These emotional reactions over perceived broken promises on the part of the business can lead to interactions fraught with negativity.

To deal with these challenging calls, Communicators should be aware of their ability to identify, manage, and control their emotions—an idea rooted in the theory of emotional intelligence. Personal characteristics such as perseverance, self-control, empathy (though not too much empathy!) and a person’s ability to get along with others have been used to explain many instances of business success, and can also be used to promote success in the contact center.

Surprisingly, recent Gallup research shows that the way in which customer care agents handle difficult calls can have a greater impact on customer engagement than the resolution itself: When customers are very satisfied with the way their problem was handled (no matter whether it was resolved or not), slightly more of them became fully engaged with a brand than those customers who never had a problem to start with.

So what does a well-handled call look like? Here are five things customer care agents can do when engaging with a disgruntled customer:

  • Talk less, listen more. Talking is easy; listening is hard. Talking makes people feel as if they’re not alone, and they appreciate the fact that they feel listened to. The more Communicators listen, the more the customer feels like they’re worth listening to—and that’s a step in the right direction.
  • Be compassionate. After listening, convey an eagerness to help. Compassion acknowledges the customer’s feelings—and puts agents and customers on the same side, with a mutual goal to alleviate the problem. Putting the customer’s emotional needs front and center help build genuine feelings of trust.
  • Ask pertinent questions. Gather the facts with pointed questions. Relevant questions demonstrate understanding, and shows that Communicators are actively working toward a resolution. In doing so, Communicators becomes trusted advisers, working hand-in-hand with the customer.
  • Suggest alternatives. If a customer suggests a course of action that’s outside the agent’s scope of authority, or one that’s simply not possible to pursue, suggest an alternative that might be acceptable. Past, similar situations can serve as a playbook for future experiences.
  • Don’t hang up without a resolution. Even if the problem requires a follow-up call or other action to be taken, customers should never exit the conversation without clear knowledge of next steps, or a resolution of some kind.

Intent counts more than technique! If your agents honestly want to help customers solve problems, that attitude affects his or her interactions, and will eventually lead to the satisfactory resolution of issues. Resolutions, in turn, give customers a feeling of success—my phone call worked!

If that happens, your Communicators have done their job superbly.

Steve Brubaker began his career at InfoCision in 1985. In his current role as Chief of Staff and as a member of the Executive Team, he is responsible for HR, internal and external communications, and manages the company’s legal and compliance departments. Brubaker is a member of a number of professional organizations, including the DMA, SOCAP, and PACE. He also donates his time to serve on several university boards, including the Executive Advisory Board for The Taylor Institute for Direct Marketing at The University of Akron and The University of Akron Foundation Board. He is a frequent speaker for national events and has also been honored with a number of awards and recognitions for his contributions to the call center industry.

How to Stand Out In a Fiercely Competitive Marketplace

Today, it’s hard for brands to stand out from their competitors, as every business leader is trying to outdo their rivals with better marketing, more competitive pricing, and improved product suits. It seems as though everyday there’s a new business entering your respective market and vying for your customer base.

When it comes down to it, however, the most successful brands have loyal customers due to their high level of customer care. Not because of their over-the-top marketing campaigns, extremely low prices, and robust product suite.

After all, customer care has a direct impact on the lifetime value of a customer. According to a survey by Dimensional Research and Zendesk, 39 percent of customers continue to avoid vendors more than two years after a bad experience.

The survey also found that 52 percent of respondents indicated that a good customer service experience led them to purchase more from the company, while 55 percent said they switched to a different company for that product or service after having a bad customer care experience.

Providing great customer care doesn’t just increase loyalty and boost reoccurring revenue, but it also save costs. For example, businesses don’t have to spend tons of money on flashy marketing campaigns or hire an entire army of sales representatives to cold call hundreds of customers.

All it takes to trump the competition is providing superior customer care that makes customers want to come back for more. With great customer care being such a competitive differentiator, however, it’s important that you ensure that your strategy is sound.

