The subscription revenue impact of customer lifetime value 

Loyalty makes the world go around – it’s the key to your personal relationships and one of the most important values for brands, too. Being a customer-centric business means nurturing your customer relationships and providing good value with every interaction. The reward for success in these endeavors is clear: customer retention.

It’s well known that acquiring a new customer requires far more effort, time, and money than retaining an existing one. Yet, for many businesses, understanding how to optimize customer retention remains a bit of a mystery. A customer-centric culture won’t cut it – customer loyalty hinges, to a large extent, on how you use customer insights and how you measure success.

Subscriptions and loyalty programs can help modern businesses shine a light in the darkness and unlock long-term profitability. Their secret? Maximizing customer lifetime value!

How customer lifetime value works

Customer lifetime value provides a customer-centric viewpoint to inform retention strategies. It indicates the average revenue you can generate from a customer over the entire lifetime of their account. 

The subscription business model lends itself perfectly to maximizing CLV and thus boosting your retention efforts. This is because subscriptions offer a more loyal customer base with predictable purchasing patterns. Contrast that with relying on one-time sales to customers who may or may not return, and you won’t be surprised to hear that subscription-based businesses grow five times faster than their traditional peers. 

Subscriptions drive revenue growth through improved CLV, loyalty, and customer retention. There are three main reasons why:

1. Subscription programs provide you with a predictable revenue stream with ongoing growth potential. Unlike static revenue figures that remain constant monthly, subscription revenue compounds with each new subscriber. Revenue grows exponentially as long as you can acquire new subscribers at a pace that surpasses customer churn.
   
2. Subscribers typically have a higher CLV than regular customers. Over time, they spend more than customers who make occasional purchases.
   
3. Subscribers are inherently easier to retain than customers who require constant reacquisition efforts. The costs associated with retaining existing customers are also significantly lower than the costs incurred acquiring new ones, which further helps brands maximize CLV.

Technology tools for customer retention success

Subscriptions and loyalty programs go hand in hand in that they work towards the same goal of boosting customer lifetime value and loyalty. However, for your technical teams, these are disjointed processes. The good news is that they don’t have to be! 

Hybrid models – which merge subscriptions with loyalty programs – can be highly effective when integrations are implemented with the right technology partners. This is why Chargebee and Eagle Eye work so closely!

With Chargebee, you can:

• Rapidly launch and iterate subscription-based plans and products through freemium, trial, and paid offerings
• Provide tailor-made offers for long-time subscribers and those most likely to churn, thus mitigating cancellations
• Gain actionable insights and analytics on those customers who do churn to sharpen and refine future customer retention strategies
• Benefit from the automation of collections, revenue recovery, revenue recognition, and more

With Eagle Eye, you can gather, manage, and execute engagement strategies utilizing customer data with your systems, such as point of sale, CRM, and loyalty program databases. It provides a comprehensive digital marketing toolkit encompassing:

• Real-time digital loyalty programs
• Personalized promotions
• Gifting and cashback initiatives
• Charitable donations
• Third-party partnerships and coalitions

The seamless integration between Chargebee and Eagle Eye means that your team can focus on what they do best – while the subscriptions and loyalty experts alleviate manual management burdens and provide tools and best practice advice to help you succeed. 

Want to learn more about how Chargebee and Eagle Eye can help you supercharge your retention strategies and build lasting loyalty? Read our new e-book.