5 Essential Tips for Increasing Customer Lifetime Value


Your customers are at the heart of your business, but making sure you keep them happy isn’t always easy, especially when your business is growing quickly. You know that customers who stay longer are more likely to spend more and tell their friends, so it’s important to do everything you can to increase customer lifetime value . Here are 5 tips on how to increase customer lifetime value for SaaS companies, regardless of what stage you’re at or your business model. These tips will help you achieve one of the most important goals of any thriving SaaS company: increasing average revenue per user (ARPU).

1) Understand your customer life cycle

In order to effectively increase customer lifetime value, you need to know where your customer is in their customer journey. In a SaaS business, there are many factors that affect customer lifetime value: average revenue per user, total number of users, average number of employees using your product and customer churn rate. Knowing these figures at any given time will help you determine what action steps you should take to increase CLV.

2) Improve retention rates

In B2B SaaS companies, customer retention rates typically dip in year two. Rather than spending a ton of money to acquire new customers, focus on increasing your customer lifetime value.  Create an outstanding customer experience and implement after-sales support that resolves issues quickly and at minimal cost—and watch as your churn rate begins to shrink. You might even find that customer acquisition costs plummet because you’re going after low-hanging fruit (in other words, customers who are actually happy with their purchase).

3) Add upsells and cross-sells

When you increase your customer lifetime value, you also need to be able to maximize every dollar a customer spends with you. For instance, you can add upsells and cross-sells to increase their purchase frequency. Whether it’s an upsell on additional storage or a cross-sell on another tool they might find useful, these small (but important) touches will only serve to make your customers happier—and it won’t hurt that they will cost you nothing extra in development time!

4) Improve your onboarding process

Customers are more likely to retain and repurchase your product when they enjoy a smooth onboarding process. There are great tools that you can use to improve the onboarding process and make it consistent and scalable.

5) Get feedback

Next, get customer feedback. While you can read all of these tips and apply them at your own pace, there’s nothing quite like getting direct input from a customer about what they feel about your product. Send out surveys and get direct feedback from people in your target market or niche to see what changes you need to make.