Before you enter the new year, take a long, hard look at your current customer care strategy. Do you have clear and concise policies in place? Do your agents have everything they need to properly service customers?

Steve Brubaker began his career at InfoCision in 1985. In his current role as Chief of Staff and as a member of the Executive Team, he is responsible for HR, internal and external communications, and manages the company’s legal and compliance departments. Brubaker is a member of a number of professional organizations, including the DMA, SOCAP, and PACE. He also donates his time to serve on several university boards, including the Executive Advisory Board for The Taylor Institute for Direct Marketing at The University of Akron and The University of Akron Foundation Board. He is a frequent speaker for national events and has also been honored with a number of awards and recognitions for his contributions to the call center industry.

Three Customer Care Resolutions You Can Actually Keep

It’s that time of year again. New Year’s is just days away and people all over the world will be making lofty resolutions for the coming year.

For example, come January, the gyms will be crowded with people who’ve committed to getting fit in the New Year. By February, however, many of those same individuals will be burnt out by trying to achieve too much too soon.

The same New Year’s resolution burn-out can happen to contact center leaders and Communicators as well, as trying to produce quantifiable results in a short period of time isn’t realistic and often leads to frustration.

To help you avoid falling short on yet another resolution, we’ve come up with three important contact center resolutions to work toward achieving all year long.

  • Professional development: Whether you’re a contact center leader or a new Communicator, there’s always room for professional development. Work with your superiors to identify opportunities for you to sharpen your skills or gain new ones. For example, perhaps there’s a seminar for you to attend. If you want to start out small, commit to doing one or two things that will help you progress; for instance, reading three industry-related articles a day or signing up for a podcast.
  • Research and implement new technology: Perhaps you’ve heard of a technology that you think will benefit your Communicators. This year, commit to researching that technology by talking to other industry professionals, attending trade shows and reading reviews. After you’ve done that, draft up a proposal that you will present to your superiors.
  • Focus on customer retention: As we’ve discussed in previous blogs, customer retention is extraordinarily important, as the majority of your revenue will come from existing customers. This year, lend more attention to retaining loyal customers. For example, implement that loyalty program that you’ve been thinking about the past year.

Remember, slow and steady wins the race. It’s better to slowly attain your goals, than crumble under the pressure of trying to achieve too much too soon. I wish you the best of luck in achieving your goals in 2016!

Steve Brubaker began his career at InfoCision in 1985. In his current role as Chief of Staff and as a member of the Executive Team, he is responsible for HR, internal and external communications, and manages the company’s legal and compliance departments. Brubaker is a member of a number of professional organizations, including the DMA, SOCAP, and PACE. He also donates his time to serve on several university boards, including the Executive Advisory Board for The Taylor Institute for Direct Marketing at The University of Akron and The University of Akron Foundation Board. He is a frequent speaker for national events and has also been honored with a number of awards and recognitions for his contributions to the call center industry.

Make New Friends and Keep The Old: A Lesson In Customer Retention

You might be familiar with the saying, “Make new friends and keep the old, one is silver the other is gold.” Well, the same is true in the customer care space.

While it’s certainly important for companies to acquire new clients, it’s just as important—if not more—to focus on retaining existing ones. After all, research suggests that it costs more to gain new customers than it does to retain existing ones, which is a subject that I lent a great deal of attention to in my recently published book.

Also, research from Econsultancy’s Cross-Channel Marketing Report revealed that 70 percent of companies say it’s cheaper to retain a customer than acquire one. Not only do existing customers costs less, but they’re also more likely to recommend your business to family and friends and spend more money with you in the future.

In fact, Bain & Company found that repeat customers spend more and generate larger transactions. Indeed, an average repeat customer spent 67 percent more in months 31-36 of his or her shopping relationship than in months zero to six.

