The Value of a Lifetime Customer

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Acquire and Retain More Customers with the Right Contact Center

The Value of Customers


If an account can be expected to generate $1000 in revenue per year, over seven years the relationship with that customer is worth $7000 minus the cost of serving that customer.

It is a long-accepted truism that it costs more to acquire a new customer than it does to keep an existing one. For any small business that is looking to grow, it makes sense to devote considerable resources to the challenge of keeping customers happy and satisfied because they represent a unique, developable asset. Too many businesses take a small-ball approach to customers, seeing each transaction as a one-off instead of an opportunity to create lifetime relationships. These relationships must be considered in terms of their value to the organization, and one way to do this is via customer lifetime value (CLV), a calculation that describes the total revenue that an organization can expect once a customer is acquired.

There are many ways to calculate CLV, ranging from very crude approximations to highly detailed forecasting models. In essence, the process compares the total revenue projected to come from a customer to the expected duration of the relationship. For example, if an account can be expected to generate $1000 in revenue per year, over seven years the relationship with that customer is worth $7000 minus the cost of serving that customer (ignoring net present value adjustments). What makes it difficult to nail down is putting numbers to the variables: how long the relationship will last, how much revenue will come from it, the cost of maintaining the relationship and reducing the amount to net present value. Whatever calculation method is used, the goal is to put a long-term perspective in place. Investing in customer loyalty and retention programs is one of the best ways small and mid-sized businesses can generate cash flow while cultivating a base of potential brand advocates who will spread the word about positive customer experiences. Lifetime customers are a revenue driver, a source of word-of-mouth recommendations and, best of all, a competitive differentiator.

Despite knowing this, many organizations miss the goal. Some do not know exactly what steps are needed to identify and encourage repeat customers, or what factors go into creating a “loyal” relationship. Others simply underinvest in the key customer-facing functions that determine satisfaction and loyalty, like contact center staff, training and easy-to-navigate technology.

This is understandable, since for many years smaller contact centers (those with 30 to 300 seats) have been treated as a necessary cost rather than an engine of customer retention. But we are in an era of industry-wide change that is encouraging organizations—especially smaller ones—to reimagine customer experiences and service delivery as opportunities to improve customer retention and thus generate topline revenue growth and cashflow.

Customers’ expectations are changing as well. They want effortless experiences that are fast, easy, correct and performed via the contact method of their choice, whether that be a voice call, text message, chat window or even a video call. Modern consumers are rapidly migrating to digital channels and automated self-service. This puts pressure on smaller organizations to utilize more flexible technologies that deliver quality encounters and measure outcomes and the return on investment.

How to Create a Customer for Life

There is no magic formula for building loyalty. It requires consistency, persistence and continuous improvement. The highest priority in any effort is to be reachable across contact channels, hopefully in the specific ones preferred by the consumer. Communication—and the resolution of customer issues—should be fast and correct, with mistakes acknowledged and corrected quickly. Loyalty is created when a company can react to customer inquiries on the first try, putting the customer through as little effort as possible. It helps to know as much about the customer’s preferences as possible, and to reach out in advance to address small problems before they become big ones.


There is no magic formula for building loyalty. It requires consistency, persistence and continuous improvement.

The contact center agent is the key to making this work. As the face of the organization, they need tools that will help them work more efficiently and perceptively, with fewer distractions, delays and transfers. Information they supply to customers must be accurate and current when it is supplied to them, and this is achieved through knowledge management applications and other resources. Agents require enhanced coaching and training, along with smooth user interfaces and agent desktops. These tools should be purpose-built for contact center agents, rather than repurposed versions of what is already in-house (perhaps tools used by sales teams or back-office workers). Modern tools are designed to enhance customer loyalty and satisfaction by providing agents with guidance and advice about the next-best-action to take, as well as insights into customer intent.

The self-service environment is of equal importance. Mobile, plugged-in consumers require options for helping themselves that are seamless—no repeating information to an automated system at every stage. Their experiences can be improved by automated interventions that detect frustration and escalate self-service inquiries quickly to the right next stage. Also key to building loyalty and longevity is proper measurement of the qualities you want to develop. Most contact centers track activities like the number of calls or interactions, their length and the amount of time agents spend in various work states. Those are fine for operational efficiency, but they reveal very little about the strength of an organization’s bonds with the customer.

