By Abhi Golhar
A common mistake made by many businesses is to focus on individual sales. If you have a product or service for sale, attempting to find buyers is an obvious step. The most successful businesses focus attention on lifetime customer value.
During the launch of my latest business, my co-founder and I made the decision to provide as much value to our customers as possible instead of providing minimal education (blog posts, videos, newsletters, etc.), and it has made a world of difference. Make sure to understand how much, on average, a customer will provide in revenue. Then, a comfortable and sensible investment in marketing and advertising can be deployed to provide a positive ROI. Increasing the lifetime value allows you to increase ad spend, making it difficult for your competitors to keep up.
So how can you maximize earnings for each customer you bring into the business?
Increase Product Options
One of the simplest ways to vastly increase the value of a customer is to offer additional products. The perfect time to recommend another product is during or immediately after the first purchase. By adding upsells and cross-sells that have relevance to the main product, you can be certain a good proportion of buyers will want more.
Improve Customer Service
Poor customer service will leave a bad impression, potentially leading to refund requests, cancellations, no further purchases and a negative reputation. When you get your customer service right, though, you can have the opposite effect, creating brand loyalty and long-term customers. The key to good customer service is simplicity, accuracy and efficiency. Make your customer service desk easy to operate and as fast as possible.
Survey Your Customers
During the early stages of your business, making assumptions will be necessary. As you build your customer base, though, you can find out exactly what people think. A survey could take place after a purchase, assessing how user-friendly the process was. Additionally, you could find out exactly what your customers want to be added, helping to launch new product lines and improve existing ones.
Analytics can help you discover any flaws in your sales process, ensuring customers are made the right offers at the right times. You could find, for example, that a certain email in a series is not getting the response you hoped for. You can then change the email to an alternative, removing an unwanted breakdown in the funnel. Analytics can be used alongside customer responses to guide you through a streamlined process.
Test As Much As Possible
A/B testing can radically alter the results you get from a variety of factors, including sales messages and customer service processes. The ideal scenario will be your entire sales funnel will be highly optimized, allowing you to maximize earnings from each customer you acquire. An improved sales process also works for your customers, enabling them to find exactly what they need without any friction.
Increasing profit from each customer acquisition is important, but it is also worthwhile to reduce expenditure. Reducing the amount it costs to acquire and serve customers will achieve your ultimate goal of increasing the lifetime customer value. Reducing expenditure typically involves looking for inefficiencies and removing them. You might, for example, be spending money on advertising streams that are not productive. Additionally, you might be investing in areas that could be automated or simplified with more efficient processes.
Create a Community
Creating a community is an excellent way of building brand loyalty, ensuring customers will keep coming back. Membership subscription programs work particularly well if you introduce a community element, with people reluctant to give up this aspect of the product. Even single purchases can benefit from community, as purchasers will be likely to keep you as their brand of choice. Social media offers a way to build communities quickly, using Facebook groups and similar options to tap into a large user base.
Focusing on these elements should be enough to increase the lifetime value of new customers who enter your sales funnel. There will inevitably be a limit on how much you can anticipate earning, but most businesses will not have maximized the value of each customer. Increasing revenue can have a number of important benefits, with the option of increasing advertising spending and investing in other areas of your business. There will always be a temptation to work on finding new leads, but earning more from every new customer is often the quickest way to make a difference to your bottom line.
Abhi Golhar is host of the daily radio show, Real Estate Deal Talk, and managing partner of Summit & Crowne, a real estate investment firm.