How To Enhance Buyer Lifetime Worth : 6 Secrets To Scale Up

This is a strategy that you have to apply to have a better average cart worth. By averaging the lifetime worth of all of your prospects, you get a stable image of your profitability. A high CLV usually refers that an extra customer adds extra income to your company. When this happens, it means you probably can afford to spend extra on customer acquisition. Customer lifetime value (CLV) is amongst the most necessary efficiency metrics for any business.

If you wish to know tips on how to enhance customer lifetime worth, this may be a foundational step, as glowing critiques are magnets for brand spanking new, high-value clients. You can get the total rundown in our information on how to create a Google Review QR code. Customer Lifetime Value is doubtless one of the most necessary metrics you can be monitoring as an e-commerce model. When you have a glance at the average lifetime, then look at their CLV, it tells you exactly how a lot revenue every buyer produces over that given period of time.

You can use some methods for upselling and cross-sell, like bundled merchandise, a complimentary product added with some specific order, free shipping after some certain quantity, and lots of extra. A great personalized experience can enhance your relationship with customers. It is shown that eight out of 10 customers are keen to pay more for a personalised experience. NPS makes it straightforward to search out out precisely what clients love and don’t from your corporation. A excessive NPS rating is an efficient way to upgrade your CLV while increasing your prospects.

There are other ways to calculate CLV, but before we reveal them, there are a quantity of metrics you have to acknowledge and calculate first. Oh, don’t overlook to pay consideration to their feedback and use them in your favour to hold your corporation to an even higher point. CLV is a great asset and key to making monetary forecasts and addressing any finances considerations. It provides you perception into many areas of your business and offers the knowledge to be projected onto your future business choices. So, don’t get disheartened or distracted by complex CLTV calculations. Instead, focus on the crucial first step of mixing your information into a single location.

By analyzing buyer feedback, buy history, and engagement metrics, businesses can determine frequent causes for churn and develop methods to mitigate them. This might contain improving product high quality, enhancing buyer help, or implementing loyalty applications to incentivize repeat purchases. While capturing a customer’s attention initially is necessary, sustaining their engagement over time is equally crucial for maximizing Customer Lifetime Value (CLV). One approach is to spend cash on a sturdy buyer relationship management (CRM) system that permits businesses to track buyer interactions, preferences, and behaviors. Start leveraging CRM knowledge to develop personalised retention strategies, corresponding to targeted provides, loyalty applications, and proactive customer help.

Identify all qualified leads and high-value clients throughout the entire customer journey in one single place. Alignment between sales and buyer success leads to greater retention. At Proposify, buyer success managers weren’t totally certain why prospects purchased their product. And the AEs didn’t know what info was required to kick off an account. The startup is so known for its unparalleled customer assist that it has become an integral a half of its distinctive promoting proposition (USP).

The trick to a structured tier plan is to work out the pricing in a method that’s advantageous to your model. Consumers can typically choose between monthly, bi-annual, or annual membership plans. Those manufacturers then sometimes offer discounted rates for those who commit to the longer plans as opposed to going month-to-month. Almost every SaaS company now supplies multiple membership choices to its customers. However, the shocking nature of it’ll make the consumer notice that you just do consider and worth them as an individual buyer.

They already understand you and your product or service, and they’ve already parted methods with their own cash to work with you. Maybe your prospects spend so much and you’re making a great margin, however they just don’t order very often. Try a few of those campaigns to maximize revenue by nurturing long-term customer relationships.

The three parts of Customer Lifetime Value (CLV) are customer acquisition costs, buyer retention prices, and customer profitability. It should really feel easy to use and a delightful addition to your already nice customer experience—that’s the important thing to seeing the CLV outcomes you want from it. Get inspired by well-known loyalty packages like the one from Sephora, Alo Yoga, and Starbucks. Loyalty packages can be anything from points system and cashback offers to exclusive perks and tiered rewards and reductions. Before you choose one, survey your best customers or research your target market to learn the kinds of loyalty packages they prefer and revel in most. It is necessary for businesses to continuously adapt and innovate their choices to fulfill evolving buyer wants.

For instance, whenever you calculate customer lifetime value (CLTV) towards every origination source (referral, organic search, chilly gross sales outreach, and so on.) tells you where your time is finest spent. You might find that a customer who makes a purchase order after seeing a Google advert and visiting a touchdown web page is value $1,000 over their lifetime. But then you definitely uncover that a buyer who is referred to your business and speaks to a member of your gross sales team before buying is worth $5,000 over their lifetime.

