Customer lifetime value (CLTV) is one of the leading indicators of the strength of your overall Customer Success program.
CLTV represents the total revenue a company can expect from a customer account throughout their business relationship. Since plan upgrades, cross-sells, customer satisfaction, account health scores, and other factors contribute to your CLTV, this metric is an amalgamation of all your CS efforts into one highly important revenue marker.
Improving your CLTV can allow your business to:
- Focus resources on high-value customers, such as your ICP and VIPs.
- Guide strategic decisions like pricing, marketing, and product development.
- Retain customers for long-term growth.
- Tailor experiences to high-value segments.
- Accurately predict future revenue and optimize growth.
- Improve profitability through customer loyalty.
Given the broad scope of CLTV, there aren’t any “silver bullets” for improving it overnight, but there are tried and true methods for making progress on your CLTV quarter after quarter. We’ll break down each of the methods in this guide.
1. Win With Personalized Onboarding & Customer Check-Ins
Personalized onboarding accelerates the customer’s journey from initial adoption to realizing value from the product, and regular check-ins keep the lines of communication open, providing opportunities to address any concerns, offer help, and keep customers informed about new features or updates.
This two-fold approach may sound like a no-brainer, but a reported 89% of customers experience friction at some point in their onboarding or communication journey with a brand.
- Onboarding Establishes Trust Early On: A well-executed, personalized onboarding sets the tone for the customer relationship. It establishes trust and shows the customer that the company is committed to their success.
- Check-Ins Allow Customers to Keep Realizing Value: By regularly checking in and ensuring that customers are getting value from the product, companies can identify and address issues before they lead to dissatisfaction and potential churn risk. Check-ins also hold both your team and your customers accountable for achieving goals.
“The first 30-90 days of a customer’s experience fully dictates the lifecycle of their account,” says Liam Feldstein, Customer Success expert. “Stumbles and hiccups happen, but it’s how you solve those issues and maintain progress that determines whether a customer will stick around for another year, let alone add more to their existing account.”
How to Improve Your Onboarding & Check-In Process
- Keep Scalability in Mind: While personalization is key, it’s also essential to balance it with scalability. Automations within your Customer Success software and the use of templates and Blueprints can help you deliver personalized experiences at scale. This maximizes your customers’ time-to-value (TTV) while providing your CSMs playbooks to address any question with confidence.
- Enhance Your Training and Resources: Provide comprehensive training and resources as part of the onboarding process. This can include tutorials, documentation, webinars, and unmatched white glove support.
- Build In Feedback Mechanisms: Implement easy-to-use feedback mechanisms during and after onboarding, and during regular check-ins. This can help in refining your approach and identifying blockades that customers run into.
- Establish Metrics and KPIs: Establish clear metrics to measure the success of onboarding and regular engagement initiatives. These could include time to first value, product usage metrics, customer satisfaction scores, and renewal rates.
You never want your customers to feel like they’re in it alone. By delivering high-quality onboarding experiences and touch bases, your customers can feel at ease — even if their product experience doesn’t go as planned. This two-fold approach can be your key to unlocking greater CLTV.
2. Improve Your Product Utility Through Cross-Selling
Cross-selling allows customers to discover additional tools, services, or use cases that enhance the utility of their primary purchase. For instance, an accounting software company might cross-sell a payroll management add-on. This not only adds value for the customer but also integrates more deeply into their business processes.
Will’s example explains the process of cross-selling after he bought a new smartphone, and how the items suggested were perfect complements that added value to his purchase.
Here’s how that lesson can be adapted by B2B SaaS providers:
How to Implement Cross-Selling Effectively
- Understand Your Customer Needs: Effective cross-selling starts with a deep understanding of the customer’s needs and pain points. This ensures that the additional products they’re offered are genuinely useful and relevant, instead of obvious promotional pushes. For example, during onboarding, your new customer mentions they’re not currently using a payroll management solution. This becomes the perfect opportunity to mention your complimentary add-on to their original purchase.
- Take Note of Integration Capabilities: Cross-sold products should integrate seamlessly with the primary product to provide the best user experience. Bonus points if the cross-sell integrates nicely with other products in their tech stack.
- Keep Educating Your Customers: Sometimes, your customers may not even be aware of the full range of products available or how they could benefit their business. Educating customers through webinars, guided tutorials, and case studies can be an effective way to introduce them to additional offerings.
- Test Your Timing and Personalization: The timing of the cross-sell offer is crucial. It should be done when the customer has realized value from the existing product and has a clear understanding of their additional needs. Personalized offers based on customer usage patterns and preferences can increase the success rate of cross-selling.
- Refine Your Feedback Loop: Incorporate customer feedback to continuously refine and improve the cross-selling strategy. Understanding why customers accept or decline cross-sell offers provides valuable insights for future initiatives.
Offering solutions that address multiple business needs can position your SaaS as a more integral partner, which can deepen and lengthen relationships with customers. This directly impacts CLTV, as customers will spend more over their lifecycle.
3. Identify Churn Risk Patterns Proactively
With an abundance of SaaS alternatives, it may only take a few poor interactions and experiences with your product for a customer to consider churning. Getting ahead of churn risk is one of the fundamentals of improving your CLTV.
How to Reduce Your Churn Risks
Spot The Churn Risk Behaviors Early
- Decreased Usage: A sudden or gradual decline in product usage is a strong indicator of dissatisfaction or reduced need.
- Negative Feedback: Frequent complaints or negative feedback on surveys and support interactions can signal underlying issues that could lead to churn.
