When it comes to business, getting a customer base is difficult and it gets even worse when you want this customer base to purchase your products. At the same time, you want customers who have purchased your products to become loyal to you. There are reasons that will make a customer loyal to your business or product. Customer value is one of those reasons. For instance, Jeff Bezos, CEO, and founder of Amazon is a believer in chasing lifelong customer value rather than seeking short-term gains.
If you look at the success of Amazon, it’s safe to say that customer value optimization is fundamental in the growth of your business. It’s not an easy strategy, but it will yield results when successfully executed. Customer Value Optimization (CVO) is a process that helps you create a great customer experience as you maximize Return on Investment (ROI) for all marketing campaigns. It’s an optimization process that focuses on enhancing your products and customers’ loyalty towards your brand. Statistics from various research confirms that an increase in loyalty can increase your profits by almost 96%. A great customer experience is 3x likely to make a customer place another order and 5x likely to make this customer recommend your brand to another person. Customer journey is a key element that needs nurturing to ensure customers are loyal to your brand.
Table of Contents
1.) Presenting Customer Value Optimization:
The approach is quite straightforward. To create customer value, you need to establish who your customers are. In your customer base, who are the most valuable customers? These are the customers that if you invest in them, you are certain that there will be returns on your end. Any business should strive to increase Customer Lifetime Value (CLV). In turn, CLV will increase your profits in the long run leading to the growth of your business. Investing in CVO will double your account. Because every amount spent on maintaining a valuable customer increases the Customer Lifetime Value of current customers and prospects.
2.) Determine Whether The Products Fit The Market:
As a business, your product should address certain problems that consumers are facing. Arguably, it’s an important step to ascertain that your products will be embraced by a particular target market. A customer falls in two states, “before state” and “after state”. In the before state, a customer has feelings of frustration and dissatisfaction. Probably, this is because of the products that they have interacted with before. These products didn’t give them value because their needs were never met. They want a product that will take away these feelings of disgruntlement. Your product should be the ultimate solution. When they purchase your product, they will feel the value of their money, your product should take them from the before state to the after state. In the after state, a customer feels fulfilled. When the problem is bigger, customers won’t feel the pinch of digging deeper into their pockets because the solution is worth the while. When it’s beyond doubt that your products fit the market, then move towards establishing product prices and marketing strategies.
3.) Selecting A Source Of Customer Traffic:
You have established that your product suits your target audience. The next important phase is coming up with a way your customers will engage with your products. As technology has advanced, getting traffic to your website or social media platforms should be the least of your worries. You can easily get traffic into these avenues by simply buying traffic. When your Cost Per Click (CPC) or CPM rates are right, you can use social media to generate traffic. Essentially, traffic boils down to cost, and as such, you need to understand two significant things. First, how do you know the worth of customer traffic? Secondly, how do you convert this traffic into something of financial value? For instance, say you earn $5 for every visit to your site. You will be in a position to pay $5 for every visit and still gain profit. When you understand the power of CVO, you will milk more profits from these visits subsequently. CVO allows you to reap more profits from visits, and at the same time, you can invest more in visitors that come to your site. You are ultimately at an advantage when you spend more money to get new customers. Amazon.com founder and CEO, Jeff Bezos, understands that getting new customers, selling your products to them, and ensuring they repurchase, is the way your business becomes a force to reckon with.
Yes, there are various marketing strategies, but they will be futile if you don’t know the CVO system. The aim of generating traffic is not to drive your profits up immediately, but to get your customers towards the CVO funnel. Not understanding the CVO system will make you hop from one traffic source to another. Identify one source and learn how to maximize from it. Sources of traffic include email marketing, social media marketing, and content marketing.
