People today have a wealth of options when they choose where to shop and how to pay. This means businesses must work even harder to create seamless experiences, given that the slightest hiccup can lead to lost sales and customers.
This can hurt what’s known as customer lifetime value (LTV) — the total monetary value a customer creates over the course of their relationship with a business. Understanding this metric is vital: It costs much less to invest in relationships with existing customers than to convert new ones.
Consider this: Just a 5% increase in customer retention can boost profits by between 25% and 95%, according to the Harvard Business Review.3 Issuers and merchants will see measurable results if they can put themselves in the shoes of the consumer and develop creative ways to keep their customers happy and loyal.
40%
of customers wouldn’t buy from a merchant after their first false decline2
5%
increased retention can boost profits by between 25% and 95%3
Where do you start improving your LTV?
Here are five tips for retailers (or merchants) and card issuers:
Then crafting an experience tailored to these evolving needs.
Every touch point on this journey should be seamless to make purchasing as easy and efficient as possible.
It begins with a deep dive into how customer demands are changing.
1
Experience and transparency matters
Payment disputes are inevitable. Sometimes it’s fraud, other times it’s transaction confusion, which is when a consumer doesn’t recognize a payment and reports it as fraud. Providing customers with enhanced purchase information, such as a clear name and logo, geolocation data or fully itemized digital receipts, adds clarity to transactions, reduces disputes and limits chargebacks. Merchants should make this information easier to access for their consumers — whether through their own merchant app or consumers' banking apps. Not only does this make the purchase journey more transparent, it also deepens customer trust.
2
Curb card declines
When a customer’s card is blocked at checkout, there’s a high risk that they’ll abandon their purchase and use a card from a different issuer the next time they shop. Merchants and issuers should rely on data to help approve or decline transactions. Solutions that provide dispute data in real time can help them better identify fraud, reduce false declines and improve authorization rates, which means less chance of a card going back into a wallet.
3
Get personal
The more products and features a customer uses, the higher the chance of retention. For issuers and merchants, that can mean offering new features to help boost loyalty, such as the ability to manage subscriptions directly via their banking apps, or providing targeted offers based on shopping history.
4
Keep it simple
Most people have multiple cards, so issuers need to make it easy to use their card. Each time a customer receives a replacement card, for instance, the new card should automatically update in the background wherever it’s been stored for recurring payments and online purchases. This will save consumers from having to reenter their card information when returning to a merchant, such as the online marketplace where they regularly buy their groceries, smoothing the experience and preventing any potential gaps in spending.
5
Time means money
Give customers more options to self-service in their bank app. Giving them access to more information, like digital receipts, or enabling more options like subscription controls can reduce the number of calls into a call center to handle simple inquiries or tasks. This saves money and creates a more efficient experience. Self-service options cost pennies, while a live call can cost more than $7, according to the Harvard Business Review.4
Conclusion
It’s human nature to seek change and new ways of doing things. But pursuing new customers without investing in existing ones only hurts your business.
Adopting LTV strategies makes your business stand out in today’s competitive marketplace — and puts you on the path for the future.
1. Ethoca. Digital Field Guide. 2023
2. https://explore.forter.com/new-user-missed-opportunity/p/1
3. https://hbr.org/2014/10/the-value-of-keeping-the-right-customers
4. https://hbr.org/2017/01/kick-ass-customer-service
The long game: Putting customers center stage for lifetime returns
EXPERIENCES
1/2
of consumers would consider switching to rival providers to get the services they want1
The long game: Putting customers center stage for lifetime returns
EXPERIENCES