3 Customer Metrics That Increase Profits
Remember that first sale? The hard work to make it happen?
Every purchase is the start of a customer journey. It’s the buyer’s vote of confidence for your brand.
Part of the brand’s experience is servicing this journey. The more perceived value provided, the more profits made!
The customer journey nurtures and improves the customer relationship. Knowing which metrics to track and leveraging this data will help you optimize the journey, increase perceived value and leverage profits.
Today I’ll take a look at three metrics you’ll want to track. By tracking these key indicators, you’ll be able to build strong, fruitful and lasting relationships.
1. Customer Churn Rate
Your customer churn rate is the percentage of customers who stop doing business with you. Reducing churn can dramatically increase profits.
Churn can be a symptom of poor customer service, a change in their personal circumstances or simply finding better deals. Understanding the reasons behind churn will increase profits. Do you have a process in place to monitor and reduce churn?
2. Customer Lifetime Value (CLV)
Your customer’s lifetime value (CLV) is the total amount of money a customer spends with your brand over the course of their journey. It determines how much you can spend to acquire and retain customers.
There are a number of factors that contribute to a customer’s lifetime value, such as purchase frequency, the average order value, and the length of time they remain a customer. By understanding your CLV, you can make more informed marketing and sales decisions that are focused on acquiring and retaining high-value customers.
3. Net Promoter Score (NPS)
NPS measures how likely your customers are to recommend your brand to others. How satisfied are your customers?
NPS is calculated by asking customers to rate their likelihood of recommending your brand. Customers who respond with a score of 9 or 10 are considered to be “promoters”, while those who respond with a score of 0-6 are considered to be “detractors”. The scores are then used to generate an overall NPS score, which can range from -100 to 100.
How to Use These Customer Metrics
Customer metrics will help improve the bottom line.
Take a look at the churn rate. Are you losing customers? Find out why. Counterintuitively it might be as simple as *raising* prices.
Next, take a look at the lifetime value. What are ways to increase the lifetime value? In a competitive market, the player with the highest lifetime value wins.
Lastly, look at your NPS score. If your scores are low, improve the customer experience. Can you improve the communication touchpoints or train the staff?
Add these metrics to your or your partners marketing dashboard and meet the goals.