- Reduced Engagement: Lower engagement levels in emails, webinars, and training sessions might indicate a loss of interest.
- Payment Issues: Frequent delays or issues with payments might be a sign of reconsideration of the product’s value.
- Changes in Customer Behavior: Significant changes, such as reduced logins or interaction with the product, can indicate a loss of interest or a shift in priorities.
- Non-renewal Signals: Indications that the customer is not planning to renew, such as inquiries about contract terms or mentions of competitor products.
Take Proactive Actions
- Personalized Communication: Reach out to at-risk customers with personalized messages addressing their specific concerns and offering help. This can be through additional training and hands-on support to help customers fully utilize the product and understand its value. Segment customers based on their behavior and risk level to tailor your retention efforts effectively.
- Success Planning: Work with the customer to create a success plan that clearly outlines how they can achieve their goals using your product. Goals and objectives should be laid out crystal clearly during the onboarding phase, and logged in your CSP.
- Regular Health Checks: Conduct regular health checks or reviews of customer accounts to assess satisfaction and address any issues early on before they become churn-worthy. Be sure to set up alerts in your CSP for when certain thresholds are crossed.
- Employee Training: Train your CSMs to recognize and address signs of customer dissatisfaction. Human intuition cannot be understated when it comes to providing proper Customer Success.
The Importance of Showing ROI Again and Again
An important aspect of customer churn not many folks talk about is the loss of a stakeholder or champion within your customer’s company. This is often the point person your CSMs touch base with on how they’re experiencing your product.
“The most common precursor to churn — across all SaaS — is the loss of a key stakeholder (admin, sponsor, champion, etc),” says Jay Nathan, former Chief Customer Officer at Higher Logic and current Head of Growth at Churnkey. “But the root cause is a lack of value and ROI, and all it took was someone with a fresh pair of eyes for the new sponsor to see it.”
Piggybacking off Jay’s insight, even if a customer loves your product and is finding success using it, if they end up leaving the company, the new stakeholder can be one poor experience away from churning. To mitigate this, you’ll want:
- Continuous Innovation: Ensure your product adapts to evolving user needs and market trends. Keep the value proposition fresh and relevant, and make sure the new stakeholder sees this.
- Frictionless Onboarding: Introduce your setup process to the new stakeholder, just as you would a brand new customer. This allows for quick adoption and early value realization. Show them the “aha!” moment early on.
- Outcome-Focused Engagement: Shift the focus from features to outcomes. Track and measure how your product impacts key user goals, providing tangible evidence of ROI, and proactively show this to your new stakeholder.
According to Carta, the average tenure for someone at a B2B startup is about two years, which isn’t long! You can’t predict when your product champion will leave, but if you have a playbook built to prepare for their departure, you’ll be best fit to onboard and find success with the next stakeholder in line.
4. Build (and Strengthen) Community Around Your Product
Building community around your product and brand is an increasingly popular strategy in B2B. Community gives your customers a platform to share experiences and learn from each other. People who engage and contribute to your community — most commonly on social media, but also through mediums like articles, podcasts, and webinars — keeps your product top-of-mind and reinforces its value to their networks.
Customers who are active community members are more likely to see value in the product and stay longer, having a direct impact on your CLTV.
How to Build a More Impactful Brand Community
- Form a Customer Advisory Board: Forming a group of key customers to provide regular feedback on the product roadmap and strategy can strengthen customer relationships and provide valuable insights.
- Host Virtual and In-Person Events: Organizing local meetups can humanize a customer’s experience with your brand. They get to see the actual people behind the product they enjoy using. Pair this with exclusive webinars on how to master your product, and virtual sessions offering thoughts and opinions about industry trends and forecasts, and you’ve created a well-rounded event experience.
- Offer Content Creation Opportunities: Invite customers to contribute an op-ed to your blog. Host them on your next podcast or YouTube series. Ask them to create custom playbooks or automations using your product, and feature these assets on your website so other customers can benefit from them. Create an Expert Directory so others can find your contributors’ content, follow, and learn from them. Put your customers and their expertise first! After all, they’re the glue that holds your community together.
Leveraging Influencers for Community Engagement
In a recent CMO survey, 75% mentioned they’re actively employing influencer marketing in B2B industries, with 93% saying they have plans to scale their influencer programs in the near future.
Notable personalities in your B2B sector will have extensive networks of followers and prospects. When they’re featured in your content, share your content, or endorse your product, it’s not just their immediate audience that sees it. Their followers further share and discuss this content, say on LinkedIn, leading to a ripple effect that amplifies the message far beyond the initial post.
Given the importance of brand reputation in B2B, when respected industry influencers advocate for a product, their endorsement serves as a powerful form of social proof. As more people within the network recognize and discuss the brand, its credibility grows, making it more appealing to potential customers.
Let Your CSP Do the Heavy Lifting
Customer Success Platforms are essential for taking the load off your CS personnel and empowering them to do their best work.
- CSPs streamline personalized onboarding and regular check-ins, ensuring each customer feels valued from the outset.
- They enable scalable customization, allowing businesses to maintain a personal touch as they grow.
- CSPs offer invaluable insights and automated recommendations for effective cross-selling, and their proactive churn identification features allow businesses to address potential issues promptly.
- They also demonstrate continuous ROI through robust reporting tools, reinforcing the value of your product to stakeholders.
In essence, a top-rated CSP like Vitally, empowers your organization to effectively implement and manage a multitude of strategies aimed at improving your CLTV.