Do not begin with the end in mind.
Just like being a good person does not guarantee a relationship, offering a good service alone is insufficient. One needs to apply strategies that would help gain customer loyalty; that is when Customer Value Optimization services come into play.
Customer Value Optimization (CVO) is the framework in which companies focus on creating a delightful customer journey, improving customer retention, and maximizing ROI. It focuses on the aftersales customer lifecycle to build brand loyalty.
Here are 3 effective techniques that provide you with Customer Value Optimization solutions and make your customers solely count on your services:
1- Measure what matters
You simply cannot improve what is not measured. There are important metrics related to Customer Value Optimization which you must take into account, namely:
Customer Lifetime Value (CLV):
Calculate the total net profit earned from a customer over their lifetime with the business.
Customer Acquisition Cost (CAC):
How much a company spends to gain new customers
Customer Retention Rate formula (CRR):
The percentage of customers the company turns into repeat buyers who remain loyal within a given time frame.
2- Customer segmentation (RFM analysis)
The RFM model is a marketing tool that helps identify and target high-value customers that are worth your money; it is a fun way to tackle Customer Value Optimization.
It works by dividing your customers into groups based on the Recency, Frequency, and Monetary value of their transactions.
Lovers: The most frequent buyers with the highest number and value of orders; they are the smallest but most profitable group.
Admirers: Recent customers who have placed a couple of orders but still need a push to increase their frequency and monetary value.
New Friends: Customers with high monetary values who recently bought their first order, have a good chance of becoming lovers if treated properly.
3- Approach customers based on RFM analysis segmentation
Research, Survey, and analyze your customers to find out about their nature and what makes them choose to stay or consider a competitor then treat them accordingly.
- Lovers: they are the most valuable and they deserve VIP treatment, you could give them complimentary gifts from time to time to strengthen their loyalty.
Find out what makes them loyal to your brand and apply it to the other types of customers. - Admirers: they like your brand but they are usually reluctant when it comes to investing in high-value orders.
Recognize the friction they encounter and improve on their customer journey by delivering value at every contact point.
- New Friends: They are the interested but most fragile type of customers, brands lose most of their new customers after the first order.
Apply previous knowledge you gained from analyzing lovers’ and admirers’ segments.
Provide exceptional customer aftersales services and help them get the most value out of your service.
Final thoughts
Advancing in Customer Value Optimization is essential for the success of your brand amid today’s business landscape, but it takes a lot of time and effort. Businesses usually have a hard time working on their core objectives and CVO while trying to maintain legal compliance.
Fortunately, it is not all doom and gloom! There is a solution that would aid you in your journey towards retaining loyal customers and increasing your return on investment.
Outsourcing can help you gain more time to focus on CVO and reduce the cost of managing your business. It saves time as it rids you of the hassle of mundane tasks, and additionally, it frees you from the legal responsibility related to your employees.
Contact us now for more details about how outsourcing can benefit your business
