a call center agent working on ways to improve their client's customer lifetime value.
Call Center Outsourcing, Global Response Blog

Using Call Centers to Improve Customer Retention and Increase Lifetime Value

red vector stroke

There’s no business out there who doesn’t want to improve their customer retention and CLV. Focusing on both, or either, of these metrics confer an outsized degree of benefits:

  • increased profits and revenues
  • increased conversions and sales
  • higher levels of word-of-mouth marketing
  • improved NPS and CSAT scores
  • more effective marketing and lower acquisition costs

But in today’s saturated marketplace, convincing customers to become—and remain—loyal to your brand is more difficult than ever.

The secret weapon to improving customer retention and CLV? Your call center.

Don’t believe us? In this article, we’re breaking down the recent data and future trends to demonstrate why your call center is an essential element in customer retention—and how to use it effectively.

Understanding Customer Retention and Lifetime Value

Before you can improve your customer retention and lifetime value, you need to have a clear way to calculate, track and measure each of these.

Customer retention rate is slightly easier to calculate, and can be calculated using this formula:

[(CE-CN) / CS] x 100 = CRR

That may look confusing, but it’s pretty straightforward. First, customer retention rates are always measured based on a specific timeframe, typically monthly, quarterly or annually. Once you’ve determined the time frame, you’ll get three specific measures:

CE: The total number of customers at the end of the period
CS: The total number of customers at the start of the period
CN: The number of new customers added within the period.

From there, you can subtract the number of new customers added from the total number at the end, and divide by the number of customers you had initially to determine the percentage of existing customers that were retained over the course of the period.

Customer lifetime value is slightly more complicated to determine, but can be determined with the following formulas:

Customer Value x Average Customer Lifespan = CLV
Customer Value = Average Purchase Value x Average Number of Purchases

Most companies measure average purchase value and average number of purchases on an annual basis, which gives you the average customer value for the previous year. Once you determine your customer value, you can multiply by the average customer lifespan to determine the average Customer Lifetime Value.

Obviously, the longer you can retain your customers, the more valuable they will become. Not only does retaining your customers increase CLV, but data shows that the longer customers stick with your business, the higher their average purchase value and purchase frequency becomes, further raising CLV. There’s other benefits to retaining customers as well—just look at the data:

  • The average customer spends 67% more in months 30-36 of their brand relationship than in months 0-6.
  • Increasing customer retention rates by 5% can boost revenue by 25% – 95%.
  • Acquiring new customers is 5 to 25 times more expensive than retaining your existing ones.

As you improve customer retention, you not only boost CLV, but also make your marketing more effective, develop stronger brand loyalty and word of mouth marketing, increase profits and strengthen overall customer value.

The Impact of Call Centers on Customer Retention

Unfortunately, in the quest for improved customer retention, companies often overlook a key element: their call center.

The call center has a major impact on customer retention and brand loyalty, in large part due to the importance today’s customers place on customer service and experiences.

  • 92% of customers will switch to another company after just three (or fewer!) negative experiences
  • 60% of consumers have purchased from a specific brand expecting to receive better service over a competitor
  • 81% of customers say positive customer service experiences makes them more likely to purchase again from a brand

As the data indicates, customers not only factor customer service into their decisions about where to shop, but it also influences their loyalty, retention, number of purchases, referral rate and more. Excellent customer service, then, is one of the key strategies you can use to foster customer loyalty and improve customer retention.

The front line of your customer service is, of course, your call center.

The more dedicated your call center is to:

  • delivering consistent, excellent and on-brand customer experiences
  • offering omnichannel and seamless customer support
  • providing friendly and knowledgeable customer service
  • connecting and empathizing with customers so they feel known and cared for by your brand
  • developing agents who are true brand specialists and can deliver exceptional experiences every time

the stronger your customer retention will become. It’s a big reason why we at Global Response are so focused on developing our agents as brand specialists for our clients. With more personalized service that delivers strong brand experiences, customers feel known, seen and understood by your brand, strengthening their loyalty, purchase value and retention.

Call Centers and the Increase of Customer Lifetime Value

Of course, as call centers play a crucial role in customer retention, they also play a role in customer lifetime value.

