If I were to nail down the single most important metric all businesses should focus on, it would be Customer Lifetime Value (CLTV).
As the name suggests, CLTV is the amount of revenue a single customer generates over the course of their “life span” with your business. Of course, you can think of CLTV in terms of your individual customers (allowing you to identify high-value clientele), or you can look at the average CLTV throughout your entire customer base, as well.
In either case, the higher your CLTV, the better off your business will be.
Now, on the surface, this is pretty obvious: Of course you want your business to make more and more money from each of your customers as time goes on.
But—and this is much more important than just “making more money”—an increase in your CLTV also means you’ll have more money on hand to reinvest into growing your business.
More specifically, you’ll be able to spend more money on further customer acquisition efforts.
(And, since the value of your “average” customer has since increased, you’ll quickly eat away at the increased cost of acquisition with every new customer you bring on board.)
Now, while simply retaining customers at their current Average Order Value does technically increase their CLTV with every purchase they make, this is really just par for the course. If you really want to see your CLTV explode, you need to get your current customers to not only stick around longer, but to also make even larger purchases moving forward.
Which is where the value ladder comes in.
Do You Have A Value Ladder In Your Business?
The focus of today’s episode of the Insane Growth podcast is on what’s called a value ladder.
In this episode, I:
- Explain just what a value ladder is
- Discuss how I’ve implemented value ladders into my own businesses—and the insane amount of success I’ve experienced in doing so
- Brainstorm different ways you can implement a value ladder in your business—regardless of the industry you serve
I also dive deep into the idea that creating a value ladder is more than just trying to sell more to your customers without actually doing more for them. As I discuss in the podcast, when developing a value ladder, the focus should be squarely on providing as much value to your clientele as you possibly can.
It’s simply, really:
As long as you can continually provide more and more value to your customers each time they do business with you, they’ll have every reason to keep coming back again and again.
Resources Mentioned In This Episode
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