To ensure optimal business success, there are several metrics you should consider as a business owner. Profit margins, sales revenue, and retention when all these metrics help to keep your business on the right track there is one metric that will let you know what you can expect from any of your average customers throughout your business relationship. Known as the customer lifetime value (CLTV) is this specific metric. By running proper SMS marketing campaigns, you can increase this crucial metric effectively. Learn more about CLV and the role of SMS marketing in enhancing it from this blog.
Importance of CLTV for a Business
Customer Lifetime Value (CLTV) denotes an important metric that is used to give an idea about the total profit one business can earn from a specific customer throughout the journey.
It considers the facts like a customer’s first purchase, repeat transactions, and how long they stay loyal to the brand.
Understanding CLTV is vital for gauging customer loyalty and business success. High CLTV indicates satisfied customers who return consistently, proving that your strategies are on point. CLTV matters a lot for a business for causes like:
Calculating customer lifetime value (CLTV) for distinct customer groups provides crucial insights to enhance business decision-making. By analyzing CLTV, you gain clarity on several key aspects:
- Determine the maximum amount you can allocate for acquiring new customers (CAC) while ensuring a profitable outcome.
- Uncover the exact revenue you can anticipate from an average customer over their lifecycle.
- Identify the products that your high-value customers are most drawn to and why they resonate with them.
- Pinpoint which offerings yield the highest profitability and contribute most to your bottom line.
- Recognize the customer relationships that are the driving force behind your sales figures.
- Understand who your most profitable client types are, enabling more tailored targeting.
- Gain insights into the customer journey, including pivotal moments and churn rates.
Using CLTV as a foundation, you can refine your strategy to connect with your most loyal customers. Ask yourself: What do they value? Why do they repeatedly choose you over competitors? Leveraging tools like SMS marketing software or SMS communication tools can help you keep these loyal customers engaged and informed.
When applied correctly, this knowledge can transform your business’s profitability. But simply knowing your CLTV isn’t enough—you must actively use it to craft a sharper business strategy.
- If your CLTV is increasing, it’s a clear sign to continue focusing on areas like product innovation or enhancing your customer success teams.
- If your CLTV is dropping, it may signal the need to revamp your marketing, such as launching more effective SMS marketing campaigns to re-engage your audience.
One standout benefit of understanding CLTV is its ability to slash customer acquisition costs (CAC) over time. When paired with SMS communication tools, you can efficiently nurture relationships and build stronger connections with your audience, ultimately driving long-term growth.
Why Use SMS Marketing for Increasing CLTV
A well-reached and proper SMS marketing strategy focuses on the four key KPIs ( key performance indicators) of a business.
These indicators include the length of the relationship, purchase frequency, purchase recency, and AOV (average order value). Text or SMS marketing is like an expressway to your most valued customers. Know its role in increasing the CLTV.
Makes the Process Streamlined
SMS marketing campaigns keep users engaged by delivering short crispy easily understandable messages. Here customers don’t need to go through a boring longer mail at all. They can receive messages on their phones instantly over there. This streamlined nature of SMS marketing also makes it a perfect option for promotions and time-sensitive events.
More Trusting Customers
SMS is a highly personal way to connect, much like email, but often more effective than social media or digital ads. By categorizing your subscriber list distinctly, you can create tailored messages understanding the unique needs of your customers.
However, for customers to share their phone numbers, they must already trust your brand and value your communication. This creates a highly loyal audience, ready to engage.
Higher Message Visibility
Unlike emails that often get lost, SMS messages demand attention. With a 98% open rate and 60% read within five minutes, texts are hard to ignore. They provide a direct line to your audience, ensuring your message stands out amidst digital noise.
Boosting Brand Awareness
SMS communication keeps your brand top-of-mind through consistent, timely messaging. Whether it’s a promotion or a quick reminder, these bite-sized texts ensure your customers think of you when it’s time to buy.
Delivering Useful Updates
SMS allows you to enhance the customer experience with real-time updates, like order confirmations, shipping details, and delivery timelines. Additionally, offering live text support enables customers to provide feedback or ask questions, ensuring smoother interactions.
Integrating With Other Channels
SMS seamlessly complements other channels. Encourage sign-ups through checkout pages, emails, or social media, and use texts to support email campaigns or promote your app. These interactions also generate valuable data to personalize customer experiences further.
High ROI and Cost-Effectiveness
SMS marketing is cost-efficient, with low costs per message and high open rates driving significant ROI. Even with added expenses like MMS or hiring a copywriter, the results—higher CLTV and stronger profits—are worth the investment.
SMS Marketing Strategies to Follow for Increasing CLTV
When using SMS marketing software to connect with customers who want the desired outcome, you need to go after some strategies. Check them out here.
Personalize Without Overstepping
SMS communication tools allow you to segment subscriber lists and craft tailored messages based on data like names, locations, and buying behaviors. However, avoid overwhelming customers with irrelevant or excessive texts. A personalized yet respectful approach strengthens relationships and increases trust. Sending messages at odd hours or mentioning overly personal details (e.g., a pet’s name) can feel intrusive and lead to opt-outs.
Obtain Consent and Follow Regulations
Always get explicit opt-ins before sending messages, as required by laws like the Telephone Consumer Protection Act. Include clear opt-out instructions, like “Text STOP to unsubscribe.” Non-compliance not only damages trust but also risks legal trouble.
Add Value Without Spamming
Customers appreciate updates on deals, recommendations, or exclusive offers—when done sparingly. Flooding them with daily messages diminishes value and prompts unsubscribes. Keep your SMS marketing campaigns concise, relevant, and spaced appropriately to maintain engagement.
Maintain Brevity While Staying On-Brand
The nature of SMS communication tools demands concise messaging. Stick to the 160-character limit, ensuring clarity while preserving your brand’s tone. Brief yet engaging messages demonstrate respect for your customers’ time and strengthen their connection to your brand.
Grow and Retain Your Subscriber List
Building a robust subscriber base is essential. Use touchpoints like checkout pages or emails to encourage opt-ins. Simultaneously, nurture loyalty among existing subscribers by sending valuable, engaging messages that keep them interested.
Leverage Metrics and Test for Success
Track key metrics such as open rates, unsubscribe rates, clickthrough rates, and conversion rates. These insights help fine-tune your SMS marketing strategy. A/B testing is especially useful for identifying what resonates best with your audience and aligning with business goals like CLV growth.
Integrate Channels Without Repeating Content
Combine SMS communication campaigns with other channels to create seamless experiences. For example, follow up on email campaigns or phone calls with relevant texts. Avoid redundancy—each message should add unique value rather than repeat what customers have already seen elsewhere.
Enable Interactivity and Respond Promptly
Interactive texts, like surveys or support messages, foster trust and build connections. However, ignoring incoming responses can damage your credibility. Use SMS marketing software to manage two-way communication effectively, ensuring all customer concerns are promptly addressed.
By implementing these practices, SMS marketing campaigns can create meaningful interactions, boost loyalty, and enhance customer lifetime value (CLV).
Conclusion
So as you can see, the SMS marketing campaign is undeniably a potent tool for gathering fruitful and smarter insights that will improve your CLTV. When integrated seamlessly with your broader marketing efforts, SMS can drive significant improvements in retention metrics and send your CLTV skyrocketing.
And to run the right SMS marketing campaigns for your business, take expert guidance from RevText. Revolutionize your brand communication with the help of our best SMS communication tools and increase CLV effortlessly.