What’s more, the study also found that on average repeat customers referred three people each to an online retailer’s site after their first purchase there. After ten purchases, that same shopper had referred seven people to the site.

As you can see, customer retention has a big impact on your contact center services ROI and you’re company’s overall bottom line. Therefore, make sure that you put a concerted effort toward keeping your existing customers happy and wanting to come back for more.

For instance, reward them for maintaining their relationship with your business by offering them a yearly discount or enrolling them in a customer loyalty program. And, always make an effort to be consistent and reliable when interacting with your most devoted customers, they deserve some special treatment!

While making a good first impression will prompt a customer to come back a second time, delivering consistently good customer care will cause them to return, and thereby foster a positive, long-lasting relationship with your brand.

Steve Brubaker began his career at InfoCision in 1985. In his current role as Chief of Staff and as a member of the Executive Team, he is responsible for HR, internal and external communications, and manages the company’s legal and compliance departments. Brubaker is a member of a number of professional organizations, including the DMA, SOCAP, and PACE. He also donates his time to serve on several university boards, including the Executive Advisory Board for The Taylor Institute for Direct Marketing at The University of Akron and The University of Akron Foundation Board. He is a frequent speaker for national events and has also been honored with a number of awards and recognitions for his contributions to the call center industry.

Defining and Delivering Next-Level Customer Care™: My Personal Journey

Sometimes I simply cannot believe that 30 wonderful years have already passed since my first day at InfoCision. Since 1985 I’ve been right here, honing my skills, satisfying my hunger to learn more and working with industry experts who, along the way, have successfully helped me define and deliver what I call “Next Level Customer Care™.”

One of my dearest industry mentors and comrades, Nadji Tehrani, founder of Technology Marketing Corporation (TMC), has been by my side throughout much of my journey. Together we collaborated and challenged one another to become more strategic in our dedication to deliver the highest quality of Customer Care™.

The result of our years of communication and brainstorming sessions led us to co-author our new book, titled “Taking Your Customer Care™ to the Next Level,” which I am deeply proud to present to my peers in the world of Customer Care™. View a clip of my excitement when the new books arrived by clicking here.

Taking Your Customer Care to the Next Level

“Taking Your Customer Care™ to the Next Level” is a compilation of industry insights and strategies, as well as memories of our own personal experiences. You can hear about my personal favorite Customer Care™ experience during my interview with TMC CEO Rich Tehrani by clicking here.

But despite the memorable Customer Care™ experiences I’ve had, the original idea for this book arose during a conversation Nadji and I had about the shocking prevalence of subpar service efforts displayed by many of today’s businesses, both large and small.

Each chapter, therefore, aims to instruct companies on how to improve their Customer Care™ strategies to retain more loyal customers, increase ROI and stimulate positive outcomes inside and outside of the workplace. We crafted this book because, despite all of the emerging technology at our fingertips—like customer relationship management (CRM)—and industry trends such as “customer experience,” many companies, to their detriment, just aren’t delivering top-quality Customer Care™.

If there is one objective I want readers to take away from “Taking Your Customer Care™ to the Next Level,” it’s that customer care means just that: caring. With every page turned, readers will gain an understanding of the importance of demonstrating empathy and understanding during each and every customer interaction, whether they are over the phone or by way of a digital or social channel.

Throughout our Customer Care™ journey, we’ve created a winning formula that we are pleased to share with our audience. As you’ll come to discover while perusing the book, it includes hiring the right employees, providing high-quality professional development, and putting more focus on retaining loyal customers than continually shelling out dollars trying to keep acquiring new ones.

In fact, I was recently interviewed by Customer magazine and got the chance to explain my point of view on the matter:

A company may do well financially in the short term without excellent customer service; however, when you consider the impact loyal customers and repeat business have on corporate financial success, those who make investments in Next Level Customer Care™ will benefit from greater ROI in the long term.

