How can AI Boost Customer Lifetime Value?
Updated on Sep 20th, 2022
Amanda is shopping for a new top online. She has browsed multiple websites looking for the beige top in size “S,” but nothing appeals to her. During one of these exploratory experiences, she lands on the website of the brand XYZ, where she is disappointed. However, when she’s trying to leave the website, a chatbot pops on her window asking what she’s looking for. She gives it a chance and enters the specifics about the product she’s trying to find.
The chatbot brings a range of options to her fingertips. She likes two of them and purchases both instead of one. Chatbot also offers her a range of trousers that go along with the top; she loves one of them and buys them.
The conclusion is clear here: There are many ways to boost your conversion and ensure customer loyalty and satisfaction. Not only does it take you closer to your customers and increase the chances of repeat sales, but it also improves the chances of referrals.
Having a clear idea about a customer’s buying behavior gives businesses a great weapon to boost conversion and improve customer retention. Knowing what your customers need and anticipating those demands in advance helps you understand your market better and fulfill customer demands.
This is exactly what AI can help you with. While creating a channel for you to capitalize on big data, it uncovers hidden market patterns and analyzes the trends. AI solutions are critical in empowering organizations to ratify agile methodologies and utilize the full potential of existing data. Besides providing exceptional experiences to the customer, AI also opens many other options for the customers.
So, in this article, we’ll be understanding how organizations around the globe are utilizing AI to create brand loyalty using their existing data. But before we dig in further, let’s look at the basic definition of customer lifetime value.
- Customer lifetime value (CLV) measures the average customer’s revenue generated over their entire relationship with a company.
- CLV helps businesses improve customer satisfaction ratios and fuel their growth and revenue.
- Investment in AI development helps businesses implement cutting-edge solutions that bring detailed insights about customers, markets, operations, etc.
- The actional insights delivered via AI help businesses strategize better, improve conversion rates, and boost sales.
- AI enables businesses to anticipate user demands to fulfill them timely. This makes their investment more targeted and helps marketing teams to strategize better.
Table of Contents
What is Customer Lifetime Value?
Customer Lifetime Value (CLV) is one of the critical stats of a customer experience program. It represents the value of your customer during his entire customer journey. Technically speaking, customer lifetime value represents the amount your customer is expected to spend on your business during his entire journey.
We all know that acquiring new customers costs more than keeping the existing ones. So, customer lifetime value helps make informed decisions on how much money to invest in developing new customers and how much to retain existing ones. Moreover, customer lifetime value also encourages firms to focus on the long-term health of their customer relationship.
What is the Current Scenario?
Effective data processing is still one of the major problems of many organizations. Most firms collect data through various marketing strategies. But the main concern is harnessing and implementing this sensitive data to improve customer service. Some companies, at their best, analyze data in silos for a specific project. But the result is that they can only influence a few touchpoints of a buyer’s journey. To overcome this cause, many companies have now started to utilize AI in data processing, ditching traditional methods.
How can AI Boost Customer Lifetime Value?
The current era is dedicated to the increase in digital experiences. The trend will only grow further. Today, customers are not here to click targeted ads based on their demographic locations. That’s why many different organizations have started using AI to boost search results. They are now more focused on how customers engage with varied content across different touchpoints.
AI also helps marketing teams to strategize better to boost user engagement. For instance, a content copy that works better for millennials may not deliver great results to GenZ customers. Similarly, what works best for customers in a specific demographic may not work well in another geographic location. AI bridges this gap by bringing the right insights to the teams’ disposal.
So, below are some ways AI increases customer lifetime value. Let’s have a detailed look at them.
1. Create a Personalized Experience
Today’s customers don’t just visit one store. Their purchase decisions are made after going through n number of digital stores. To stand out, you need to make each experience count and deliver them a reason to choose your brand time and over. You need to show them that they matter; personalization is how you do it.
For globally competing businesses, personalization is not just an optional feature. It is rather emerging as a must-have attribute for brand growth. 80% of customers are more inclined to buy from brands that deliver personalized experiences.
