Little Known Ways To Get Skyrocketing Sales
You have customers that have started to buy your products, but it probably wouldn’t be enough to cover your product cost (physical products), marketing and the effort that went into getting them to buy for the first time. If your cost of getting a new customer is at breakeven or better, then your business is doing pretty good.
So, to increase the lifetime value of your customers, you need to have strategies and tactics for getting existing customers to do more business with you.
You becoming more profitable depends on your continuing to encourage customers to buy again (and again, and again, and again). This is where your profit margin begins to go up.
At this stage, there are some key marketing methods that you will need to put in place, but it all depends on your customer support, and delivery of your products.
What Should You Accomplish At This Stage?
In this Stage, you want your first-time buyers to buy again so they can develop the habit of becoming frequent buyers.
Your goal in this Stage is to get your new customers to continue trusting you and buy more from you. Unless you do something to get customers to buy again, they might not buy from you again.
Just like opting in to your email list is the way prospects to see if it’s worth to put their trust in you, the first purchase is the next test in building trust – you have to show them how you deliver on your promises when their money is at stake and show your care towards them.
A first-time buyer may not have fully bought into your message, brand, and products. When you think about what it takes to get them to trust you enough for them to opt in to your email list, then to buy a product from you for the first time, they will still test you to see if you’re still worthy for them to continue to trust you. It will take more to turn them into repeat customers.
This stage of the sales process is about proving to as many customers as possible that you are still trustworthy and able to meet their needs. The process of them placing their first order, the product delivery, your communications with them, and the product they bought will be enough to convince some that your business is one they would like to do more business with. But for the majority of your first-time buyers, you will need to work a little harder to convince them to spend more money with you.
To increase Customer Lifetime Value (CLV), it’s really important to get things to happen very quickly. It’s very powerful when a customer has just recently bought from you. Therefore, there’s a lot at this Stage that you can do to encourage the second purchase to be made faster.
Once they place their second order:
- Their potential value to your business goes way up.
- The chances of them buying from you again goes up a great deal.
- The order becomes profitable to your business.
The easiest sale to make is to an existing satisfied customer.
At this stage is where you lay the foundations to a first-time buyer becoming a frequent buyer – as he or she buys from you time and time again. Here’s where you deepen your relationship with customers, do more business with them and also get more referrals.
The Importance Of Existing And Past Customers
Your “front end” offers are what brings new customers through the door. Your “back end” offers are what makes existing customers buy more. Many businesses place less focus on their existing customers and spend all their marketing energy, money and resources on seeking new sources of revenue.
Although getting new customers is vital to growing your business, your profit lies with existing and past customers. Increase in revenue and more importantly profit from existing and past customers is far easier than getting new ones. A person is 21 times more likely to buy from a business that they’ve bought from in the past compared to one they’ve never bought from.
This gives you a huge selling advantage when it comes to selling to your existing and past customers. The real profit will be in figuring out how to sell more to existing and past customers and increasing their lifetime value.
Five major ways to increase CLTV:
- Raise your prices
- Upsell them
- Ascend them
- Increasing purchase frequency
- Reactivating past customers
Raise Your Prices
Raising prices is often overlooked when businesses want to increase the lifetime value of customers. They fear that if they raise prices, customers will leave in large numbers. While raising prices does need to be handled strategically, you’ll generally find that your customers will be far less price sensitive than you imagine.
If you’ve positioned yourself correctly and deliver a great customer experience, then most customers will happily accept the price increase and depending on your relationship with them, some may not even notice.
If you’re an existing business think about when was the last time you raised your prices? If it has been a while then it may be time to reassess. Here’s what it comes down to – if you keep your prices constant for a long time, in real terms you’re effectively lowering them because inflation makes the same nominal amount of money less valuable over time.
Inflation is the sustained increase in the general price of goods and services over a period of time. And by not raising your prices over a long period of time you’re effectively giving yourself a pay cut.
The key to raising your prices in a way that makes it agreeable to your customers is by giving them a reason why. Explain to them the increases in quality of your product or the increase input costs that you’ve incurred. Explain to them the benefits they’ve already received from your offering and how they’ll benefit from your future innovations.
Some percentage of your customers will leave you despite your explanations. However, they tend to be the lowest value customers. If you won them based on price, you will lose them the same way. When you do your price increases right, the increase in profit gained by raising your prices will far outweigh any lost revenue from price sensitive customers.
One tactic to implement if you’re concerned that your existing customers won’t tolerate a price raise, you can try “grandfathering.” Grandfathering is where price increases are only applicable to new customers and existing ones are “grandfathered” in at the current price level.
If you use the grandfathered approach, make sure to tell your existing customers what you’re doing as this can reinforce to them what a great deal they’re getting and increase their loyalty to you since you’re making them feel special.
