In the early days of starting a new business, it’s normal to hyper-focus on getting as many customers as possible. As long as they’re purchasing something, it’s a win, right? However, as time goes on and you’re looking to scale, having a loyal, high-quality customer base becomes much more important for your ROI.
You don’t just want customers who buy something cheap at a discount and disappear forever. You want customers who are engaged with your brand and find value in your high-margin products.
This is why you need a customer optimization strategy.
What Is Customer Value Optimization?
Customer value optimization (CVO) is a marketing strategy that focuses on increasing a business’s high-value customer base. This can be done by working to maximize the value of existing customers and nurturing new leads down a sales funnel that encourages brand loyalty.
CVO differs from conversion rate optimization because it prioritizes the increase of customer profitability rather than purely the number of leads converted into customers.
So, here are the six customer value optimization strategies that you can use to boost business.
1. Identify Your Best Customers
In order to apply CVO to your marketing strategy and generate a new wave of high-value customers, you first need to analyze the customers that you already have. Generally speaking, customers fall into three categories:
- Low value: these are the customers who return used products, complain endlessly to customer support, and exclusively buy low-margin products at excessively discounted prices.
- Medium-value: these are your general, one-time, or infrequent buyers, making up the majority of your customer base.
- High-value: these customers bring in the most profit, making repeat purchases or buying high-margin items.
You can use these RFM (recency, frequency, monetary value) metrics to establish whether a customer is high-value.
Your aim is to target customers with the highest customer lifetime value, ensuring that your sales funnel is optimized to their needs better than your competitors. You can also target medium-value customers in the hopes of converting them, particularly those who engage with your brand by opening your newsletters or liking your social media posts.
2. Find Your Most Valuable Traffic Sources
While IoT automation has made it easier for businesses to target more traffic sources than ever before, bulk targeting can be counterproductive from a CVO perspective. Not only does it increase the potential of attracting low-value customers, but it’s difficult to manage them all consistently.
Instead, put your all into one or two traffic sources, identifying the ones that supply you with the most engaged customers. Popular options include:
- paid search results
- organic search results
- social media marketing
- pay-per-click advertising
- email marketing
- referral links
- display advertising
- content marketing
Not all of your targeting has to be done online either. If you use a power dialer and optimized script, there are plenty of target markets that still respond well to telephone marketing.
3. Present a Lead Magnet
Your lead magnet is a free product or service that you offer to your customers in return for their contact details. While everyone loves free stuff, persuading people to give out their personal information can be difficult. By making your item something of genuine value to your customer, you will stand a much better chance of sign-up success.
Take a look at Just Creative’s lead magnet for some inspiration.
Your lead magnet could be something like a:
- free course
- e-book
- printable
- infographic
- how-to guide
- template
- app
- workbook
Lead-magnet strategies boast high conversion rates, allowing you to market products directly to your customer’s inbox. Take note of the subscribers that continue to engage with your brand afterwards – if they add you on social media or browse your website, they are potentially a high-value lead.
4. Propose a Tripwire
A tripwire is a low-value or discounted item that you promote to your leads in the hopes of easing them into making a high purchase later. Depending on your industry, your tripwire might be a free trial, discounted service, or item worth between $1 and $30. Most importantly, it has to be something of value.
Tripwires work well on customers who’ve already subscribed to your email list, especially those who positively receive your lead magnet. However, advertising tripwires on your website are also effective ways to encourage people to make an initial purchase.
Once they’ve made a small purchase, they are much more likely to buy a higher-value item next time.
5. Offer Your Core Product
So, your customer has downloaded your lead magnet and purchased your tripwire. They’re engaged with your brand and acquainted with your product. It’s now time to present them with the crème de la crème: your core offer.
Your core offer is your best-selling product or flagship service. It’s the product that you’re aiming to get your customers hooked on and the one that offers them the most value.
Customers who have journeyed through the previous steps will be more inclined to purchase your core offer, so make sure to clearly advertise its key features and benefits. It’s also worth throwing a money-back guarantee into the mix, a powerful strategy that elevates CVO by winning customer loyalty and confidence.
6.Give Customers an Incentive to Return
An easy way to convert existing customers into loyal customers is by creating a return path for them. After they’ve made a purchase, re-incentivize them to make another by offering them something of value in return. Even just staying in contact with customers keeps you at the forefront of their minds and encourages them to re-engage.
You can create a return path through:
- Discounts and coupons
- outbound calls – consider using a business phone number app for real-time transcriptions and unified communications
- Newsletters
- Loyalty programs
- ad retargeting
- Surveys – potentially with incentives
- Exit offers
- “We miss you” emails
Solved: Your CVO Strategy
Customer value optimization is not a one-size-fits-all process. The strategies that you implement will depend on the needs of your specific customers, so continually test and analyze your approach until you find the perfect fit for your business.
And remember – when it comes to CVO, your focus isn’t on the number of customers you have, but the number of average transactions per customer and the value of these transactions. It might be a long game, but if you stick at it then you’ll surely reap the rewards of a loyal, high-value customer base.