Leveraging AI’s data processing ability can be a smart choice for marketers to engage more customers. AI helps to deliver a more personalized experience and make your customers feel special. It also helps your team to provide appropriate content that can further strengthen the relationships with your customers. Apart from that, AI’s strong metrics and analysis help you to prioritize the spending on each customer. That also saves a lot of time and money.
2. More Sales
AI can significantly transform the way you greet your customers. By utilizing a handful of data, AI can create a holistic and hyper-targeted approach to attracting customers to purchase more. Furthermore, it can also be used to lure customers into agreeing to long-term commitments. And as teams gain a more precise understanding of the customer’s choices, they can deliver tailor-made offers for their customers. In short, AI equips you with the necessary tools that help to build trust and turn new visitors into loyal customers.
3. Visual Search
Thanks to the advances in AI image recognition and analysis, today, customers are more driven toward visual search. Many platforms like Pinterest and Google Lens make it easier for brands to promote and present their products to customers more efficiently. Visual search allows users to search for a product using an image as a keyword. And we all know that the human brain can remember an image more efficiently than remembering a word.
4. Easy Renewal
Increasing loyal customers for your brand becomes much more comfortable when using AI as a technology. Customers are more attracted to the brand, where they feel more valued and understood. And AI-powered tools can help you accurately predict what your customers want /need next. So, by encouraging longer-term commitments, businesses can seamlessly increase their customer lifetime value at a small cost.
5. Evangelize Customers Enthusiastically
When marketers focus more on increasing the CLV, they become personal and indispensable to the customers. And using the best tools of AI in calculating CLV, you can quickly determine the rewards for your loyal customers while increasing your brand loyalty.
6. Virtual Assistants that can Deliver Better Experiences
AI-based chatbots are taking customer service interactions to the next level. For instance, imagine your customer service executive is having a bad day. There are chances that the interactions he has with the customers are affected by the same. Similarly, imagine coming across a customer who wants to change their order for the fourth time. While there are chances that customer service executives will likely get annoyed, this is not the case with chatbots. Here is what chatbots can do for your business:
- Interpret voice-based interactions and use natural language processes to provide personalized experiences.
- Leverage deep customers insights to anticipate and address customer demands
- Use self-learning to improve customer interactions with time address buyer queries better.
- Introducing personalized and target marketing campaigns to the customers
- Understanding customer problems better and offering detailed solutions to the same
- Improve the shopping experience by integrating advanced virtual assistants like Siri, Google, and Alexa.
7. Take Multi-channel Marketing Approach Profitably
For a business to be profitable, you must be present for your customers on the channels they prefer. Let’s take an example here. Walk back to the time when the pandemic outbreak started. Fearing the shortage of necessary items, buyers quickly ran to physical stores. However, once the lockdown was enforced, they switched to browsing the online stores. While some brick-and-mortar stores had no online presence, they started accepting orders via social media.
This is a clear example of what we said. For instance, while a section of your buyers may still prefer traditional business models, some of them are choosing digital shopping. AI helps you get insights into where your customers are. Knowing their presence greatly lets you understand where you need to place your business.
Things have drastically changed in today’s digital era. Unlike traditional marketing channels, disruptive technologies are helping businesses to grow more efficiently, and AI is one of them. Today customers demand of more personalized experience that makes them feel special. And for this purpose, firms are embracing AI to utilize data collected at various touchpoints of the customer’s journey.
But many aren’t taking customer lifetime value seriously, impacting their revenues. AI-driven marketing strategies are offering the teams a better ROI. It is also helping many organizations better understand and accelerate their customers’ purchasing decisions while tailoring their content strategies.
In short, the world is now shifting towards more powerful AI tools to get valuable insights, drive better decision-making, and know what works for their brands and what doesn’t.
As an AI development company, we help these businesses put their best foot forward with the right digital transformation strategy. Our team invests time in understanding your business goals and organizational challenges to create the success roadmap that delivers results for you.
We are proud of the value-added services we offer, including (but not limited to):
- Readiness assessment to analyze the scale of development
- A comprehensive range of AI development services under a single roof
- Industry-specific development services
- Decades of experience
- Global team presence
- CMMI certified experts
And much more. To begin immediately, reach out to our team and talk to the experts about your business problems.
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