Delivering a personalised buyer experience is amongst the most effective methods to extend lifetime value. Modern consumers expect brands to know their preferences and cater to them. In fact, 77% of customers have spent more money or really helpful manufacturers that provide a personalised service or experience​. Raising your prices can enhance buyer lifetime worth, but it could additionally put you at danger of dropping prospects. Be cautious and think about buyer retention and market components when adjusting your pricing technique. Customer lifetime value is the total amount of money a buyer spends in your products and services during their relationship along with your firm.

Improving it means offering higher service, help, and communication throughout the client journey. This leads to larger customer satisfaction, more repeat purchases, and constructive word-of-mouth. This predictability additionally helps you calculate how a lot to spend on buyer acquisition. If the price to amass a customer is €100 they usually usher in €500 over time, your customer acquisition cost (CAC) is well-justified.

Calculating buyer lifetime worth is not tough and involves a straightforward calculation. As lengthy as you’ve the necessary numbers to factor into CLV, you can get this number rapidly and easily. By monitoring your clients’ specific actions on your web site, you possibly can decide the steps or develop completely different features meant to influence prospects to stay engaged or even have interaction extra. By tracking every buyer individually, Netflix can optimize their lifetime value.

This encourages repeat prospects to make their subsequent purchase sooner somewhat than later, maximizing the impression of the discount. Customers usually tend to make a buy order when they understand the provide as exclusive and temporary. Abandoned cart restoration reductions immediately tackle the barrier that prevented the preliminary purchase, resulting in elevated conversion charges.

Shift away from “lifetime” and as an alternative give consideration to shorter payback periods. Payback period evaluation is more practical, and still permits for longer CLV calculations. Simply put, payback period refers back to the period of time it takes for a customer to generate sufficient profit (value) to cowl the value of acquisition (CAC). For eCommerce shops, CAC is a constant issue, and as we mentioned in our submit on conversion price optimization, CAC is rising across industries. Limiting CLV to a shorter timeframe makes the metric more actionable. Changes in make in personalized offers or triggered e mail campaigns, or any other techniques you use could be evaluated in true AB testing fashion.

Keep in thoughts that the metrics of the shopper lifetime worth model are interrelated. Raising the price may improve immediate revenue but decrease buy frequency and duration of engagement. Therefore, you should implement an built-in approach when considering all metrics. The first time you hear about it, buyer lifetime worth (also abbreviated as CLV, CLTV, LCV, or LTV marketing) might not come across as a vital metric. Failure to calculate, nonetheless, can put your brand lightyears behind your competitors. CLV permits brands to know how they fare with their viewers, how a lot their customers respect their choices, and what they’re doing proper.

They will transfer down the funnel into the sales assisted part of the loop. That’s the place you need to determine nurturing potential and supply custom presents. Retention, being an upward path, ought to match the shopper development fee. As a outcome, you want to have the power to measure your client’s progress fee for using your product. But, you aren’t building on that trust and selling supporting products or services. Every dollar left on the table with trusting clients means that you need to acquire new customers to compensate for churn.

Embrace the power of data-driven insights and superior technologies like Prism Reach to cultivate lasting, worthwhile relationships together with your prospects and obtain unprecedented enterprise progress. Understanding and optimizing the Lifetime Value of a Customer is a game-changer for businesses aiming to thrive in today’s aggressive setting. Use loyalty packages, discounts for longer-term subscriptions, partaking content, and community-building efforts to keep customers engaged and loyal over time. That’s why LTV is not only one other industry metric; it’s a guideline. It underscores the significance of viewing customers as long-term partners quite than one-time buyers.

Papa Johns will give you up to $20 off an order just by increase your points. Segmenting your CLV permits you to tailor your advertising strategies effectively. You can direct more resources to high CLV clients whereas utilizing cost-efficient channels for medium and low CLV segments.

By leveraging buyer segmentation effectively, you’ll not only improve buyer lifetime value, but in addition create a extra loyal and engaged customer base. For example, in case your high segment has an LTV of $1,000, you possibly can spend as much as that per customer whereas maintaining profitability. Keep studying to find actionable insights that align with cutting-edge enterprise practices and our dedication to enhancing your e-mail communication effectiveness and deliverability. Building nearer relationships with present prospects is the basis of maximizing your CLV.

