Building lasting customer relationships is essential for businesses and brands looking to thrive in today’s competitive market. However, building these relationships isn’t an easy task and requires a well-defined, thoughtful strategy. And one of the most effective strategies for building lasting customer relationships–and ultimately, customer lifetime value, is through partnerships. But how do we accomplish this? Read on to learn what we mean by customer lifetime value and discover six simple yet effective strategies to build on it.
How do you define Customer Lifetime Value?
The short answer: Customer lifetime value (CLTV) is the total amount of revenue a customer is expected to generate for a business over the course of their relationship. In partnership marketing, CLTV represents the revenue generated by a customer that comes through a partner’s link over the lifetime of their engagement with the brand or business. This metric is important because it allows you to calculate the true return on investment (ROI) for your partner marketing efforts.
While affiliate, and the broader partnership channel are often prized for the ability to produce higher ROAS, that’s a decidedly short-term view to consider and this short-term view needs to be complemented by a long-term view like CLTV to drive the intended or desired outcomes. And this long-term view mandates use of a sophisticated partnership automation software provider that can offer cross-channel insights necessary for maximum transparency and program optimization.
– Maura Smith, CMO, Partnerize
Creating CLTV is a critical goal for any business looking to maximize the return on investment (ROI) of its marketing efforts. One of the most effective ways to achieve this is by taking a thoughtful approach to the types of partnerships you establish and manage over time.
To aid your efforts to achieve CLTV, let’s take a look at six solid strategies for building CLTV in the partnership channel. Investing in these strategies sooner rather than later can build lasting customer relationships that lead to increased revenue and profitability over the long term and that’s good news for everyone.
1 Identify the right affiliate partners: To build CLTV, it’s important to work with partners that align directly with your brand values and goals. Look for partners that have a similar audience and complementary products or services. This can help ensure that the customers acquired through the partnership are more likely to be interested in your products or services and more likely to become long-term customers.
Examine your existing partnerships that are effective in generating CLTV. They likely have attributes that play a role in generating the outcome you desire, and therefore, those attributes should be thoughtfully considered as part of your partner recruitment strategy. The partnerships you establish today, will either be successful in generating long term value, like CLTV, or not. By selecting the right partners, brands can increase the likelihood of attracting customers with high CLTV, who are likely to return for repeat purchases.
Remember, equally important to aligning to your brand’s values is working with a diverse partner composition to ensure your partners are driving value for your brand at varying stages of the funnel.
2 Provide high-quality products or services: Building CLTV through partnerships starts with providing high-quality products or services that meet the needs and expectations of your customers (and your partner’s audience). By delivering a great customer experience, you can build trust and credibility with customers and increase the likelihood of repeat purchases, giving your partners a better foundation as they promote and recommend your brand.
Furthermore, CLTV can help businesses identify which products or services are most profitable in their partnerships. By analyzing the CLTV of customers who purchase different products or services through partner links, brands can determine which offerings are generating the most long-term value. This information can then be used to optimize the program by focusing on promoting the most profitable products or services, or even developing new offerings that are likely to generate even greater CLTV.
3 Offer incentives for repeat purchases: One way to encourage your customers to make repeat purchases is to offer incentives such as discounts, loyalty programs, or rewards for referrals. These incentives can help your partnerships drive increased customer loyalty and encourage customers to continue doing business with you over the long term (hello, lifetime value!).
4 Communicate regularly with your customers: Regular communication with customers and your partners is key to building CLTV. This can include sending newsletters, promotional emails, or other relevant content that keeps customers and partners engaged and informed about your products or services. Partnerships can help keep your brand front and center with your target audience and customers, increasing the likelihood of repeat purchases and referrals.
5 Provide exceptional customer service: Just like your product offering, exceptional customer service is essential for building CLTV through your partnerships. By providing prompt and helpful responses to customer inquiries or concerns, you can build trust and loyalty with customers and increase the likelihood of repeat business.
6 Measure and optimize: To build CLTV through your partnerships, it’s important to continually measure and optimize your marketing efforts. This can involve tracking metrics such as customer acquisition costs, customer retention rates, and revenue generated from the partnership channel. By analyzing this data, you can identify areas for improvement and make data-driven decisions to optimize your partnerships and your marketing efforts. Remember: Your provider should have sophisticated technology that enables granular tracking across any data point.
With cross-channel insights and conscious media spend you can discover the most effective strategies for building sustainable and profitable partnership programs that create lasting value for you, your consumers, and your partners.
– Kim Riedell, SVP, Partnerships & Affiliate Outcomes, Matterkind
Bottomline: CLTV is a crucial metric in partnership marketing and understanding the long-term value of the customers brought in by your partners, can help inform smarter decisions about how much to invest in the channel, who to partner with, and which products or services to promote. All this will ultimately lead to greater profitability and more sustainable partnerships.
To learn more about how you can prioritize CLTV in your partnerships, reach out at firstname.lastname@example.org.