How to Strategies Customer Value Optimization To Boost Business ROI?
Customer Value Optimization is a comprehensive form of marketing that is focused on practices that would increase customer lifetime value for scalable ROI from customer acquisition investments. CVO practices enhance the overall customer experience, which enables the customers to evoke a sense of brand loyalty. Increased brand loyalty urges the customer to invest more in the brand, which on a larger scale gains a brand more repeat customers and boosts the sales, driving growth.
Earlier we talked about Customer Value Optimization (CVO); what is it? What does it do for your business? What is the significance of CVO for propelling the growth of an enterprise? We answered all your queries. Here’s a quick recap;
Today, we will be delving deeper, directing you towards the strategies that will help in customer value optimization for long-term brand development and growth, even mitigate the present COVID-induced business setbacks.
Understanding Customer Lifetime Value & Strategy Building
Most businesses either fail or struggle to create a long-term impact in the minds of the target audience. The main reason behind that; they prioritize customer acquisition over the development of customer value for life. When you foster a loyal customer base through the value creation of the existing customers, it earns you long-term returns. No, it’s not what we are claiming; according to multiple studies:
- Existing customers of a brand spend 67% more compared to new ones.
- A 5% increase in customer retention can boost the profits by a minimum of 25%.
- 71% of the customers abandon a brand citing poor customer service as their reason.
So, if you prioritize the existing customers and ensure a great customer experience, then they will not only keep buying from you but also ask others to invest in your products and services as well. That’s how you strategize your CVO for the scalability of your business.
Top Strategies for Customer Value Optimization
Before strategizing towards customer value optimization, you need to understand the primary facets of customer lifetime value; which are:
- Customer experience
- Customer retention
Your customer experience influences customer retention and the overall impact of customer value optimization. The customer will stick to your brand and invest in your services and products only if you provide him/her with a wholesome customer experience. Keeping this basic rule of business in mind, we have divided the strategies as per respective categories. It will help you apply them to enhance both customer experience and customer retention, contributing to a greater business ROI.
Strategies to Improve Customer Experience:
First, let’s devise let’s explore the ones that can help enhance the overall experience of your customer:
- Easy Onboarding: Whether you have an app or a website, the onboarding of the customer should be super smooth, easy, and quick. You have to assume that not all your customers would be tech-savvy. So, for a universal appeal of your brand, you should make your online experience of signing up to the platform and registering pretty lucid for everyone to understand. To make it simpler, you can keep walkthrough guides and instructional/interactive videos. The downside of complicated onboarding is that it can cost you up to 25% of your customers, even before they have even seen your entire range. So, simplify it for the formation of customer value.
Example of On-boarding Customer
- In-App Support: In a physical store if the customer has any query he/she can ask the floor personnel, but what about a virtual platform? That’s where in-app support comes to the rescue of stranded and confused customers. You can incorporate live chat support to suffice the needs of the customer. Studies suggest that brands that immediately respond to the queries of the customers invoke a sense of brand loyalty. Live chat has a bigger preference among customers (more than 79%) because it offers fast solutions. So, make sure to keep in-app chat support for better engagement with the customer and to offer them a seamless buying experience.
Example of Live Chat Support
- Ensure Relevance in Marketing Content: This is integral to customer engagement and experience’ your target audience should be able to relate to the marketing content of your brand. The days of automated campaigns and emailers have become pre-historic. People crave personalized campaigns and experiences that hit close to home. Your audience seeks meaningful interactions and engagements. Recommendations are great, but they should be relevant and contextual to the customer, bombarding them with unnecessary recommendations will do you no good at all.
Example of Contextual Marketing
- Omni-channel Engagement: The majority of your customers own more than one device, and they switch between them to surf online. So, you need to ensure that your brand can reach out to them at all times through multiple mediums. It means that you cannot afford to have just an app or a website. Your brand needs a more conducive form of engagement, through an Omni-channel approach. A study shows that businesses that adopted an Omni-channel approach accomplished a 91% high year-to-year retention rate.
- Listen to Your Customers: To improve the customer experience you need to listen to your customers’ feedback. You need to keep your customers happy, and the only way to do that is by establishing a system that enables you to gain insight into what your target audience thinks of your brand. App ratings, reviews, testimonials, social media polls, surveys, NPS, etc. are some great ways to gather customer feedback.
Example of Improving Customer Experience
Strategies to Increase Customer Retention:
Retention is the foundation of customer lifetime value and optimization of the same. Your goal is to keep a customer hooked to your brand as long as possible, not forcefully, but organically, through smart strategies. Now, let’s take a look at the strategies that help you retain your existing customers.
- Customer Loyalty Rewards : Your customers want to feel that you acknowledge their contribution to the growth of your brand. So, to expect a reward in return is not outlandish. Customer loyalty rewards and initiatives invoke a sense of belonging in the customer, who feels the urge to further invest in your brand. You might be thinking, what’s new in creating a customer loyalty reward system? We agree with your point; it’s an age-old technique to enhance customer engagement. What you can do differently here is gather data on the profitability of your customers and then categorize them based on the same. Now, reach out to the customers with moderate to high profitability rates and offer rewards based on their customer lifetime value optimization. It creates exclusivity in your rewards structure and urges others to enter that elite group.
Example of Customer Loyalty Rewards
- Influence Repeat Purchase: The idea is to encourage and not push them to buy more. Studies show that repeat customers invest 67% more than new ones. Once they buy from you, keep tracking the online activity through your platform and create personalized recommendations based on their initial purchases and searches. It should subtle, a small nudge towards the purchase. This is a great way to increase the ROI of your acquisition costs.
Example of Repeat Purchase
- Adopt New Customer Engagement Channels: Online engagement is advancing fast and the mediums are increasing as well. New channels for customer engagement are popping up now and then and you need to keep a track of the same, implementing them in the marketing mix. Direct Messaging or DMing has become a widely accepted practice by brands, especially through WhatsApp and Facebook Messenger. The ability to message the brands directly puts the customer in an approachable position, which benefits both parties.
- Leverage Customer Personal Data: According to a recent survey, most Millennials and the younger generation are comfortable sharing their details with brands if that means they would get more personalized customer service and product recommendations, thus enhancing the overall experience. Acquiring personal data and utilizing the same to create better customer experiences goes a long way in retaining customers. It also enhances brand and customer engagement.
Example of Product Recommendations
- Give them a Human Experience: Creative holistic customer lifetime value through concrete strategies and execution evokes the human side of the brand. It creates better engagement and the customer feels closer to the brand. It’s high time that you start looking at customers like they were a number on an excel sheet. Seeing them as individuals will increase customer loyalty for sure and help in a major boost in the retention rate.
Effective Human Experience Example
To summarize, customer experience and customer retention go hand in hand in optimizing the customer lifetime value of a brand. So, going forward, incorporate these customer value optimization strategies to witness unprecedented growth of your business.