Customer Lifetime Value

How to Optimize Customer Lifetime Value using a CRM

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Customer Lifetime Value (CLV) measures the net value a customer brings to a business throughout their relationship. A high CLV indicates that a customer is profitable for a business.

Customer lifetime value (CLV) is the total money a customer spends with a business. Optimizing CLV involves:

  • Increasing the revenue generated from each customer by encouraging them to make repeat purchases.
  • Upselling or cross-selling additional products or services.
  • Increasing customer loyalty and advocacy.

So how to increase customer lifetime value? Some strategies for optimizing CLV include:

Personalization: Tailor the customer experience to each customer’s preferences and needs. Personalization can increase their emotional connection to the brand and encourage repeat purchases.

Loyalty programs: Offer rewards, discounts, or other incentives to customers who make repeat purchases or refer new business. This increases loyalty and encourage customers to deposit more.

Upselling and cross-selling: Offer complementary or higher-value products or services to customers. This can increase the average trading revenue generated from each customer.

Communication and engagement: Stay in touch with customers through multiple channels and engaging them with relevant and helpful content. This helps to increase engagement and encourage repeat purchases and also builds a good rapport with your traders.

Customer feedback: Soliciting and responding to customer feedback can help identify opportunities to improve the customer experience and increase loyalty.

Retargeting and remarketing: Target customers with personalized advertising and promotions based on their trading history. This can encourage them to make further deposits and increase their overall CLV.

Optimizing customer retention and lifetime value can be achieved by using a Customer Relationship Management (CRM) system. This is one of the most effective methods.

How to optimize customer lifetime value with a CRM

Segment Customers

One of the first things you should do is segment your customers based on their behavior and demographics. This segmentation helps you understand your customers better and target them more effectively.

Optimizing Customer Lifetime Value

For example, suppose you have a segment of high-value customers who trade frequently. In this situation, you can offer special discounts, promotions, and loyalty programs. This will stimulate repeat deposits and create a strong customer loyalty.

Customer segmentation divides a company’s customers into distinct groups based on their shared characteristics and behaviors. These groups lead to more targeted marketing strategies, personalized product recommendations, and customized customer experiences.

Depending on the business’s specific goals, there are many different ways to segment customers. However, some standard segmentation methods include:

Customers can be broken down into groups based on demographic, geographic, psychographic and behavioral characteristics.

  • Demographic segmentation covers factors like age, gender, income, and education.
  • Geographic segmentation classifies customers by location, such as city, state, or nation.
  • Psychographic segmentation looks at customers’ personalities, values, hobbies, and lifestyles.
  • Behavioral segmentation divides customers based on their buying habits, such as purchase frequency, average order value, and product preferences.

Businesses can improve customer satisfaction and loyalty by understanding the needs and preferences of different customer segments. They can then tailor their marketing efforts and customer experiences to meet the needs of each group.

Personalize Communication

Personalization is an effective way to build strong customer relationships and drive loyalty. A CRM can help you personalize your communication by tracking customer interactions, such as purchases, inquiries, and feedback.

This information allows you to tailor your communication and marketing efforts based on the individual customer’s interests and preferences.

Personalized communication refers to tailoring your message to existing customers based on their unique preferences, behaviors, and characteristics. Collecting and analyzing customer data helps us understand their needs and interests.

This data can then be used to create targeted and relevant communications.

Some examples of personalized communication include:

Personalized emails: Send personalized emails that address customers by name and offer customized recommendations.

Personalized product recommendations: Offering personalized product recommendations based on a customer’s trading history or pattern of deposits, for example.

Offer personalized promotions and discounts based on customers’ past purchase behavior. Also, consider the likelihood of customers taking up new offers or products.

Creating content that is tailored to a customer’s interests and preferences can be effective. Examples include blog posts, social media updates, and videos.

Personalized communication can help businesses improve customer engagement, loyalty, and satisfaction by showing customers they are valued and understood. As a result, businesses can increase conversion rates and drive more sales by delivering more targeted and relevant messages.

Provide Excellent Customer Service

Providing excellent customer service is essential to optimizing CLV. A CRM system can help you manage customer inquiries and complaints, ensuring all customer interactions are handled promptly and professionally. This approach helps build trust and fosters positive customer relationships, which, in turn, drives loyalty and encourages repeat purchases.

Customer service refers to the support and assistance a business provides its customers before, during, and after a purchase. It includes everything from answering questions and addressing concerns to resolving complaints and providing ongoing support.

Good customer service builds strong customer relationships and drives customer loyalty. Some critical elements of effective customer service include:

Responsiveness: Respond to customer inquiries, complaints, and feedback promptly and professionally.

Empathy: Understanding and empathizing with the customer’s needs, concerns, and emotions.

Clarity: Communicating clearly and concisely to ensure the customer understands the information provided.

Professionalism: Conducting oneself professionally and courteously at all times.

Accountability: Taking ownership of customer issues and following through on commitments to resolve them.

Flexibility: Being flexible and adaptable to meet your customer’s unique needs and preferences.