4.) Offer A Lead Magnet:
A lead magnet is sort of a bribe that adds value to a potential customer when they give you their contact information. When you have this contact information, you can add these prospects to the CVO funnel. For your lead magnet to be productive, it needs to be detailed as possible and show its value. A lead magnet is often offered on the landing page. Your landing page helps you convert traffic into leads. It doesn’t have to be attractive, it’s a simple page that is optimized to improve conversion rates. The leads that will be generated will enable you to do follow-ups. When it becomes to being specific with your lead magnet, the key thing is what your customers will gain from your lead magnet. You have to give a specific promise or show the value that a customer will gain. For instance, if you are an e-commerce website, you could offer free delivery services or a discount on any first purchases by a new customer. If you are a company that deals with software, you could entice customers with a free trial version. A lead magnet will likely help you convert prospects into long-time customers.
5.) Giving A Tripwire Offer:
With lead magnets, you were able to enhance your email marketing strategy because of the information you gained. On the other hand, lead magnets have given you prospects, not customers. With a tripwire offer, you can convert prospects into customers. To make this offer productive, you need to make it irresistible in the eyes of the prospect. Tripwire offers entail selling your products at a loss. However, if you appreciate the value of having a long customer list, this loss will seem like a drop in the ocean. For instance, Colombia Records revolutionized the sale of music records when they offered customers 13 tapes for $1. If you are dealing with physical products, your tripwire offer would probably be “buy one item get another one for free”. If your business is service-oriented, you can offer discounts that are irresistible to customers. Let’s say you are running a veterinary clinic, you could offer free check-ups for certain diseases diagnosis or discounted prices on various services that you offer. The approach behind this step is simply maximizing lead magnet leads into paying customers.
6.) What Is Your Core Offer?
You have been able to sell discounted products or services to several customers, and you now have a customer list. The next step for you getting these consumers to purchase your high-value products or services. At this point, they have had maybe two or three purchases from your business. The odds of them coming back, at this stage, are in your favor. Selling your core product to prospects is a long shot because the product price will likely turn these prospects away. Well executed tripwire offers and leads magnets will offer a solid foundation for your core products. When these two offers were well received by prospects, a good number of them will want to purchase your core product. You could also use proceeds from your core product to get more customers. Remember that when your business has a good list of buyers, it will experience growth.
7.) Using CVO To Increase Profit Margins:
To increase your profits, you need to have profit maximizers, these are products that amplify sales from your core products. Introducing your core products to prospects without giving them offers such as a tripwire or lead magnets, is a way of slowly killing your business. Successful businesses such as Amazon and McDonald’s have successfully known how to tap into profit maximizers. McDonald’s is well-known for its burgers. Surprisingly, sales of French fries and Soda is where their profits lie. E-commerce companies such as Amazon maximize their profits by adding statements such as “people who purchased this product also brought this product”, on their website. With such statements, there are customers that will likely purchase another product on top of what they wanted. Another way to maximize your products is through memberships. Membership offers often are monthly, quarterly, or annually. Memberships are classic profit maximizers for companies that want to model a consumer base with recurring revenue. Revenue generated from profit maximizers is higher than what you will gain from tripwire offers. To make your core offer more appealing, bundle it with something. Something such as subscription or memberships. When you establish your profit maximizer, you have established a way of making your business successful.
Having a return path is a way of increasing the number of transactions a customer makes. The aim is to have communication between your business and buyers as well as prospects. From the lead magnet offers, you were able to get the contact information of customers. You can use this information to continue marketing to them. You can offer them new tripwires or new lead magnet offers. You can also take them back to the offers that they didn’t buy. Return path helps bring prospects or buyers back to your products on a frequent basis. You can use approaches such as email marketing, loyalty programs, or exit offers.
CVO is a system that you can effectively use to grow your business. This system has proven itself, and with companies such as Amazon adopting this system, it goes without saying that customer value optimization is a method that grows your business from a small scale to become a global company. These steps, when applied to the letter, will create something that will make you feel proud. Digital marketing has become a common practice among entrepreneurs. At the end of the day, you realize it’s not how well your product is known, but what solution it offers customers, what value does it add to them? A satisfied customer will always come back for more.