As we say RIP to cookies, most brands are turning towards long and sustainable activities to keep their customers alive once they pay the monopoly taxes to the Gods of Facebook and Google.
That wakes them up to a reality that’s alive since the trade is: customer lifetime value, which becomes sexy again.
The math is simple: if your e-commerce makes less profit than it pays to acquire a customer, you’re in trouble.
Many retailers are shifting towards a digital transformation to achieve customer-centricity now that they have identifiable customers to track, analyze, and remarket.
So, I guess it’s time to unveil the model that we’re using to help our dear and smart customers that we’re lucky enough to work with.
Introducing the CVO Maturity Phases:
As you can see above, there are 4 phases and 5 types of activities.
You can’t walk before you run, so let’s start with the first phase:
Phase 1: Crawl
At this phase, the company realizes something BIG (been there, done that):
We’re wasting money on ads!
The CFO: Yes, let’s stop that!
The Marketing Manager: No, we’re investing!
The eCommerce manager: But what if the customers buy more than once and we’re actually profitable?
This usually leads to many debates about the data models, doing the data hygiene, and getting educated about the concept of customer lifetime value.
They then install Reveal, which automatically pulls the data from their data lake or eCommerce platforms like Shopify, Hybris, Magento, or Vtex.
That makes the wet dream come true for any company willing to improve CLV and decrease CAC: the data is clean, visible, and constantly updated.
If they are not that lucky, they mess around with SQL, crafting segments that are not automatically updated and can be used only to see how big the issues are. No action is possible like this.
The fact is that the main outcome of this phase is that the company knows how big the problem is and has X-ray vision. Hopefully, they also transition from being order or product-centric to being customer-centric.
Meaning, they must change the company mindset to get to…
Phase 2: Walk
At this phase, the company realizes the impact of purchase frequency on their overall profitability and understands how cohorts are churning as time goes by.
If the company has a God-given gift of talented people, they will also understand how damaging it is to use the fictional buyer persona concept instead of the reality of the ICP (ideal customer profile).
So, they optimize the ways they collect and interpret data and aligns the whole company around what matters most: Customer Lifetime Value – as this is not a marketing KPI but a company-wide measure of success.
Congrats, you’ve just unlocked…
Phase 3: Run
Things are getting kind of serious at this phase.
The taste of blood attracts other senior leaders within the company around the topic.
They join forces.
They get experts by their side and create the customer journey map. (Yes, we do this, as well)
All the touchpoints on the customer journey manage to map how the experience should be from AS IS > TO BE.
A list of the main issues to nail CLV is constantly updated.
That’s based on multiple data sources, such as customer support tickets, product reviews, NPS feedback, social media comments, chat transcripts, etc.
Moreover, the agencies are informed about it, and the siloes are starting to collapse. The email team talks to the product team, the social media team, the PPC manager, and the customer success manager.
The main outcome of this phase:
Someone is finally responsible for improving Customer Lifetime Value. And it has a budget. And is sustained by the other teams.
Sounds too good to be true? Wait to see how it’s at…
Phase 4: Fly
The ship is turned around.
The customer finally gets a vote on the board of the company.
That person who’s responsible for the CLV is now optimizing the process of customer value optimization.
So – CVO means addressing the 3 main pillars:
There will be initiatives within each of these teams.
Those initiatives will lead to all sorts of fixes or optimization experiments.
The faster they succeed or fail, the faster the company learns and evolves.
The outcome of this phase: that company will no longer have schizoid customer journeys.
No more ad campaigns triggering a discount for the 2nd purchase to a customer that has not received the product yet.
No more asking for customer feedback without the right follow-up flow, using the right tactic to increase their satisfaction.
No more soulmate customers being treated like they are first time there and don’t benefit from loyalty programs.
No more wasted money to acquire customers that never come back or to retain toxic customers.
The system will orchestrate the right company behavior at any touchpoint with the customers, according to who they are and what’s their story.
Outstanding experiences at any touchpoint. That’s how you grow your business. As Joseph Pine said it:
Sounds like a wet dream, but that’s how you win the customers’ minds. And wallets.
As you pass through the CVO maturity phases, you become more agile at increasing your customer lifetime value and get more control over your customer acquisition costs.
You’re getting better and better at leveraging the customer data and transform it into actionable tasks that allow your teams to acquire more new customers and generate more repeat customers.
PS: I am struggling to run a company of about 40 people AND write a newsletter every week.
I’d appreciate it if you’d let me know if I am on the right track by subscribing to our Weekly Newsletter or sending us a message.