Each and every piece of advice I contributed in my chapters ties back to the lessons I’ve learned and the experiences I’ve had throughout my career at InfoCision. And I have to say, the incredibly talented individuals who I work alongside and the amazing clients we work with have impacted my life immensely. I wouldn’t have been able to compile this book without the people I’ve met or the moments I’ve had throughout my journey.

If you’d like to learn a bit more about the background and the creation of “Taking Your Customer Care™ to the Next Level,” please read my Q&A in this month’s edition of Customer magazine.

Steve Brubaker began his career at InfoCision in 1985. In his current role as Chief of Staff and as a member of the Executive Team, he is responsible for HR, internal and external communications, and manages the company’s legal and compliance departments. Brubaker is a member of a number of professional organizations, including the DMA, SOCAP, and PACE. He also donates his time to serve on several university boards, including the Executive Advisory Board for The Taylor Institute for Direct Marketing at The University of Akron and The University of Akron Foundation Board. He is a frequent speaker for national events and has also been honored with a number of awards and recognitions for his contributions to the call center industry.

Why Customer Care Is Worth More Than Advertising

Well-executed advertising campaigns can be important in attracting new customers, but at the end of the day excellent customer care is the most vital ingredient for successfully conducting business.

Having a company with a strong advertising arm but poor customer care is like driving a $50,000 car with a $100 engine; it may look good from the outside, but once on the road your disappointment will be acute. It doesn’t matter how many customers your fancy ad campaign attracts if your customers become frustrated by poor customer care when they try to resolve product or service issues.

Effective print, online, and television ad campaigns, while helpful to brand awareness, can also be extremely costly. Not all businesses have the budgets to launch them; a less expensive, but just as valuable way to gain market share, can be achieved from simply improving your contact center services—for example, online chat and email communications. Training representatives is fairly low-cost, and the benefit is worth more than gold in the fact that you will be actively retaining customers by keeping them satisfied.

Improving your contact center services also has the potential benefit of attracting new customers, just as a costly ad campaign would. Having a good reputation for customer care generates a strong word-of-mouth presence, drawing prospective patrons toward you. Conversely, garnering a reputation as a company that fails to provide proper assistance to its customers can warn prospects away from your brand. If customers feel that they are being dealt with in an empathetic, attentive and intelligent manner, they are much more likely to stay where they are.

The bottom line is this: Spending money on improving and expanding contact center services will result in improved ROI for business, increasing customer retention and bolstering organizational reputability.

Steve Brubaker began his career at InfoCision in 1985. In his current role as Chief of Staff and as a member of the Executive Team, he is responsible for HR, internal and external communications, and manages the company’s legal and compliance departments. Brubaker is a member of a number of professional organizations, including the DMA and PACE. He also donates his time to serve on several university boards, including the Executive Advisory Board for The Taylor Institute for Direct Marketing at The University of Akron and The University of Akron Foundation Board. He has also been honored with a number of awards and recognitions for his contributions to the call center industry, including the ATA’s highest honor, the prestigious Fulcrum Award.

Multichannel Marketing Services Are a Brand Reputation Booster

We’re living in the age of the self-empowered consumer, a customer that has endless resources at his or her fingertips thanks to the ubiquity of digital channels and personal devices. Due to this technologically enhanced environment, consumers’ customer care expectations have reached new heights.

Now your potential buyers, as well as your existing customers, want more ways to connect with your brand, specifically through multichannel marketing services such as traditional telecommunications, email marketing, texting and Web chat. In fact, a recent study revealed that 64 percent of consumers are likely to have a better perception of a company if it offers text messaging as a service. What’s more, 41 percent of consumers feel that a company understands that their time is important if it offers multiple channels in its customer care services.

Whether your customer care strategy currently includes multiple channels or not, the message from these compelling statistics is clear: Consumers trust brands that make it a priority to connect with them. For instance, your customers will feel more appreciated if you offer them multiple different ways to connect with you in addition to the telephone. Your customers will feel that you understand their needs and their busy schedules when you offer them accommodating services that are convenient and simple to use. Plus, as an added perk for your efforts, you’ll be the recipient of good karma in the form of positive online reviews and customer retention.