As the data above shows, the better service customers receive, the more loyal they will be to your brand. And the more loyal customers are to your brand, the higher your CLV will be. Great customer service and a strong call center undergirds all of this.

But there are other ways a call center can support CLV as well. For example:

  • delivering proactive customer service
  • offering personalized customer experiences
  • employing empathetic and friendly agents
  • offering seamless customer experiences

Great customer service can indirectly impact purchase value and frequency, but proactive customer service—anticipating customer needs and product usage—can provide a foundation for effective cross-selling and upselling. Not only does this increase revenue and lifetime value, but improved selling can create better product fit and provide more value from your brand to the customer, further increasing loyalty.

In addition, seamless, personalized experiences are becoming a cornerstone in customer service that can make or break a customer’s loyalty and lifetime value. According to recent research, 70% of customers say they purchase more from companies that offer “seamless, conversational experiences,” and 77% of business leaders agree that increasing personalization has improved customer retention.

As customers feel more empowered, connected to and cared for by your brand, they will become more loyal, thus increasing their purchase value, frequency and spend.

Strategies for Leveraging Call Centers for Customer Retention and CLV

So, how can companies actually leverage their call center to improve customer retention and CLV? Here are five key tactics we’ve successfully used across a variety of clients and industries:

Ready to perfect your CX?

Save money and increase sales with a brand-obsessed, people-first team that delivers a high-touch, superior customer experience, every time.

Implement customer segmentation in your call center. Customer segmentation not only allows you to better understand your customers—thus enabling you to improve upselling, cross-selling and so on—but it also allows you to more easily and effectively personalize your customer experiences. As personalization continues to become an expectation in customer experiences, segmentation within your call center—not just within your marketing—can allow you to improve retention and grow CLV.

Provide comprehensive training for call center agents. Training—especially ongoing training after the onboarding stage—is one of the most overlooked strategies for call centers to improve customer retention rates. The better service agents are able to provide, the more loyal your customers will become. And according to some surveys, 62% of agents say that more training would allow them to offer better customer experiences.

Use advanced technology and CRM tools. Modern technology and CRMs allow call centers to offer truly seamless customer experiences, ensuring every agent knows the entirety of a customer’s history while providing up-to-date information and solutions. Today’s tech can also provide personalization recommendations, speed up processing, offer AI assistance for sentiment analysis or de-escalation and support other personalization and customer experience tactics.

Listen to your customers and implement actionable feedback. When customers feel heard and understood by your brand, their loyalty increases. One of the easiest ways to make this happen is to regularly gather customer feedback—through CSAT scores, NPS ratings, customer surveys, online reviews or other means—and then implement the most actionable feedback. Be sure to share with your customers when you implement feedback and how it was implemented—it demonstrates that you care about what your customers’ value and are willing to put it into action.

Strengthen your customer support. Finally, strengthening the foundations of your service is always an effective strategy. 80% of customers say that “speed, convenience, knowledgeable help and friendly service” are still core expectations of a good customer service experience, but expectations for what exactly those mean are always changing. Implementing omnichannel support solutions allow you to provide personalized, convenient and fast service in line with today’s consumer expectations. Other modern tools—AI assistants, stronger QA processes—will allow you to make your service faster, better and more effective.

Challenges in Maximizing Customer Retention and CLV Through Call Centers

As with many metrics, one of the biggest challenges in maximizing retention and CLV is balancing quality with quantity of support. As you expand your service across different channels—as is the expectation for today’s brands—you also need to maintain a high level of quality across all of them for brand consistency.

Omnichannel solutions provide software and processes that make this much easier, collating customer history and data in one place so that any agent on any channel—whether that’s phone, live chat, social media or something else—can have a clear look at each customer’s contact and purchase history. Such solutions allow you not only to offer more personalization, but also provide more seamless experiences, without customers having to repeat themselves, be transferred endlessly between agents, or contact your brand on multiple channels before receiving a response.

Another challenge comes with integrating and analyzing customer data. Customer data is essential for personalization, segmentation, and more—but integrating and analyzing it can be a difficult task. This is why it’s essential for call centers to have not only the right software, but also the right expertise to manage, analyze and appropriately implement data.

