As a CVO Evangelist, I felt compelled to sit down & write the 10 laws of Customer Value Optimization.  

The pillars without which any Value Optimization strategy will collapse on itself. 

The Meaning & the Context

The principles of CVO are a set of rules companies must follow when starting the Customer Value Optimization Process.

These rules aim to set the stage for an effective CVO process in the most organized and functional way possible.

While we’ve all seen our fair share of experimental pieces out there, it’s vital that the entire company knows the significance of the fundamentals.

Incorporate them into your 2023 strategy, and your retention rates will thank you later.

1. To change customer behavior, you must first change the company’s behavior.

First things first. 

Companies can’t expect to find some hidden toggles that will instantly make their customers behave as they desire. 

Most customers who give up on buying from a certain company do it because they feel that the company doesn’t care about them.

Changing company behavior means focusing on what the customers get, not only on what they can give. 

For companies, it also means using the ears, not only their mouths. 

It means making a company priority on how the customers are being treated.

2. No amount of marketing will fix a broken Product.

Selling a product for the first time means selling the promise of a better future. 

The product is the bridge that gets customers from an inconvenient present to a better future reality. 

That’s why you can’t expect buying habits to kick in unless the customers are getting their jobs done with the products that your company sells. 

No amount of outstanding marketing or great customer service will make customers buy the second time if you haven’t delivered a bit over their expectations.

3. It’s too expensive to acquire customers that never come back.

As customer acquisition costs are skyrocketing, it is getting more and more difficult to break even. 

That’s why companies must monitor the ratio between the CAC and CLV and fine-tune their marketing initiatives.  They must focus on the right customers, with the right products, at the right time, using the right message. 

4. You get what you give.

Improving Customer Lifetime Value is not about companies getting better at sucking more value from their customers. 

It is about understanding how to generate so much value for their customers that they naturally become loyal customers and brand ambassadors.

5. Retention starts with the acquisition.

“There comes the point where we need to stop just pulling people out of the river. We need to go upstream and find out why they’re falling in” – Desmond Tutu. 

Companies willing to improve CLV must first ensure they have answers to these questions: 

  • Are we acquiring the right customers? 
  • Who are our best customers? 
  • Why are they buying from us? Are we setting the right expectations? 
  • How well are we helping our customers to make progress in their lives?

6. Hell is the Truth seen late

Prevention is better than cure. 

That’s why companies willing to scale must first properly monitor what matters before feeding the acquisition machine. 

Ensuring that the company has nailed the data hygiene and has the discipline of aligning everyone around the actual consumer behavior is the healthy embark in the Customer Value Optimization journey.

7. CLV is the CEO’s KPI.
Therefore, it’s everyone’s job.

Improving the value that the customers are getting is the primary job of the CEO. 

You can’t nominate a department that can take the credit or blame for this North Star Metric. Therefore, CLV is a company-wide measure of success. 

That means a company must nail the internal alignment to make it happen.

8. CVO needs ALL these 3 pillars.

As long as you can’t evaluate how solid are all of these 3 pillars, don’t venture into improving any of them. 

However, the most important of all is the Product pillar: if your product doesn’t help the customer get the job done, the other two pillars are useless.

9. You can’t bribe customers into becoming evangelists.

Referral and loyalty are the natural effects of products that provide undeniable value and of a well-crafted customer journey, not of incentive programs. 

One of the go-to tactics to improve Customer Lifetime Value is launching customer referral and loyalty programs. 

Happy customers should indeed be seen and nurtured to become brand advocates. Their indirect CLV impact should also be credited (they recommend your products and produce a ripple effect besides their direct profitability.)

However, those programs will start to move the needle significantly, and you’ll only achieve Word of Mouth if customers are really amazed by your company. 

Therefore, before launching referral and loyalty programs, make sure that the NPS is anywhere north of 80.

10. Truth lies beyond the average.

Customer Lifetime Value is an average. 

To truly leverage the data behind it, you must look beyond the average and understand the anomalies that can be harnessed. 

Looking at the CLV by RFM customer segment, by channel, by the first bought product, brand, or category, by the time to pay back the CAC, location, etc., is the right way to optimize Customer Lifetime Value.

Wrap Up

Whether you’re just starting out with CVO, or you’re well versed in the methodology, these 10 Commandments are crucian in creating a customer-centric approach.

You can’t keep living from one month to another, hoping the CAC will go down, your competitors will give up, or you’ll find more customers through sheer luck.

You need long-term growth and predictable results. And an army of loyal customers can help any eCommerce become more profitable and sustainable.

Remember: CVO is not just about making sales. CVO means creating a meaningful relationship with customers that goes beyond the transaction.

Are you ready to become a CVO legend? Check out the CVO Academy – where world-wide leaders will teach advanced CVO tactics to help your business thrive in 2023 and beyond!