What Is Customer Value & How Do You Increase It?

Image Credit (CC0 License)

Customer value refers to how valuable a customer is to your business. It’s all to do with the idea that certain customers are worth more than others. 

For example, a bad-value customer is one that might buy something from you once and never return. They may even send back what they ordered because it didn’t fit or they didn’t like it. Here, this customer provides little-to-no value to your business. Sure, you make a sale, but that’s it. In some cases, you end up having to refund the sale and process the return, so you could actually lose money. 

Contrasting, you have customers that provide so much value to your business. These people are constantly making repeat purchases and spending a lot of money. They’re not just returning time and time again, but they’re consistently spending more money. As such, they’re such a profitable customer as they keep your revenue ticking over. 

The goal is to make as many high-value customers as you can. How do you increase the value of a customer? Let’s take a look…

Provide targeted advertising

Targeted advertising is advertising that’s specifically targeted at each individual consumer. They scroll through Twitter or browse Google and get presented with the most relevant ads based on their likes/browsing history. As a business, you need to get your ads out there to those that are most likely to make purchases from you. 

Already, this helps you create more traffic for your business full of people already interested in what you offer. It is a lot easier to make some initial sales, but the key is to boost the value of this customer – which is why the next steps are crucial. 

Keep the customer hanging around

Give potential customers a reason to keep sticking around when they visit your website. This could be by presenting them with a pop-up that tells them you have a sale. Or, you may showcase a discount code they can use across the site. It encourages people to think, hmm maybe I won’t just buy the product I came for, I may as well have a look around while I’m here. Consequently, they might place a larger order, making them a more valuable customer. 

You can even apply this to traditional businesses depending on foot traffic. When people are in your store, you could have a TV hooked up to a business player that displays all of your latest offers. It attracts someone’s attention and makes them realize you have special discounts, so they stick around for longer or go to the sale section. Again, they could end up purchasing more than they initially thought they would. 

Sell add-ons with your purchases

Following on from the theme above, you should also look to sell add-ons with every purchase a customer makes. When someone adds something to their cart, you can present them with potential add-ons. This could be a series of products that other customers have bought when they bought that item. For example, someone has bought a new mouse for their PC – the add-ons you showcase could be a keyboard, mouse mat, batteries for the mouse, etc. You’re presenting relevant items that can improve their purchase, so they may spend more money. 

Alternatively, the add-ons could be things like insurance or warranties for products. It offers extra protection for the customer, so they might be very likely to spend the extra money. 

Encourage repeat purchases

The above tips will help you get more value from customers making an initial purchase. However, the key is to keep sending customers back through this system. To do this, you must find ways of encouraging them to return. 

Seeing as you have their contact details after a purchase has been made, you can now target them through email or text advertisements. Send unique promotions to them or discount codes, encouraging them to come back. 

Or, you could implement a loyalty program that makes people want to spend more money with you. They get points for every dollar they spend, so the more they shop, the more points they get. Points can be converted into cash to get money off future purchases. The more someone shops with you, the more beneficial their loyalty points will be. Some might even realize that they should shop with you all year to get loads of points for money off at Christmas!

Just like that, you have created lots of high-value customers that make big purchases and keep coming back for more. These are the customers you should focus most of your attention on – don’t worry about low-value ones; they’re not worth your time or effort.