Peter fader says, “Customer centricity is a strategy to fundamentally align a company’s products and services with the wants and needs of its most valuable customers. That strategy has a specific aim: more profits for the long term.”
Businesses often believe that customer centricity is all about delighting every customer and keeping them happy by providing the best service. This includes adhering to the notion that the customer is always right and catering to the unique needs of all customers, regardless of their value to the business. So, they will put best of their talents in catering to these customers and marketers will roll out strategies to attract new customers and keep fulfilling their needs. However, this approach can lead to wasted resources on low-value customers and missed opportunities to retain the existing customer and increase the lifetime value of high-value customers who drive the most revenue.
In this blog, we will debunk common myths about customer centricity and understand its true meaning. We’ll also explore proven tactics to increase your customer lifetime value. Read on to uncover how focusing on the right customers can drive sustainable growth for your business.
The Shift in Customer Centricity
Let’s first understand what having a customer centric approach truly means. Peter Fader’s work on customer centricity challenges the conventional wisdom of treating every customer equally. He argues that being customer-friendly does not necessarily mean being customer-centric.
Being friendly and offering good service are aspects of customer centricity, but they don’t encompass the entire concept. True customer centricity involves being friendly, providing excellent service, and developing new products and services specifically for your most valuable customers—the ones who significantly contribute to your business. This means recognizing that a subset of customers drives the majority of profits and tailoring business strategies to cater to these high-value individuals.
Some customers deserve the special treatment, and if others want to buy from you, that’s great, but they are not going to be treated the same.
The Data Behind the Strategy
Studies show that a 5% increase in customer retention correlates with at least a 25% increase in profit. This is because returning customers tend to buy more over time, and as they do, the operating costs to serve them decline and as they keep buying from you their lifetime value goes on increasing. Data from the Wharton School indicates that the top 10% of a company’s customers can account for more than 50% of its sales.
So, that’s the reason why marketers need to shift their perspectives, allocate budgets, craft strategies to retain these high value customers and increase their CLV.
And why it is so important you ask?
- That’s the segment where most of your revenue is sitting
- They are the loyal advocates of your brand
- They need to be rewarded and treated royally for their loyalty, since there are a lot of brands trying to snatch them away with best offers
- And again, retention is always profitable than acquisition
5 Tactics to increase the CLTV of your most valuable customers
Loyalty Programs: Creating strong loyalty programs that honor recurring business, valuable clients, and sustained involvement can greatly increase CLV. These initiatives may provide special discounts, first access to new goods, and other perks that incentivize ongoing loyalty
Provide One-Day Delivery: Customers are more likely to make frequent and larger purchases when they have access to fast delivery options. Offering one-day delivery to your VIP customers can significantly boost their purchasing frequency and overall CLV, as it adds convenience and enhances their shopping experience
Send post-purchase email campaigns: Implement post-purchase email campaigns to stimulate repeat buying. Incorporate next-order coupons or discounts, preferably within order confirmation emails, which enjoy a remarkable open rate of about 65%, nearly four times higher than the average email. Alternatively, utilize post-purchase emails to solicit reviews, fostering repeat purchases from satisfied customers
VIP treatment and benefits: Let your loyal customers get exclusive advantages or perks, fostering a sense of importance and value. Drop an exclusive limited time sale encouraging quick action and purchase
Host Offline meet ups for new launches: Invite your loyal customers to a new product launch party where they can get firsthand access to your products and shop your new line of products. Through this they could give you feedback and help you gain insights
Conclusion
By shifting the focus to high-value customers and leveraging proven tactics, businesses can significantly enhance Customer Lifetime Value (CLV). Peter Fader’s insights remind us that true customer centricity is about prioritizing the right customers—the ones who contribute the most to the company’s profitability. Implementing these strategies not only boosts CLV but also fosters long-term loyalty and advocacy. As businesses embrace this targeted approach, they can drive sustainable growth and build stronger, more profitable customer relationships.
If you want to implement this but are not sure where to start? and take away strategies to amplify customer value exponentially using Actionable CLV Booster Playbook, we invite you to register for our webinar featuring Peter Fader, who will delve deeper into the nuances of CLV and share his expert insights.
Don’t miss this opportunity to learn from one of the leading voices in customer-centric marketing and take your CLV strategies to the next level. Register now
