How well are you tracking your biggest asset – your customers? One of the biggest reasons start-ups die or growing companies slow down is because their Customer Acquisition Costs (CAC) and Customer Lifetime Value (CLV) get completely off-balance.
Can you answer the below questions right now?
- What is your customer acquisition cost?
- What is your customer lifetime value cost?
- What are your churn rates?
When you can answer these questions about your customers then you can spot potential trouble, advise new business strategies and reallocate spend and efforts.
Bottomline is that it’s expensive and hard to acquire new customers. The cost of acquiring a new customer is typically up to 5X more than retaining an existing customer – which is too much. Increasing your Customer Lifetime Value brings all the focus to maximizing your monetary return from existing customers. It’s more profitable to invest in customer services with customers who have high customer satisfaction. And with the right systems and tools in place, you can get the data that everyone needs to elevate customer service and play the better CLV hand. How is your hand now?
Becoming more services-centric
In today’s services economy, it’s all about how to keep and better serve your customers not just acquire them. Lacking the proper systems and ERP strategy could ultimately cost you. As of now, many companies have yet to make the necessary changes in their infrastructure to become more services-centric. In a CFO survey we conducted earlier this year, when asked to respond to a statement that their company’s “operational and technology infrastructure” can handle “any increase in service-related revenues,” fewer than one in five respondents (17 percent) said they strongly agreed.
Finance leaders need comprehensive views into the “whole account”, across multiple departments to answer real-time customer questions, know the context of those questions, and make smarter decisions. Solutions that connect your ERP and CRM will allow you to do just that – delivering one customer database to manage while also automating your revenue management and billing functions from a single customer record. Customer service levels will be more easily raised and customer loyalty won.
Learn more about Cloud ERP and how it can help you to become more services-centric & customer focused and achieve a well-balanced CLV vs CAC.