The Customer Lifetime Value is the single most important metric of understanding your customers.

The customer lifetime value is the projected worth of a customer in contribution margin to your business over the length of the time they’ll remain your customer. Therefore, A high lifetime value relative to the cost of acquisition is always a good thing.

The most straightforward way to calculate CLV is to take the revenue you earn from a customer and subtract the money spent on acquiring and serving them.

So when your unit economics is unfavourably skewed, or just needs tuning up for better cash flow, one of the ways to balance out unit economics is to increase the lifetime value of your customers. Consequently, you make them worth more to you without increasing your cost of acquisition.

The most obvious way to do that is via retention. Step up your retention game. If you are able to keep your customers  longer, they are able to buy from you for a long period of time and bring you more value.

According to the Harvard Business School, an increase in customer retention by just 5 percent, can lead to an increase in profits by 25 percent to 95 percent.

Here are some things you can do to increase your customer’s lifetime value:

1. Have a subscription strategy

Selling outright to new customers is always fun, but what if you could get that customer to commit to a subscription package?

This means you’ve locked them into your service for a considerable period of time, depending on your subscription package.

A traditional fruit store sells to customers when they walk in the door. If your fruit on demand business can get a customer to subscribe to have a specific number of fruit boxes sent to them over a period of time , you would have successfully locked them into a deal that will keep them in business with you for longer than an over-the-counter customer.

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2. Make your services personal

When we get emails addressing us by name, the manner with which we approach the email immediately changes favourably.

Even if the information contained ends up being of no consequence, we find we take the time to read through. We usually don’t have the same patience for emails that start off with a generic: “Hi”.

Personalised emails makes us feel that we are not being treated like just another number in a list of subscribers.

People like to be related to as individuals.

As far as your resources allow, make your service personalised to your individual customers. Extend the personalisation to your website. Configure your website to give users a personal experience based on their previous interactions with your website.

3. Have a ‘free returns’ policy

Having to pay for a return simply doesn’t get customers excited about buying from you again.

Although this move will increase your operational cost: extra man-hours and logistics, but doing it could turn your retention all the way up.

As long as returns are not unusable or non-resellable, pucker up and let them bring them in free of charge. It is this strategy that has allowed the online print shop, Printivo earn the trust of its customers in Nigeria.

The founder, Oluyomi Ojo,“We’ve added a trust layer. If for any reason you don’t like your order, Printivo is going to print another one. We are building trust in an organic way.”

That trust layer has paid off for Printivo which has grown 100 percent from quarter to quarter since it launched in 2014.

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4. Don’t falter on delivery

A lot of retention has to do with trust. If your customers trust you, they will stay with you.

One way to cement trust is to keep within delivery window. It’s even better if you beat customers’ expectations by delivering faster than expected.

On the days you falter, always keep the communication channel open. Tell customers you are running a little late. This lets them know they are valued; developing a mutual respect between you both in the process.

5. Reward loyal customers

Remember the 80/20 Pareto principle, 80 percent of your sales will come from 20 percent of your customers: your high-value customers.

An effective way to strengthen brand affinity is to reward those loyal customers: the 20%. An obvious way to do this is via freebies. Another is to give access to exclusive services or content.

Get creative on this one. The goal is to make your customer feel they’ve been good and that they’ve been recognised to be good.

6. Upgrade your customer service

Few things rile customers and make them churn more than a shoddy customer support department. Rude customer support staff. Unreplied emails. Unattended complaints. The combination of these and makes a good recipe for losing customers.

A study by Harris Interactive found that 56 percent of people would switch to another company if the alternative offered more options to connect with them. This underlies the need to make yourself reachable. Set up multichannel points of contact and respond quickly to enquiries.

7. Build long term relationships

We’ve heard different versions of this truism, “business is not about making sales, it’s about making customers”.

To focus on sales alone is to think extremely short-term. Focus on making friends and partners out of your customers and they are sure to stay with you for longer.

Be honest about the services you are providing. Share its strengths and be clear on its limitations. Don’t just see your customer as the king, see them as a friend.

8. Cross-sell and up-sell

The goal is to make your customers spend more over the same period of patronage. Cross sell by suggesting other products on your line-up that customers can buy to compliment the product they ordered.

Up-sell by suggesting a better version of the product they wanted to buy. Better version, on the surface, means a product with more bells and whistles. It also means one that is more expensive.

This is not geared at making your customer stay longer, but for them to spend more regardless of how long they stay. Splendid innit?


But hold on tiger! The temptation often is to get sleazy with upselling and cross-selling. Don’t fall for that. Always be open to them about their options. Making irrelevant suggestions and over-promising is sure to damage your relationship with the customer.


We work with few selected clients to help them develop content marketing playbooks for their business. Book a free strategy session

Growth is the only essential thing you need to be a startup. Startups are created to grow fast. Everything else that happens within a startup is a derivative of growth.

Everything – ideation, product validation, product management, team building, fundraising – follows from growth. Without growth, early stage startup is just a small business losing money.

That is why founders are encouraged to focus on one metric – the one that matters. This is because, as a startup, your limited resources are a deterrent to wasting your time trying different things.

Depending on your type of business, growth will mean different things to different startups. And your one metric that matter changes over time. Getting rid of distractions enables you to focus your already limited resources – people, time, and money – on the one thing that moves the needle.

What is the one thing that signifies that your business is growing at a particular point in time?

In the beginning, growth for a lot of startups has more to do with user acquisition and engagement than revenue. The advantage of defining your growth metric is it tells you the most important thing about your startup and how should drive it.

You need to consider the followings when choosing your growth parameter.

1. Your business model

The way you monetize your product is an indication of the value that will be created by your business. It’s not always about the money, but revenue metrics provides a standard benchmark for growth metrics.

2. How you acquire your customers

The rate at which your products gets into the hands of users is a substantial measure of how scalable and successful your product can be. Inherent in the DNA of startups is the ability to build products that have the potential of being ubiquitous and viral within a short time frame.

That is why most startups are tech-enabled companies because technology enables innovation not just in the way products are made, but how they are distributed. You can measure your growth based on metrics such as unique web visits, page views, app downloads, partner signups, user signups, conversion rate, churn rate, etc.

3. The stage of your business

The stage of your company will determine what to focus on. Early stage business should be obsessed about metrics that validates their product-market fit more than mid or late stage companies.

In the beginning, your growth metric is based on time-based milestones you need to reach such as partnerships, signup at a particular time, user signup rate, number of feature releases, etc. It is important that you wrap this with specific numbers as much as possible to measure progress.

4. How you measure growth

Answering this question will help you make right decisions. Let’s assume you decide to measure your growth by the number of subscribers to your email list. First, you’ll have to optimise your product, website, app, content and every potential user interactions to grow this list.

You then measure the results of all your actions on a regular basis against this metric. You hold yourself and your team accountable with data and see whether you are making progress or not. You deep dive into all your acquisition channels to identify where you are getting the most number of subscribers. You look at the numbers every day and experiment with various tactics and tools to see how you can grow the subscription rate.

As you focus on a particular growth metric and optimise your products accordingly, magic happens. You identify particular big hairy destinations to drive your startup towards and you can measure the how and the rate at which you are getting there. And as you grow, your goal may change, and you redefine your growth metric.

You build, you measure, you learn.  And you continue the cycle until you reach your true north.