It’ll help you get extra insights on how much your customers are value and the way a lot you’ll have the ability to spend on targeting new prospects. LTV represents the amount of cash your clients bring you throughout the entire relationship with your corporation. You can then use this information to retain extra customers and make your small business extra successful. If you might have a enterprise, you must know what Customer Lifetime Value is and how a lot of an impact it might have on your corporation’ gross sales and income. By strategically allocating sources, you’ll be able to improve your profitability.

To showcase – in 2010, the management of Zendesk, the assistance desk software program, outraged prospects when raising their prices, leading to a 300% improve in month-to-month fees for some users. Again, it’s pure for businesses to hike charges in some unspecified time within the future, but checking how dramatically it might have an result on the bills, particularly of their early prospects, might need helped avoid the wrong turns. What’s extra, this resolution lets clients know exactly when the service may be renewed once more. Many shoppers would doubtless respect this sort of reminder because it saves them time – they don’t need to lookup your FAQ part or contact your assist staff by email or cellphone.

As one of the most effective and inexpensive advertising tools, corporations of all sizes use social media to develop more private connections with their prospects. Calculating your buyer lifetime worth offers you the time to establish your prime clients. They’re loyal to your model and incessantly make extra purchases. As a fluid and dynamic metric, your organization can enhance its buyer lifetime value and enhance income.

This results in greater satisfaction, loyalty, and a higher probability of repeat purchases, all of which contribute to an elevated CLV. By persistently offering high-quality content, you can create a loyal buyer base that sees your model as an indispensable a part of their lives. By incorporating game-like components such as points, badges, and leaderboards, prospects are motivated to participate in activities that drive loyalty and repeat purchases. Implementing gamification can increase buyer lifetime value (CLV) by making interactions together with your brand more partaking and rewarding.

Imagine a service supplier analyzing usage patterns and suggestions gathered via AI chatbot’s analytical instruments. This information can guide the development of latest providers or enhancement of current ones, instantly growing CLV. Whether that’s through interactive media in your web site, unique unboxing experiences, or attention-grabbing advertising campaigns, use your band as a foundation to make your small business unforgettable.

If your system notices a card is reaching its expiration date, send a gentle reminder to the consumer to empower them to avoid service interruptions. Offering upsells and cross-sells is a robust approach to supply that personalised expertise described above. Subscription service sites like DashClicks provide each account person the flexibility to create their client dashboard and notification settings. Those who log in expertise recommendations specific to their interests, communications with their name, and product promotions based on earlier activity. They never have to waste their time sifting via data that doesn’t apply to their buyer persona. Let’s dive into our prime 12 ways every enterprise ought to use to extend the lifetime worth of a customer.

Retargeting your customers is a cyclic process that permits you to improve your Customer Lifetime Value that results in serving to you determine what prospects you need to be retargeting. Retargeting allows you to filter out the fraction of your prospects that you should be specializing in extra when in comparability with others. This is an important step as it helps you in understanding the shoppers that you ought to be placing more effort on in addition to who’s a extra valuable asset to your small business.

The actual lifetime worth of a customer is essential to forecast the expected performance. For instance, grouping your prospects and creating a mean portrait of each class will allow you to determine the potential income from a new customer. It’s enough to compare a new customer’s characteristics with typical portraits to decide on the right engagement technique. Now that you know how CLV is calculated, it’s time to make improvements in your course of. Follow the steps mentioned below to boost CLV and retain extra prospects.

Growing customer value is not a one-time project – it takes ongoing dedication from your whole team. Share information insights often, encourage new concepts, and celebrate wins together. When everybody understands how their work impacts key metrics, they’ll be extra invested to find ways to enhance them further. The strongest buyer relationships transcend simply buying and selling. Think about corporations like Patagonia – their dedication to environmental causes creates deep connections with customers who share those values. Building genuine emotional bonds turns glad prospects into passionate brand advocates who persist with you for the long haul.

‍A sensible technique for a lot of advertising groups is Recency, Frequency, Monetary (RFM) analysis. This teams customers based on how lately they bought, how regularly they buy, and how a lot they spend. ‍Not all customers are equal – some will solely buy once, while others become “VIP” repeat patrons. Use your information to determine segments similar to high-CLV prospects, medium, and low​.

