Pop quiz! Quick: what’s the one thing that every ecommerce business needs?
a. An over-the-top brand visual identity that puts Marvel’s artists to shame?
b. Building real relationships with customers that ultimately increases their Customer Lifetime Value over time?
c. Going the extra mile and introducing “up-selling” and “cross-selling” sales techniques in your marketing campaigns?
d. All of the above, except a.
e. You’ll find out soon enough.
If you’ve answered a, maybe it’s time for you to re-watch my “Simplest Email Marketing” video? Here, I’ve talked about moving a first-time customer to a regular, repeat customer by up-selling and cross-selling to them.
If you’ve answered d, good job. You’re nearly there.
And if you’ve answered e, well then, looks like we have a genius within the group. Keep on reading because in just a few paragraphs, we’ll get right into unraveling this “mystery” one thing:
Assuming most of you have answered d, which talks about building mutually beneficial relationships with your customers and increasing their CLV over time through up-selling and cross-selling, you’ve nearly hit the nail on the head.
After all, it costs 5x as much to attract a new customer than to keep an existing one, remember? Additionally, selling to an existing customer has a success rate of 60%-70%, whereas it’s only 5%-20% when you’re selling to a new one.
Now, let’s be real here: you already know about the concept of maximizing CLV, right? Maybe you’ve even memorized some of the statistics I’ve mentioned above. In fact, this was the topic of the ebook that I wrote for Conversio — 4 years ago! — and the tactics are still relevant today.
To successfully scale your business over time, you need to maximize CLV.
And to maximize CLV, you need to upsell and cross-sell to your existing customer.
Yes, you can maximize CLV if your first-time customer becomes a regular, repeat customer.
But did you know that you can also maximize CLV even through your first-time customer or a customer who bought from you only once in their life?
Keep your friends close and your customers closer
This book includes a whole bunch of best practices, tips, tricks & techniques to not only help you retain your customers, but also maximize your Customer Lifetime Value.
Let’s take the case of Casper, for example. When they launched years ago, they only had one product: a single mattress. Once you’ve purchased this, you were done. They couldn’t up-sell or cross-sell you anything else — even though you were their happiest customer — simply because they only had one product back then!
How can you maximize your CLV even though you have only one product in your catalogue?
You can do this by getting this customer to bring in a new customer for your business.
Engage with your customers + make your existing customers happy with your marketing & customer service + incentivize them to tell their friends about you = maximizing CLV over time.
Incentives can come in the form of store credit or discount code, sure.
But again, if your product catalogue only has one product, what would your existing customers do with their store credit or discount code? They can’t purchase anything else from you, so why bother getting the incentive in the first place?
Instead of giving store credit or discount codes, give your existing customers cash back for every successful referral.
One of the brands that’s been successful in doing this is Remarkable.
Now you may be thinking, “But Adii, isn’t it bad when I give cash as an incentive? I mean, they’re not going to use that money on my business anymore so why should I do this?”
Here’s the thing: giving cash may mean that your customer won’t buy anything else from you since they already bought your main product.
But shouldn’t you be happy to give cash to your existing customers? After all, this means they’ve successfully referred their friends to you. This means you got another sale. This means you’ve gotten another value from your existing customers even though they bought from you only once.
And this is what I exactly meant by the “one thing” that every business needs: it’s figuring out a way to make sure that you get more value from a first-time customer beyond their first purchase.
More value means your first-time customer:
– Buys from you again & again through up-sell and cross-sell; or,
– Encourages their friends to buy from you and you incentivizing their efforts by giving them cash back.
Hopefully this video gave you helpful ideas when it comes to maximizing your CLV over time. Any thoughts, reactions or questions you may have? I’ll be waiting for you in the comments section below. Cheers.