Upsell Them
One of McDonald’s famous lines: “would you like fries with that?” This line is responsible for hundreds of millions of dollars to McDonald’s and a similar upsell strategy that could be worth a fortune to you. Upselling is when you bundle add-ons with the primary product or service being sold.
When prospects buy the primary “expensive” item first, the add-ons you suggest will feel comparatively cheap.
And since prospects weren’t specifically shopping for your suggested add-ons, they’re much less likely to be price sensitive to the item or items being attached.
What this means to your bottom line are much higher margins.
A great way of framing an upsell is, “most customers who bought X also bought Y.” You’ll notice this strategy being implemented by ecommerce giant Amazon. This strategy works since due to people desires to participate in social norms. When you tell them what “normal” buying habits are, you tap into the powerful, deep-seated psychological human desire to fit in.
Don’t make the mistake of thinking that just because a customer has just bought, you need to give them a break before attempting to sell them again. When a prospect is “hot and heavy” and in a buying state of mind, they’ll be much more receptive to more offers to buy. This is where the opportunity shows up for you to bundle in a high margin add-on.
This gives customers a better result and instantly increases your CLTV.
Ascend Them
To ascend existing customers means to move them to your higher priced, and hopefully higher margin, products and services. Ascension campaigns should be a constant part of your marketing process.
Customers often stay on existing products or services even though they can benefit from and afford to move up.
Other than just making you more profit, when you implement ascension campaigns, they help you combat inertia and can prevent customers from switching to a competitor. When customers take the initiate to move up because your existing products or services are no longer meeting their needs, they will often look at what your competitors have to offer and blame you for the poor experience they’re having with your product or service.
Just as bad would be having only one pricing option or only one option for each product or service category. By only having one option you leave huge sums of money on the table. At minimum you need to have a “standard” and a “premium” option in each category.
Increasing Purchase Frequency
Increasing the frequency with which your customers buy from you is a good strategy for increasing CLTV.
- Reminders
- Help them buy repeatedly
Reminders. People live busy lives and they don’t always remember to do things timely even when it’s of benefit to them. So, you would send reminders by email or SMS to remind them to do business with you again.
Sending reminders can be automated, this is why you would take advantage of technology to do some heavy lifting for you. Don’t worry about looking too pushy because if you sell something of value that benefits your customers, then you do them a great disservice by not selling to them regularly enough.
Help Them Buy Repeatedly. The Dollar Shave Club model of selling cheap disposable razor blades month after month as a subscription service. This company’s model has created great value and convenience for their customers and they get to charge for their product every month until the customer tells them to stop their subscription.
You’ll find many companies that have followed suit with product categories sold on a month-to-month subscription basis. From cosmetics, underwear, fruit, socks, pet food and much more.
Just imagine and you probably already subscribe to such a service where your item arrives automatically on your doorstep every few weeks. You no longer have to trek to the store for that product, load it in and out of your car. The process is automatic and you don’t ever need to think about it again.
If you sell consumables of any type (whether physical or digital), wouldn’t it be nice if you could turn it into a subscription service?
One of the benefits of having a subscription model is where customers price shopping radar generally turns off. Whereas previously they would have been tempted to price shop, now their price shopping radars is turned off. This is because now they know that getting their product is automatically taken care of every few weeks.
If you deliver extra value in the way of convenience, your customers likely won’t even care that you’re charging them more. People have the understanding that convenience has a price and for the most part they’re ok with that.
Reactivating Past Customers
Don’t let your past customers slip through the crack. Past customers have trusted you enough to cross the bridge from prospect to customers. There are many reasons why they haven’t bought from you such as having a bad experience, finding better prices elsewhere or simply apathy because you didn’t give them a compelling reason to come back.
Your list of past customers is of great value because much of the hard work involved in your prospecting to get them to know you, like and trust you has already been done. Now you just need to run a win back campaign. This is great for getting some quick wins.
Here are the basics of running a win back campaign:
- Go through your customer database and pull out the names of past customers that you haven’t heard from or who haven’t bought from you for a while. If this list includes bad customers who you don’t want back, then simply exclude them.
- Create a strong offer to motivate them to come back. A gift card, coupon or free offer with a strong call to action.
- Contact them and ask them why they haven’t returned. If it’s something you did wrong and if it’s appropriate offer an apology and tell them what corrective action you’ve taken. If they start to buy from you again, do a follow up that makes them feel special.
Some great win back campaign themes and headlines are “We Miss You” or “Have We Done Something Wrong?” Then you take the step to describe to them how you’ve noticed they haven’t bought from you in a while and you would love to have them back and show them how special they are to you.
Win back campaigns can recharge the relationship with past customers and contribute significantly to increasing CLTV.