It’s the measure that exhibits the whole value a customer brings to your small business over time, guiding you towards sustainable growth methods. From bettering your product’s worth and customer expertise to smart upselling and focusing on retention, every strategy performs a significant function in enhancing LTV. Customer lifetime worth (CLV) is calculated by multiplying common buy value by booking frequency and retention size. Travel brands typically layer in referral worth or loyalty redemptions to account for long-term engagement and advocacy. Moreover, businesses must communicate with users to maintain them informed about new rewards, updates, and different related data via e-mail newsletters and even social media. Overall, efficient loyalty program implementation requires a thoughtful and strategic method and should frequently evolve to meet the altering needs of shoppers.

Marketing to everybody will lead you to take a position extra resources in low CLV customers. A good tip is to increase communication channels for customer help. Ideally, it will help should you appeared into the channels your shoppers use the most and created touchpoints there.

Leveraging the high-value nature of ‘smart bedding trade’ merchandise can be key to maximizing earnings. Calculating owner revenue on this sector entails understanding the difference between gross income and net revenue. Owners typically pay themselves via a mix of wage and profit distributions, relying on the enterprise structure. For occasion, a business producing $2 million in annual revenue with a 20% web profit margin would have a internet profit of $400,000.

Confusion and frustration along with your services or products can stop your buyer from utilizing your offerings. As the name implies, calculating your historic customer lifetime worth includes using your business’s gross revenue from all historical purchases. Offering a versatile pricing mannequin is a superb method to give your clients choices on how they need to pay for the services. This means, you may give clients enough time to know the worth of your providers.

Both are confirmed ways to extend the amount a customer spends while not having to acquire someone new. By specializing in CLV, you shift your mindset from short-term sales to long-term relationships. This improves not just revenue however your overall customer loyalty and brand popularity. When you focus on growing CLV, you’re not simply making one sale you’re constructing relationships with long-term customers.

Suddenly, you’re not simply observing a quantity that tells you ways a lot it prices to convey on a customer. Now you have the context of how much value that customer brings you in return. And when you compare the two, you realize precisely how much to spend in order to grow. Learn how SAP Emarsys AI-Powered Analytics identifies opportunities and points all through the customer lifecycle.

Identify opportunities to upsell or cross-sell to your existing buyer base. By providing complementary products or premium upgrades, you presumably can improve the typical order worth and, consequently, the general CLV. Remember, it’s often cheaper to sell to existing customers than to acquire new customers. Understanding LTV permits companies to make smarter selections about the place to take a position, whether or not in acquiring new prospects, retaining existing ones, or enhancing customer experiences.

Be proactive and monitor customer health by connecting along with your audience frequently, not only when you might have one thing to promote. Keeping a pulse on buyer satisfaction may also allow you to take immediate motion in case of a sudden lower. It’s no secret that individuals (be they B2C or enterprise buyers) count on a fast response to their questions and support requests. One of the most effective methods to offer that is through round-the-clock buyer help. Yet, should you can’t provide 24/7 help, make sure your group can reply to buyer requests as quick as potential. The key to an efficient message is to find that value and present it to your clients in a means that shows your contribution.

Most corporations focus obsessively on that first click however neglect the whole user journey. As a end result, they miss out on opportunities to show one-time patrons into loyal, high-value advocates. Understanding and enhancing CLV is more than only a technique; it is a dedication to nurturing enduring customer relationships.

It’s essential to know what your customers are looking for and have interaction with them to get their opinion. So the longer they stick with you, the extra they spend, which means your small business reaps the advantages and, in turn, the customer reaps some advantages as well. It’s no secret people have favorites and this is especially true when it comes to eating places and the hospitality trade. People will exit of their method to frequent their favourite institution and often publish about their expertise on social media and tell their friends. Get discovered on-line, convert leads faster, generate more revenue, and improve your reputation with our all-in-one platform. The higher you understand the patron expertise and handle these pain factors, the higher you will turn into at making your process extra handy in your unique audience.

Similarly, retention strategies may be fine-tuned to concentrate on keeping these priceless customers engaged and happy, reducing churn and growing profitability. Customer Lifetime Value (CLV) is a metric that shapes the way corporations work together with their clients and strategize for the future. The importance of CLV to businesses lies in its ability to rework customer relationships into tangible assets, influencing everything from advertising strategies to product growth.

