It is generally considered easier to sell to existing customers than to acquire new ones. Existing customers already know your brand and have demonstrated that they trust your products or services.
They also have a history of engagement with your company, which can provide valuable insights into their needs and preferences. That being said, it is inevitable with all businesses that some clients leave searching for another provider. There are many factors to a customer’s decision-making, some of which you can control and address your customer’s needs. Others will move on despite your committed efforts to keep them.
The important metric to address in your business is Customer Lifetime Value. Understanding what percentage of your revenue is driven by existing customers will help you understand what every customer is worth. Better still, what each lost customer costs to replace.
If you need convincing of why this calculation is so important, have a read of the customer lifetime value research undertaken to help businesses understand their customers better.
This post is an exerpt taken from our Business Guide for Property Management companies. You can download your free copy of the guide by clicking the link below.
How to calculate Customer Lifetime ValueOverall, CLV provides a complete picture of the value a customer brings to a business beyond just their short-term transactions and helps companies make data-driven decisions. A simplified calculation to use as a measure is.
Customer Lifetime Value =
(Average Transactions x Number of Transactions x Customer Lifespan)
Note that this is just a rough estimate, and the actual CLV can vary depending on many factors, such as customer churn rate, upsell potential, and acquisition costs.
Customer Lifetime Value Example
£2,000 (average transaction value) x 10 (transactions) x 5 (years a customer) = £100,000 CLV
Once you know the value of your customers, you can formulate strategies for your customer support team to manage needs and expectations. The cost to replace a customer will be expensive and time committing.
Improving Customer Lifetime Value
There are several ways that real estate companies can improve their CLV. One way is by providing excellent customer service. This can include responding quickly to customer inquiries, being available to answer questions, and going above and beyond to meet customer needs. By providing exceptional service, real estate companies can build trust and loyalty with their customers, resulting in repeat business and positive word-of-mouth referrals.
Be the Brand People Recognise
Develop and maintain a strong brand. This can include creating a recognisable logo and tagline, as well as consistently communicating a clear and consistent message. A strong brand can help attract new customers and retain existing ones, as customers are more likely to do business with a company they trust and recognize.
Extend Your Services
Real estate companies can also improve CLV by offering additional services. This can include property management, home staging, and interior design. By providing a one-stop-shop for all of their customers’ real estate needs, companies can increase the likelihood of repeat business and customer loyalty.
Another way to increase CLV is by using data and technology to personalize the customer experience. For example, real estate companies can use data analysis to understand customer preferences and tailor their marketing efforts accordingly. Additionally, companies can use technology such as virtual reality to enhance the home-buying experience, making it more convenient and efficient for customers.
In addition, real estate companies can increase CLV by creating a sense of community. This can include hosting events and activities that bring customers together, as well as fostering a sense of community among employees. By fostering a sense of community, companies can create a sense of belonging among customers, making them more likely to remain loyal to the company.
Think and Stay Ahead
Finally, real estate companies can improve CLV by building long-term relationships with customers. This can include staying in touch with customers after a sale, following up to see how they are settling in, and providing ongoing support and advice. By building long-term relationships, companies can increase customer loyalty and the likelihood of repeat business.
In conclusion, customer lifetime value is an important metric for real estate companies to focus on in order to be successful in the industry.
By providing excellent customer service, developing a strong brand, offering additional services, using data and technology to personalize the customer experience, creating a sense of community, and building long-term relationships with customers, real estate companies can increase their CLV and grow their business.