Perhaps your largest target market consists of business people between the ages of 25 and 35. This means they’re not only millennials but most likely too busy with their work schedule to call a customer care hotline when they have questions or concerns. As such, this type of consumer would find it most convenient to text, email or even communicate via live Web chat. This population is also likely to share customer care experiences on social media, so make sure your brand gets positive reviews by always providing accommodating options.

Your contact center services needs diversity to keep pace with the digital consumer, so don’t fall behind; learn everything you need to know about multichannel marketing services here!

Steve Brubaker began his career at InfoCision in 1985. In his current role as Chief of Staff and as a member of the Executive Team, he is responsible for HR, internal and external communications, and manages the company’s legal and compliance departments. Brubaker is a member of a number of professional organizations, including the DMA and PACE. He also donates his time to serve on several university boards, including the Executive Advisory Board for The Taylor Institute for Direct Marketing at The University of Akron and The University of Akron Foundation Board. He has also been honored with a number of awards and recognitions for his contributions to the call center industry, including the ATA’s highest honor, the prestigious Fulcrum Award.

Three Crucial Takeaways from the Target Data Breach

Who can forget the now infamous Target hacking? During the 2013 holiday season, the company suffered a massive data breach where hackers stole the credit card and personal information of perhaps as many as 110 million customers. The network security breakdown is still being scrutinized and, for now, it remains unclear what steps the company might have taken to prevent the breach. What is not disputed, however, are Target’s major failings in the quality of its customer service.

Target’s follies, however, cast a spotlight on broader business lessons that can be learned, serving as a reminder of the extreme importance of excelling when it comes to customer service:

Takeaway #1: Prepare for the worst case scenario

Taking a proactive approach to service doesn’t mean that you expect something catastrophic will happen—it just means you are prepared if it ever does. Most customer service issues won’t produce the number of queries that Target’s breach did; however, businesses should adopt scalable solutions for one-off scenarios that call for extra capacity. Customers simply don’t want to hear that a situation was isolated and will never happen again; they care about resolving their problems quickly and courteously and you should, too.

Takeaway #2: Renew focus on agent training and quality of customer interactions

According to Forrester, only 31 percent of organizations closely monitor the quality of interactions with customers. In the meantime, anything could be happening; agent slip-ups, multiple transfers and best practices could be falling through the cracks. Paying close attention to client communications—and coaching agents to help them improve—is vital to keeping your head above water when the pressure is on. In Target’s case, many customers complained about what they perceived as a lack of empathy from agents. The fact is, without a solid foundation in empathy training, your representatives are not going to best prepared in a high-stress situation. A positive and respectful attitude must be cultivated during training and continually developed over time. Once this best practice is created it must also be maintained.

Takeaway #3: View every customer service challenge as an opportunity for service recovery

A data breach or any other customer-centric problem is an undesirable position for any company, but it can also be viewed as an opportunity for excellent service recovery. These potential crises can be stressful but they also give your company a chance to show customers how important their business is to you. Service recovery is more than a simple apology—it’s about going the extra mile to rectify the situation. In some cases, this may require checking back in with customers several times to ensure that they are still satisfied with the resolution. As the great American businesswoman Mary Kay Ash once said, “Every failure, obstacle or hardship is an opportunity in disguise.”

Unfortunately, no business is immune to mishaps. How those problems are handled, however, is critical to preserving customer relationships and bolstering brand image. According to a recent consumer survey from Zendesk, 87 percent of customers believe brands need to work harder to create a seamless consumer experience, meaning there is a lot of room for improvement out there. So rather than allowing Target’s situation to strike fear in your workforce, take the opportunity to learn from it and make sure you are prepared for whatever comes your way.