By fostering stronger relationships you possibly can cut back churn amongst your most precious customers. Customer Lifetime Value (CLV), someday known as life-time worth, is a prediction of the total net profit a company can anticipate to make from a customer over the course of their relationship. Check out this chapter devoted to tips on how to calculate customer lifetime worth. It’ll allow you to dig deeper into your buyer knowledge to see what retains them coming back (or drives them away).

Businesses might enhance their marketing and buyer administration methods by utilizing CLV to spice up income and client retention. Reengaging or upselling an current shopper is sometimes simpler than recruiting a model new one. To persuade clients to buy more expensive products or services without delay as a substitute of a cheaper various, upselling and cross-selling are methods. This holistic overview of your advertising campaigns helps you understand the form of particular person purchaser journeys primarily based on actual customer knowledge. Understanding how that contributes to conversions will enable you to focus your advertising spending and energy. Upselling and cross-selling are effective methods to increase the worth of every customer interaction.

In this time of technological developments, predictive AI stands as a strong device, remodeling the method in which we comprehend buyer habits. In essence, the importance of customer lifetime worth formulation stretches far and broad, influencing every thing from day-to-day operations to long-term strategic planning. It’s not just about understanding your prospects’ present value but forecasting their potential and sculpting methods that cater to their evolving needs.

It all comes right down to understanding the value every customer brings over the long haul. A good CLV must be at least three times higher than your Customer Acquisition Cost (CAC). This signifies that the amount of money you’re investing in acquiring new customers is offset by the revenue generated over time, creating a optimistic return on funding for your business. This implies that the typical buyer is anticipated to generate $2,500 in revenue during their whole relationship with the business. Christy Pyrz, the CMO of Paradigm Peptides, believes CLV helps companies prioritize the right actions of their enterprise.

One of the best ways to discover methods to increase customer lifetime value (CLV) is to take a glance at the profitable examples of other businesses which have done it. CLV is the total amount of money that a customer spends in your services or products over their complete relationship with your small business. It is a key metric that reflects how nicely you’re retaining and satisfying your clients, in addition to how worthwhile they are for your small business. We will also focus on the advantages and challenges of each strategy, and how you can apply them to your individual enterprise. Businesses looking for long-term progress and profitability should increase buyer lifetime value (CLV).

If you frequently speak to your group about their offers, I assure you will hear some version of these. It’s always easier to encourage present prospects and key accounts to extend their present investment, than win new clients from cold. Prioritize CRO tests and experiments that immediately influence long-term retention. For instance, a subscription service might test different renewal reminder designs, discovering that including social proof (“90% of customers renew!”) will increase retention by 15%.

For instance, somebody making regular small purchases usually ends up more priceless than a one-time huge spender. Once you realize who these star customers are, you can give them the VIP therapy they deserve. Our personal favourite, the predictive value CLV formula is very advanced, but also the most helpful from a enterprise perspective. It mixes a lot of different complex metrics to kind essentially the most correct predictive model for buyer lifetime value. To us, the difference right here is more about methodology than terminology.

Customers at present interact with businesses by way of multiple channels – on-line, in-store, social media, and so on. To increase buyer value, it’s essential to have a cohesive and seamless omnichannel advertising approach. This ensures customers can simply have interaction together with your brand and have a consistent expertise, regardless of their chosen channel. By understanding what retains customers engaged over time, firms can refine their methods to boost customer satisfaction and loyalty.

This measurement forecasts how a lot a person buyer will spend along with your firm over their lifetime. And the upper your CLV, the higher the growth and stability of your business in the lengthy term. Businesses can adjust their tactics to create extra successful advertising campaigns and improve shopper retention by utilizing predictive analytics to estimate customer preferences and behaviours.

Additionally, you presumably can have a excessive CLV by offering a personalised website experience for returning customers. For example, you probably can show content, products, or promotions that align with the customer’s earlier interactions on the net site. This means, your shoppers won’t have to spend extra time browsing your website to search out their favorite items. Once you may have segmented your buyer base into groups, you presumably can create tailor-made messages that cater to each group’s distinctive pursuits and desires. By harnessing personalised communication, you can give individualized consideration to patrons, which leads to good customer engagement and encourages repeat purchases.