How Global Response Call Centers Have Improved Customer Retention and CLV

At Global Response, our emphasis on developing agents as brand specialists and delivering exceptional customer service experiences have allowed us to consistently improve customer retention and CLV for our clients, achieving rates such as:

During our partnership with LACOSTE, a luxury retail brand, we implemented extensive brand training for our agents, ensuring that we could support their luxury brand with luxury service. Our brand specialists for LACOSTE came to know the brand inside and out through a training program we developed that ensured we delivered exceptional results.

In addition, we implemented state-of-the-art technology and increased reporting that allowed our team to understand how to continually improve our service delivery, leading to increased customer conversions and retention alongside competitive, top-notch customer service.

“To be competitive, you have to deliver top-notch customer service. When you visit Global Response headquarters, you see that the whole company embodies customer service—it’s all about your brand and your customers.”
Laura Uruchima, LACOSTE Retail Customer Service

The Future of Call Centers in Customer Retention and CLV Enhancement

As consumer expectations grow, the role of call centers in customer retention and CLV will only continue to grow as well.

One major trend we’re already seeing is the shift to omnichannel customer service. In 2023, customers have high expectations of seamless, conversational support, regardless of channel.

  • 72% of customers now expect immediate service
  • 70% of customers expect that anyone they speak to should already have the full context of their history with the brand
  • 62% expect support to flow easily between physical and digital spaces

The more straightforward way to meet these increasingly-common expectations is to implement omnichannel support, which we expect will become increasingly common and expected in call centers.

Similarly, the role of AI and machine learning in call centers is continuing to grow, and will only continue to do so in coming years. Not only do customers want and expect AI to become an increasing aspect of their lives—and customer experiences—but businesses and call centers are implementing AI solutions with success.

  • 77% of customers agree that AI / chatbots are helpful for simple issues or questions
  • 75% of customers expect that AI will eventually provide the same level of customer service as human agents
  • 72% of business leaders said that expanding their use of AI in customer service was “very important” or “somewhat important”

Call centers who aren’t yet implementing modern solutions such as omnichannel support or AI solutions are setting themselves up to quickly fall behind the curve. As you set your strategies for customer retention and loyalty, be sure to work with a modern call center who can help you understand the current and future trends for call centers—and successfully implement them for your business.

Conclusion

Call centers play a huge role in customer retention and lifetime value, but it’s a role that’s frequently overlooked.

Working with an outsourced call center can not only allow you to provide more effective customer service, but can also set the foundation for your brand to achieve:

  • increased customer conversions and online sales
  • higher average purchase values and frequency
  • improved customer retention and loyalty
  • increased customer lifetime values
  • higher quality service levels
  • and more!

For a call center you can trust to deliver quality service and results, connect with Global Response. As the experts in quality customer service for over 40 years, we’re here to create brand specialists that can serve your brand—and your customers—to improve your customer metrics and loyalty. Connect with an expert from Global Response today to see how our team can support your goals.

FAQs

Customer lifetime value can be calculated by multiplying the average purchase value over a set period of time by the average number of purchases of that same time period by the average customer lifespan.

Call centers can have a huge influence on customer retention and lifetime value through delivering exceptional customer service, which not only influences where customers shop, but also how frequently they shop there, how much they spend, how long they remain loyal to the brand, and how many other customers they refer. Better customer service is directly correlated with customer retention, loyalty and overall CLV.

There are many strategies that can be used to improve customer retention and CLV using your call center. Some key strategies that we have used successfully include introducing customer segmentation in your call center, integrating modern technology to support seamless and omnichannel service, providing comprehensive agent training and increasing personalization.

Two of the biggest challenges include balancing quality with quantity as you expand your support channels and see increased customer contact volume, as well effectively integrating and analyzing customer data. Both of these challenges can be alleviated by working with a call center partner that has the necessary expertise and modern technology to support growing customer expectations.

As modern technology and consumer expectations continue to evolve, omnichannel support and AI / ML developments for call centers will become increasingly necessary to support customer retention. Call centers who are not currently implementing omnichannel and AI solutions should know that these “future trends” are quickly becoming an expectation that will influence where consumers shop and how much they spend with your brand.

Stay in touch!

Subscribe to receive industry insights and trends.

Subscribe to receive industry insights and trends. You’ll learn more about how the best customer experience solutions can change the game for your brand.