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Now that you have started your business, it is now time to grow it. Growing your business is dependent on how much money you are making from your current customer base. Listen in as Steli and Hiten talk about how to increase your customer lifetime value by either raising your prices or offering your current customers more value. They also discuss the importance of reaching your pricing ceiling and the importance of holding onto your customers for the long haul.

Time Stamped Show Notes:

00:05 – Today’s episode is about the different ways to increase your customer lifetime value

01:03 – The growth of your business is dependent on how much money you are making per customer

01:41 – Hiten says there really isn’t many ways to increase customer lifetime value and it is really about the different opportunities you have in your business

02:06 – The basic ways you can increase your customer lifetime value:

02:28 – Get more money from existing customers by selling more to them than you already are

02:34 – Raise your prices

03:15 – Based on experience, Hiten has met and seen companies that have ridiculously high prices, but these companies are rare

04:14 – The easiest way to check your price point is when the majority of your customers say “yes”; when no one is saying “no”, then you might have priced too low

04:44 – It is your fault when you charge too low, even though you know you could have increased it

04:57 – Ask your customers how much they are paying

05:40 – Customers will tell you how much they are paying so don’t be afraid to ask

06:10 – This will help you understand your value

06:21 – In a previous episode, Hiten and Steli talked about how to cultivate a bias towards action

06:28 – Steli had a conversation with a founder that doubled their price and it had no difference on their conversion rate

07:33 – The goal is to get to a point where it starts to have a negative effect because that will be your ceiling

08:35 – The third thing is to keep your customers longer and make them use your product more by lowering your churn and improving your usage

09:01 – Otherwise, you change your customers too quickly or too much

09:50 – Most businesses have too much churn and this is the hardest thing to resolve

10:25 – This should be the first thing that businesses resolve, especially those involved in SaaS

10:47 – Businesses have an onboarding and product problem

11:44 – Businesses should aim at having a negative churn, which means your existing customers are paying you more money and offsetting the cost of those that are leaving you

12:42 – The three things are connected because they are all quantifiable

13:09 – Make it a priority to evaluate your churn, then find out how you can get your customers to pay you more money, and finally, look at raising your prices

13:50 – If you have a churn issue and you just increase your price, your churn issue will get worse

14:55 – When you have done everything, the only thing to do is change your customer base or build something completely new

15:24 – Tweet Steli and Hiten if you want them to talk about how to change your customer base

15:41 – End of today’s episode

3 Key Points:

If you want to increase your revenue, find a way to get more money from your existing customers.

You can raise your prices or offer your existing customers more value.

Aim for a negative churn rate—you want your existing revenue to more than offset the cost of those that are leaving you.

Steli Efti:

Hey everybody, this is Steli Efti.

Hiten Shah:

And this is Hiten Shah.

Steli Efti:

And in today's episode of The Startup Chat we're going to talk about different ways  for you to increase you're customer lifetime value.

Key points in this episode

Key Highlights

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