Additionally, companies can gather suggestions from prospects to determine areas for enchancment and make essential changes to boost the general buyer expertise. By prioritizing buyer satisfaction, businesses can improve buyer retention and in the end drive revenue progress. By following these strategies, businesses can actively increase buyer lifetime worth through enhanced retention practices. These steps involve initial engagement via effective onboarding, maintaining ongoing communication, measuring customer lifetime, and leveraging feedback systems.

It’s a powerful platform for implementing many of the strategies we’ve shared at present. With Teamwork.com, you can reinvent your onboarding course of, create a extra personalized buyer expertise, vastly improve your client communication, and acquire shopper feedback. It’s the proper foundation for increasing CLV — and, in flip, your profit margins. Proactive advertising efforts are a good way to scale back buyer churn, provide a better buyer expertise, and enhance your whole revenue. So is having a handle on what’s occurring in each stage of your clients’ initiatives.

Let’s start by saying that customer loyalty programs aren’t the end-all-be-all solution to maintaining clients coming again for extra. When it involves understanding how to improve buyer lifetime worth, you want the numbers first to determine the worth of your customers now. This example reveals that when customers make repeat purchases, the worth the company receives from them will increase over time, underlining the necessity to construct long-term relationships with them.

If your corporation offers a number of merchandise, completely different pricing tiers, or expenses based mostly on usage, upselling and cross-selling are nice strategies to extend buyer lifetime worth (CLV). These techniques encourage clients to spend more by upgrading or purchasing complementary products and services. Leveraging information analytics is a game-changer when it comes to optimizing buyer lifetime worth. Ultimately, this leads to elevated buyer satisfaction, loyalty, and higher CLV, leading to long-term enterprise success. Calculating Customer Lifetime Value is a posh but crucial task for businesses aiming to maximize their revenue and growth potential. Armed with this information, companies can make data-driven choices to optimize advertising efforts, enhance buyer retention, and ultimately improve their general profitability.

But CLV is also distinctive in that it may possibly look ahead, versus a concept like customer profitability, which measures previous actions to be able to achieve insights. Did you realize that boosting buyer retention by a mere 5% can amplify profits by 25% to 95%? Knowing CLV additionally helps your organization optimize its resource allocation, helping you anticipate and meet customers’ needs and nurture your company’s most valuable buyer relationships.

Boosting the lifetime worth of your customer isn’t only a game of numbers; it’s an artwork. Just like an artist hones their skills with apply, businesses too can refine their methods to elevate the value of each buyer. Unlock the secrets and techniques of Customer Lifetime Value (CLV) with Feefo’s guide. Learn the formulation, significance, and methods to optimise your corporation strategy. Create reactivation campaigns for customers who haven’t engaged in a while.

Customer Lifetime Value (CLV) is a metric that reflects the total income a enterprise can fairly anticipate from a single buyer account all through the enterprise relationship. It considers a customer’s revenue worth and compares that quantity to the company’s predicted buyer lifespan. Tracking CLV allows for organizations to make more informed decisions primarily based on actual values. The information collected is predicated on elements such as how long a customer usually buys from the business and the way much they are spending over the lifetime of that relationship.

The outcomes are evident with their thriving Facebook page and bustling business, principally comprised of repeat diners. Here are some examples of content material that may strengthen long-term relationships and enhance CLV. Tesla isn’t just in the enterprise of promoting cars—it’s creating good, self-learning companions on wheels. Every Tesla gathers tons of information, from your driving style to your favourite temperature s… Customers will feel connected to your business once they know they will always contact you relating to any facet of their buying journey, and see that their opinions and issues are recognised. Get back in touch with them as quickly as attainable after they reach out to you and guarantee they are glad with the service.

Separate from creating a personalised shopping experience, clients additionally need a streamlined experience regardless of where they’re purchasing the product or service. Customers are coming from a number of touchpoints and expect a seamless omnichannel expertise. Customer suggestions has shown that buyers need real-time personalized experiences. Organizations should purpose to section prospects primarily based on search historical past, buying behavior and other datapoints in order to retain one of the best clients. Step one of the primary CLV model equations is to search out the customer value. This requires the organization to seek out the average buy value and average frequency fee of a customer’s purchases, then taking those two numbers and multiplying them.