6 Ways Digital Agencies Can Increase Customer Lifetime Value

Increasing customer lifetime value (CLV) is a classic example of working smarter, not harder.

Making more money from a single client over time means you’ll need to have fewer clients on your roster – and you’ll have more time to focus on growing the business. Digital marketing is full of opportunities to create relationships, upsell services, and build customer loyalty, so if your agency isn’t focusing on maximizing CLV, it’s not reaching its full potential.

Why Customer Lifetime Value Matters

Many digital marketing agencies put a big emphasis on bringing in new clients. That can often make business sense, but if you’re not careful, it can backfire on you. That’s because finding new clients costs you, both in terms of money and time. If some of your new clients only make one or two small purchases with you, you may not recoup the money spent to acquire those clients.

The more money you can get a single customer to spend with you, the better. It sounds obvious, but it’s worth repeating since customer acquisition cost takes a substantial bite out of your profits. Many businesses fail because they spend too much money bringing in unprofitable customers. By contrast, there’s often no extra cost associated with getting an established customer to buy something else from you.

It’s also much easier to sell something to an existing customer than to a new one. With an existing customer, you’ve already put in the effort to win them over, and they are most likely happy with the work you’ve already done for them. The numbers are on your side: studies have shown that you have a 60-70% chance of converting an established customer.

So how can you get your customers to spend more money with you over the years? Relationship-building and upselling are the two main things you should focus on, and in the field of digital marketing, these strategies often go hand-in-hand. Here are six specific things you can do to maximize each client’s profitability.

1. Know Who Your Ideal Customers Are

First of all, make sure your clients are good candidates for building long-term relationships. If a client isn’t a good fit for your agency, you might be able to keep them around, but it probably won’t be an ideal situation for either of you. On the other hand, if a client’s needs and goals line up with what your agency does best, you’ve got the makings for an enduring partnership.

If you haven’t done so recently, get together with your team and talk about your strengths as an agency, the kind of clients you love working with, and the kind of clients you’re best equipped to help. Review and update your client personas if you need to. You may also want to adjust your marketing efforts if you’ve been attracting clients who are a less-than-great fit. Hone your own business strategy, and you’ll be better able to find the kind of clients you want.

2. Communicate Early and Often

Once you’ve got some clients who are a great fit for your agency, talk to them. Find out what they need help with and what kinds of long- and short-term goals they have for their business. The better you understand what your clients want, the more effectively you’ll be able to upsell them later.

Don’t stop talking to your clients after the onboarding phase, either. Check in every month with new data and ask how they like your work and whether their goals have shifted direction. Frequent contact will do two things: it’ll keep you fresh in the client’s mind, and it will slowly but steadily build a relationship. Below is an example of a marketing dashboard you can use to keep your clients in the loop about their marketing campaigns.

A monthly marketing report gives you a great opportunity to check in with clients.

3. Build Trust

For a client to stick with your agency over time, they need to feel like you’ve got their best interests at heart. You can speed up the trust-building process by emphasizing honesty and transparency in all your interactions. Take the time to explain:

• Your methods, as well as your reasons for using those methods

• Why you think specific services will help a client reach their goals

• What the client can realistically expect from your services

• Your pricing breakdown

Some businesses will try to take advantage of customers’ naiveté by misrepresenting their services or selling them things they don’t actually need. Avoid this at all costs, even if it means making less money upfront. Customers usually catch on when a business is just doing something for the money, and your reputation will take a hit if you mislead people. Increasing customer lifetime value is a long game, so be patient and put your clients’ needs first.

4. Identify Pain Points

Whether you’re working with a client on a one-off campaign or they’ve hired you to oversee some aspect of their digital marketing for the long-term, you’ll probably notice a few things they have trouble with or could be doing better. Frequent communication will also help you determine a client’s pain points.

These pain points are what you should be focusing on when you upsell a client, so don’t ignore them. Write your clients’ problems down when you notice them, and brainstorm some ideas for how your agency could fix them. Make sure each solution, whether simple or detailed, is a good fit for the client in question. In other words, make it as easy as possible for them to say yes to your ideas.

Try to tie these solutions to issues you’ve already worked on with a client. For instance, if you manage a client’s content strategy, you might not be able to sell them on a website redesign, especially if you introduce the idea out of the blue. However, you might be able to interest them in a PPC campaign designed to get more traffic to their content.

5. Don’t Be Pushy

Inappropriate upsells can damage business relationships, so be careful. Being pushy will ensure your pitch won’t make a good impression, no matter how great your actual idea is. If a client feels like you’re just trying to wring more money out of them, they’ll probably stop working with you.

What counts as being pushy? Here are a few things to avoid.

• Trying to upsell too often. If a client wasn't interested last month, don’t try again this month.

• Not taking no for an answer. It’s okay to address a client’s concerns if they’re hesitant, but don’t keep pestering them if they obviously aren’t interested.

• Trying to upsell a lead before they’ve decided to make a purchase in the first place.

• Offering a client something that isn’t useful or relevant to them.

• Offering extra services or features that are way outside a client’s budget.

• Trying to upsell a client who isn’t happy with the services you’ve already provided.

6. Emphasize Progress

So, what’s the right way to pitch your idea to a client? Simple: explain how this extra feature or service is going to help them achieve their goals. If you’ve taken the client’s pain points into account and chosen your upsell proposal wisely, your idea has the potential to help them, so present it to them that way.

When you make your pitch, use facts and statistics to back up your ideas. This goes back to the idea of transparency. The client is more likely to accept your offer if it makes sense to them, too.

Make sure that you emphasize how this upsell will help the client continue making progress towards their long-term business goals. When a client spends money with you, they’re buying a valuable product or service, of course. But they’re also investing in a feeling of progress, growth, and optimism. As long as you’re being honest and have the client’s best interests at heart, don’t be afraid to leverage a bit of emotion in your upsells.

The Takeaway

Increasing customer lifetime value is one of the best things you can do for your digital marketing agency as a whole, and if you do it well, you’ll help your clients’ businesses too. You can upsell and retain customers more effectively by building positive relationships, taking an active role in reducing your clients’ pain points, and pitching upsells in a way that emphasizes value.