NewsDanny Elkhoury

A Short Guide To Customer Value Optimization

NewsDanny Elkhoury
A Short Guide To Customer Value Optimization

Customer value optimization is one of the fastest avenues to grow a business, by increasing the number of customers, the average transaction value per customer, and the number of transactions per customer.


The process consists of 7 steps:

1.     Find a product/market fit

2.     Select a source of traffic

3.     Create a lead magnet

4.     Create a tripwire

5.     Offer a core product

6.     Create a profit maximizer

7.     Create a return path

1. Find a product/market fit

All successful products take a customer from a “Before” state to an “After” state. The better you are able to identify these two states, the distance between them, and communicate this to your target audience, the more successful your product will be. In order to do this, you have to define what your prospect has and feels in these two states, and what their average day and social status look like in these states. Using this method can help you determine both the product and the marketing which surrounds it.

2. Select a source of traffic

There are several traffic sources in the online world. You have email marketing, social media marketing and advertising, PPC, content marketing, SEO and microinfluencers/influencers. However, when it comes to choosing the right traffic source, there are several different schools of thought. You can either go with a combination of sources, or you can focus on one source and maximize its utility. We’d recommend choosing one source, and focusing on two key factors: measuring how much the traffic is worth, and figuring out how to extract the most immediate value from the traffic.

3. Create a lead magnet

A lead magnet is a special offer that you trade for a visitor’s contact information. For example, you can do this by offering a free ebook that targets the pain point of the customer in exchange for his email address. In order to be effective, a lead magnet must be specific. A poor lead magnet would be something that is positioned as “Sign up for our newsletter”, while a good lead magnet would entice the visitor with a variety of marketing techniques, such as proving value (“Join over 500 readers!”), and defining the USP (“free 20-week online course”) among others. A good lead magnet can have a conversion rate of up to 50%.

4. Create a tripwire

The tripwire is a fast method of converting leads into paying customers, by offering them a low-priced item, which is sometimes sold at a loss. This is done in order to fundamentally change the relationship, and grow a list of customers which will be monetized within the next three steps of the Customer Value Optimization process. There are many different types of tripwire offers, and they can be anything from physical products to books, software, webinars, and even heavily discounted services (such as a teeth whitening session at the dental office).

5. Offer a core product

This is the point in the CVO process where you sell your core product. Without CVO, it will be pretty hard to sell your core product to a cold lead. However, once leads are qualified, and turned into paying customers with a tripwire, your core product sales should grow considerably. At this point, you might be thinking that profitability is good enough, but it does not have to be. You can take it a step further and reinvest much of the profit gained into generating more customers, and delaying profitability until the next two steps.

6. Create a profit maximizer

It’s time to create a profit maximizer, and this step is meant to increase the average transaction value per customer. In order to do this, you have to upsell and cross-sell customers that have bought your core product. McDonald’s is a good example here. The company makes very little profit on its hamburgers. However, they make up for it by selling fries and sodas. In fact, their profit maximizer items make 7.3 times more profit than the core product. Best Buy sells televisions and laptops at razor-thin margins, and makes up for it with warranties, installation services, and the Geek Squad support services. You will have to get creative here, but once the cost of the client acquisition process is covered by the core product, you will be riding on pure profit.

7. Create a return path

The return path is the final piece of the puzzle. Here, the goal is to communicate with your customers and prospects in a frequent and strategic manner in order to either increase the number of sales per customer, or to reel a prospect back into the CVO funnel. For these purposes, you can use new lead magnets, tripwires, core offers, or profit maximizers. Exit offers, organic social media marketing, loyalty programs, content marketing, sales calls, and ad retargeting can also be used at this point.

 

Source:

https://www.digitalmarketer.com/customer-value-optimization/