To increase customer lifetime value (CLV), your business needs to be able to meet each customer’s individual expectations over and over again. Those expectations vary widely from one customer to the next, of course. However, when it comes to recurring purchases or usage, customers demand three things in particular: speed, choices and personalization. Delivering on these imperatives puts you in a prime position to improve customer satisfaction and retention, reduce churn, and increase CLV — commonly defined as “profitable brand loyalty.” And while this has long been the case, the Internet of Things makes these three essentials more critical than ever.
Today’s customers want everything immediately, starting with orders. Whether they’re switching from a freemium to a paid service, renewing a subscription, adding more capacity to a usage-based service, or making a one-time purchase, they want it all done instantly. In today’s hypercompetitive environment, a delay of even a few seconds is enough to trigger churn.
Customers also expect immediate confirmation, and delivery as fast as possible. For digital purchases, that means instant access. For physical goods, that could someday soon mean in as little as half an hour, if Amazon.com’s IoT-powered drone delivery service comes to fruition.
The Internet of Things is putting more than just delivery in hyperdrive. With nanosecond response times, smart chips and cloud technology are raising expectations for a world connected in real time. Companies wishing to grow CLV take note: the race will go to the swift as never before.
Increasingly, consumers expect it to be as painless as possible to join, buy or renew offerings. Accordingly, they want lots of say in how they pay — e.g., free trials, subscriptions, pay-per-use, consumption, one-time payments, etc. The more options you can provide — that work without a hitch — the better your chances consumers will find one that works best for them.
Consumers expect your product catalog to be just as agile. Consider the recent unbundling of premium cable TV channels. A big reason cable subscribers are flocking to streaming services like Netflix is because they’re fed up with the bloated, inflexible channel packages cable providers have forced on them for years.
In an effort to boost retention, cable heavyweights like HBO and Showtime have recently launched stand-alone streaming versions of their channels, giving customers the option of bypassing cable entirely.
The Internet of Things offers unlimited possibilities for rapidly adapting product catalogs to suit evolving markets. A prime example of this is happening with, not surprisingly, cable TV providers. For years, they’ve been shoring up subscriptions by expanding into non-TV areas such as IP telephony. And now, as a further hedge against customer churn, they’re broadening their portfolios with IoT-connected services like Xfinity Home Security.
There’s nothing new to the idea that personalization is crucial to retention, but the bar keeps getting higher. Not long ago, you may have been able to get away with a long-time subscriber feeling like a total stranger every time he or she called. Not anymore. Not with a universe of options just milliseconds away. To reduce churn, you need to give every customer exceptional, personalized service. The IoT makes that easier than ever.
For starters, IoT is all about personalization. Multitudes of connected sensors serve up real-time, personalized data on virtually anything customers may want to monitor, improve or control, from wearable devices that track heartbeats, footsteps and stress levels to remote monitoring systems that can keep on eye on the health of everything from elderly parents to oil and gas pipelines.
Contained within those vast oceans of data is a wealth of information about the way customers use your services. Analyzing consumption data provides rich insights into customer behaviors, preferences and usage patterns, all of which you can leverage to improve service. Anticipating customer needs and delivering highly personalized experiences that your customers love will distance you from your competitors.
Today’s customer is king. That’s the new normal for companies that want to expand recurring revenues and maximize CLV. Those that can move deftly, turn their offers on a dime and treat every customer uniquely stand to gain the most as the IoT expands. They key is to ensure your business has the right technology and processes in place to make the most of it.
This article first appeared on TotalRetail.