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.
Hey everybody, this is Steli Efti.
And this is Hiten Shah.
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.