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Increasing CLTV

What is CLTV and how can you increase it?

March 29, 20245 min read


Last week I was having a discussion with a business owner in the residential solar space. He mentioned that they were showing strong growth and doing their best to position their business for an acquisition. To that end, he expressed some of the lessons he had recently learned about the value of a solar business and some items the investors who were evaluating the business mentioned they should focus on. Guess what? One of those items is CLTV

CLTV is an acronym for Customer Lifetime Value. The metric looks at what is the total revenue that a business can reasonably expect to earn from a single customer throughout a business relationship. The reason this is important is that there are really only two ways to grow revenue in a business: 1. make more sales OR 2. increase the revenue per sale made. Last week we talked about how STAKT can help you make more sales so lets dive in this week to ways businesses can increase the revenue per sale made, or CLTV.


Lets get clear on 5 ways any home service business can increase the Customer Lifetime Value in their business:

1. Increase the price of the product/service you sell now

Its very common for business owners to get super focused on the day to day operations in a business and not think to question existing practices that may be holding their profits hostage. In general (just like landlords) it is completely reasonable for a business to look at their pricing annually so that they can consider whether or not a price increase sense on their current products. With a resounding yes I'd encourage every business owner to annually raise their prices. Whether you want to raise prices on new customers and gradfather old customers in to existing pricing is up to you BUT I can say that as costs go up the Lifetime Value of a customer also MUST go up for businesses and their owners to thrive. So don't be afraid to make that reasonable price increase annually.

2. Add more products/services to your business to sell

Especially in solar, I've noticed a clear trend with existing home service businesses as they seek additional revenue. They are adding more offerings for their sales teams to give consumers. If you're in pest control offer a solar appointment after the sale. If you're in solar, start by selling fiber and then transition to the higher ticket solar sale after the trust has been built. Theres a mixing and matching of fiber, pest, hvac, permanent lighting, turf, landscaping, satellite, security, solar, and others. Luckily, we've got you covered and within your STAKT account you can offer multiple products and we can help track the commissions on all of those various products that can be purchased by just one customer. This is definitely one of the fastest ways to increase your CLTV, and to increase it by a large margin.

3. Create a referral machine from existing customers

Nothing can be better for a home service business than when one customer turns into two! Theres a very clear path to increased CLTV when the customer experience is excellent enough that an existing customer is willing to refer their family, friends, and neighbors. If a company can really dial in their ability to make referring new customer easier then this is viable. Some key ways to make sure the referral machine is operating successfully all hinge on feedback loops from the existing customers you're serving. This boils down to online presence with reviews, post service testimonials, surveys of customers who have been served, and then the most obvious one: ASKING! Make it a habit via text, email, and in person to always ask for feedback and referrals from your current customer base. That added value and attention to them will definitely help increase CLTV in the business.

4. Use warranty, guarantee, or maintenance plans to create more value

Recently I had the chance to meet a business owner of a solar panel cleaning business. They created an entire offering around this specific point that drastically increased CLTV as well as the value of their business. The company provides critter guard services, cleaning services, and just added a maintenance plan to their sales process. Very simply put they know have a REOCCURRING income to their business because each time they sell a maintenance plan to a customer they get $50-$100/month. Talk about a win! Any service business who has a large high ticket offer or a 1 time type purchase should definitely consider some type of ongoing revenue model to provide maintenance, cleaning, a warranty, or a guarantee to the customers they serve. Its one of the most frictionless additions to a new business because customers are so used to paying for insurance or these types of recurring monthly costs.

5. Increase likelihood or repeat purchases from 1 customer

Similar to item number 3 but with a small nuance. Both of these suggestions hinge on the customer having an unparalleled customer experience. If the product and service are high quality then the CLTV is more likely to go up. In this case, i'm referring to the ability to purchase again from the same customer. In my opinion this comes down to having good data and communication. Consider a newsletter, make sure they have your number saved, is your website accurate? All of the things that create friction when a customer tries to call in and get a service have to be evaluated. Do you have their accurate contact info? When is the last time you or a team member spoke to them? Again, if there is a relationship built with the customer than the next time they move or need your services again they will absolutely use you again. Especially in the higher ticket trades like solar, roofing, or hvac there could be the "one and done" tendancy always chasing the next deal but with a great experience the next home purchase could easily double your CLTV when they use you again because of that quality relationship.




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Devin Oakes

Devin Oakes CRO STAKT Commissions Helping home service companies simplify and automate their sales commissions. #makecommissionsgreatagain

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