The 80/20 principle manifests itself in all aspects of life. And the adage that 20% of your customers bring in 80% of the business is an interesting phenomenon to analyze.
With that in mind, try to figure out where you need to focus your marketing efforts. You can start by assessing the lifetime value of your customers.
The customer lifetime value (CLV) is a prediction of the total profit a company can expect to earn from a customer over the course of the entire relationship.
How to calculate customer lifetime value
Here’s how to calculate CLV:
CLV = average value of a purchase X number of times the customer will make a purchase annually X average length of the customer relationship (in years)
Let’s see the formula in action.
For Manolo Blahnik, the CLV of haute couture enthusiasts like Carrie Bradshaw would be:
$1000 per pair of shoes X 4 pairs per year X 10 years = $40,000
Whereas, a young middle-class woman who buys a pair for her wedding and considers them her only luxury splurge might have a CLV worth:
$1000 per pair X 1 pair per year X 1 year = $1000
So, it would make sense for the brand to maintain a good relationship with a customer like Ms. Bradshaw.
Improving customer lifetime value is important
It’s important to nurture a relationship with someone who has a high CLV. But don’t overlook potential.
So, why is that?
Well, it’s because the likelihood of you selling something to an existing customer is 60-70% while the probability of you selling to a new prospect is 5-20%.
Now, the medium you choose to go about achieving this objective matters, too.
Our pick: video!
Why use video to boost CLV?
If you think video isn’t the ideal medium, consider the following:
- Our brains are hard-wired for motion. This makes video more engaging and memorable.
- 72% of people prefer watching training/tutorial videos compared to reading training material.
Now, let’s get specific.
Below, we’ll dive into the types of videos you can create to boost CLV.
3 Tips for increasing customer lifetime value with video
1. Effective customer onboarding
A customer’s post-purchase experience will determine future interactions if any.
An effective onboarding process—especially for complex products/services—can allow your customers to get the most out of their purchase.
In the long-run, this can boost their loyalty to your brand.
Videos to experiment with:
Customer onboarding videos
First impressions last. To ensure that your customer doesn’t suffer buyer’s remorse, you could help them unlock the full potential of your product/service with a brief onboarding video.
Read more: Onboarding Videos: The Key to Boosting Customer Retention
Here’s one we made for a client:
Explainer videos
Explainer videos help break down complicated processes and solutions in a minute or two so viewers can quickly get the gist of it.
The idea is to keep it short, simple, and engaging.
Read more: Explainer Video Dos and Don’ts
Here’s one we made for a client:
Like the videos? Hit us up!
Talk with a video strategist
2. Improve customer satisfaction
Improving your CLV would mean improving their experience with your brand.
To find areas you can work on, pay attention to customer interactions. Pick up on their grievances and preferences.
Videos can help you in this realm, too. Our survey revealed that 52% of people feel that they trust a company more after watching a video that features their team. While 48% of them feel companies need to do more to earn consumer’s trust.
Videos to experiment with:
Interactive videos
Interactive help videos have a ton of potential. You can use links and branching to provide users with easily accessible info in one place.
They can be highly engaging and can help your customer discover more of what your brand is about at their own pace.
Find out more about how brands are experimenting with interactive video.
personalized video
The one-size-fits-all marketing approach is gradually being replaced with personalization. Adopting personalization in video content can seem daunting but with a customer database and the right video editing tools, you could easily experiment with this type of content.
Thank-you videos are a great place to start. You can keep it simple with an earnest straight-to-camera message thanking your customer.
A gesture like this can go a long way.
Check out this example from Maybelline New York’s campaign:
3. Build a community and celebrate fans
Fostering a community of like-minded individuals requires social listening and generally being active on social media.
Efforts like these can make your followers feel more connected to your brand. This has the potential to boost the CLV of several customers.
Videos to experiment with:
Feature your biggest fans
Feature your fans in your video content. Brands who engage with their followers at this level tend to get their audience buzzing with excitement.
This also opens the floodgates to user-generated content, which your company can share on social media.
Here’s an example of Ocean Spray celebrating a fan’s viral TikTok video.
View this post on Instagram
That’s a wrap
That covers how you could use video content to boost the lifetime value of your customers.
The takeaway is that it’s worth assessing who your most profitable customers are, which products have the highest profitability, and how you could improve the CLV.
And doing the latter with video is an exciting way of increasing your bottom line.
Talk with a video strategist
Read more: 3 Tips for Creating Short Videos to Boost Customer Loyalty