In addition, consider analytics that describe the customer’s lifetime value under different circumstances. This provides insights into what aspects of the relationship the organization can control and which aspects it cannot. The best metrics are those that stress outcomes over activities, like revenue contributions or repeat engagements, and those that measure advocacy, like NPS.

The Tools Will Determine the Results

Making these investments is not trivial. It will require a commitment of time, money and personnel to get right. But the payoff can be profound. Loyal customers spend more, stay longer and tell more people about the experience. That means that making the choice to deploy these technologies and change processes will pay off in terms of faster topline growth and cashflow.


Deployment in the cloud does provide access to state-of-the-art technology at reasonable cost, if delivered through a modern CCaaS platform.

But these benefits will not accrue with the kind of low-impact tools that smaller contact centers have typically used or have access to. For example, many firms that are early in their development have created ad-hoc tools like spreadsheets to use for workforce planning and quality control. Smaller centers are often staffed by people who wear multiple hats and have sparse resources at their disposal. As a result, they sometimes lack clear operational insights. Running a contact center this way hinders much of the measurement, routing and agent management functions that a business needs to build solid loyalty and customer lifetime value. Using a basic business phone system or CRM platform to run a contact center adjacent to the rest of the business will not generate the results that allow a small firm to compete with the efforts of a larger enterprise. A lightweight contact center from a Unified Communications as a Service (UCaaS) platform has similar constraints.

Deployment in the cloud does provide access to state-of-the-art technology at reasonable cost, if delivered through a modern Contact Center as a Service (CCaaS) platform. Small centers are often drawn to the cloud because of cost and scale. Cloud provides the ability to ramp up or down the number of seats in use to meet peaks or valleys in demand, and to do it without huge infrastructure costs. Another element often overlooked is that CCaaS can future-proof operations. New features are pushed to users on a tempo far quicker than on-premises platforms, without necessarily adding to the overall cost. Contact centers do not have to plan for the obsolescence of their hardware, and a business can look ahead to adopting new features on their own timetable.

As tools come up for replacement, or as an organization’s contact center outgrows its infrastructure, modern CCaaS platforms are able to replace existing tools with more capable ones, rather than just less expensive ones. For example, modern systems allow centers to blend agents across multiple contact channels, which both enhances productivity and provides a better customer experience. This flexibility is necessary to nurture long-term relationships and build loyalty.

Moving from a low-end on-premises system to CCaaS is a way to upgrade the entire suite of applications at once. Some examples of tools that can become immediately available include agent management tools for coaching and evaluation that leverage AI and machine learning to increase monitoring coverage; analytics of speech and text that assesses customer intent, sentiment, and agent adherence; and increased contact channel choices that are fully integrated into CRM and marketing resources. These were long out of reach for smaller centers, and they are part of the reason why big organizations can focus so well on building loyalty. CCaaS is one way that SMBs can close this performance gap.

The Decision-Maker’s Dilemma

Growth and customer retention are not what contact centers were originally designed for, but they are top of mind for executives and other decision-makers—especially in small and medium-sized businesses where roles may be blurry. In that environment, even if existing tools are capable of handling current volume, it is likely that the organization does not know what it could be achieving by upgrading to tools that leverage the constantly improving state-of-the-art. To build a loyal and long-lasting customer base, organizations should explore the use cases for advanced tools that they may have overlooked in the past: AI, analytics, integration with existing back-office applications, and connections to marketing and sales teams (and the analytics tools they use).

Customer experience management encourages a shift in the way people think about interactions. In the traditional reactive stance, the organization perceives customer interactions as an unpredictable and voice-centric cost. Instead, shift to a proactive stance, where the organization knows in advance what the potential value of each customer is, and how that can be monetized through messaging, personalization and better agent awareness of the interaction context.

In the decision-maker’s hands, awareness of the savings gained from efficiency improvements and increased revenue from greater lifetime value can be part of the business case for making a more strategic investment in a modern contact center. By focusing on value instead of cost, small and mid-sized businesses can do more to drive revenue and customer retention. In the process, they transform the contact center into an engine of growth instead of the site of problems that need to be fixed and costs that need to be contained.

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