Businesses can improve customer service in several ways. Investing in staff training is one way to do this. Additionally, effective communication and escalation protocols should be implemented. Lastly, chatbots and CRM software can be leveraged.

Additionally, soliciting and responding to customer feedback can help businesses identify areas for improvement and prioritize their efforts accordingly.

Track Customer Engagement

Tracking customer engagement is essential to understanding how customers interact with your business. A CRM system can help you track customer engagement. It does this by monitoring website activity, social media interactions, email opens, and click-through rates.

This information lets you identify areas where you can improve engagement and drive conversions, ultimately leading to higher CLV.

Customer engagement refers to building and maintaining a relationship between a business and its customers. It involves interacting with customers to create a positive emotional connection and foster ongoing loyalty and advocacy.

Effective customer engagement is essential for businesses because it can help improve customer satisfaction, increase retention, and drive revenue growth. Some key strategies for customer engagement include:

Personalization: Tailoring the customer experience to each customer’s preferences and needs, such as offering personalized recommendations or customized product offerings.

Communication: Maintaining open and consistent communication with customers through multiple channels, such as email, social media, and live chat.

Community building: Creating a sense of community among customers by encouraging them to connect and share their experiences with the brand.

Offer rewards and incentives to customers to encourage engagement with the brand. Examples include loyalty programs and referral bonuses. This will help to promote repeat purchases.

Customer feedback: Soliciting and responding to customer feedback to show customers that their opinions are valued and identify improvement areas.

Omnichannel experience: Providing a seamless and consistent experience across all channels, including online, in-store, and mobile.

Businesses can improve customer experience by emphasizing customer engagement. This builds stronger relationships and leads to long-term growth and success.

Monitor Customer Churn

Customer churn is the rate at which customers stop doing business with your company. Therefore, reducing customer churn is essential to optimizing CLV.

A CRM system can assist you in monitoring customer churn. It does this by tracking customer behavior and identifying any trends that may suggest the customer is likely to leave.

This information enables you to intervene proactively to retain customers and prevent churn, ultimately leading to higher CLV.

Customer churn is the rate at which customers stop doing business with a company over time. Poor customer service, lack of engagement, and a lack of personalization can all cause customer churn. Additionally, if customers have better alternatives from competitors, they may decide to switch.

Reducing churn is vital for businesses because acquiring new customers is typically more expensive than retaining existing ones. Some strategies for reducing customer churn include:

Improving customer service: Providing fast, friendly, and effective customer service can help ensure customers have a positive experience with the brand.

Personalization: Offering personalized experiences and recommendations can help build a stronger emotional connection with customers and increase loyalty.

Offering rewards or incentives to customers can help encourage loyalty and reduce churn. This can include rewards for repeat purchases or referrals of new business.

Communication: Maintaining open and consistent communication with customers can help build trust and ensure they feel valued and heard.

Proactive engagement: Addressing customer needs before they become problematic can help prevent churn and build stronger relationships.

Feedback and analysis: Collecting and analyzing customer feedback can help identify the underlying causes of churn and inform strategies for reducing it in the future.

Businesses can enhance their success by focusing on strategies to reduce churn. This will help to improve retention rates, decrease customer acquisition costs, and drive long-term growth and higher profits.

Retention is cheaper than acquisition.

Marketing costs in the financial services markets, mainly the forex markets, have soared over the last few years.

More competition, changes to trading conditions, and new regulations have contributed to this increase in client acquisition costs.

Many brokers were able to offset these rising costs with affiliate programs. However, affiliates’ CPA rates have also drastically increased, with some Geos commanding CPA rates over $1,500 for a $250 FTD!

Retention is always cheaper than acquisition, and this holds especially true for the forex and trading verticals. Some of the standout numbers include the following:

  1. Acquiring new customers costs as much as five times more than retaining an existing customer.
  2. Increase your customer retention by 5%, and you could see a 20-90% profit increase.
  3. Your success rate of selling to an existing customer is 55-65%. Your success rate of selling to a new customer is 5-20%.

As a broker, your business relies heavily on your retention numbers. Your choice of CRM solution will determine your retention.

While several excellent CRM software solutions are available to you as a forex broker, not all CRMs are created equal.

A forex broker has a particular set of requirements for their CRM. Granted, you could take an off-the-shelf CRM solution and try to get it to work the way your retention and sales teams need.

Investing your time and resources in a CRM solution specifically designed for forex brokers is a better option. This type of solution will be tailored to the needs of your business.

That’s where the PLUGIT CRM comes into play. Our CRM is custom-built to meet the needs of brokers. It connects directly with your trading platforms. Plus it has all the advanced features necessary for your sales and retention teams to maximize customer lifetime value.

Our intelligent solutions already power over one hundred leading global forex brokers. We’re constantly adding to our feature list, so why not book a no-obligation demo with one of our onboarding experts? We’ll show you the benefits of our CRM solution how to maximize your customer lifetime value and revenues.

Learn more about the PLUGIT solution

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