The majority of online startups now require to have an endless recourse for development. It’s sad to see how a successful business idea becomes a straight failure because of the wrong “direction” chosen. CVO and CRO are considered basic strategies to help the business prosper, but why do more and more business coaches admit CVO to exceed the CRO?
A Bit of Theory
According to MOZ, a conversion is a general term for a visitor to complete a site goal. There are two generally accepted forms of conversion-micro and macro. For example, if your online business is specialized in clothes trading, then the macro ( or primary goal ) is that a visitor makes a purchase. Micro conversions ( or smaller conversions) are actions that a user makes before achieving a primary goal ( f.i. signs up to receive emails).
So, Neil Patel gave the following definition of CRO “In internet marketing, conversion optimization, or conversion rate optimization is a system for increasing the percentage of visitors to a website that converts into customers, or more generally, takes any desired action on a webpage”.
Customer Value Optimization, in its turn, is a process that combines all three ways of growing the business offered by legendary J.Abraham:
- Increasing the number of customers
- Increasing the number of transactions per customer
- Increasing the average transaction value per customer.
Its main goal is to create a sales funnel that allows you to outspend your competition to acquire and keep customers
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CRO Won’t Help Your Online Business Grow in Long Term Perspective
CRO is vital for your eCommerce. It is seen as a silver bullet that can solve all e-Commerce problems. However, CRO won’t make people purchase more often. What’s the point of attracting more visitors and turning them into buyers, but don’t turn more customers into admired repeat customers?
The whole CVO process is all client-oriented. Any online company must first understand its customers and their needs before investing resources in customer acquisition.
What Does CVO Process Consists Of?
- pointing out who’s your ideal customer
- magnifying their value
It’s tightly connected to another metric: customer lifetime value, or CLV. Increasing CLV can offer some of the best ROI in business, ensuring both company growth and long-term profits.
Amazon.com trades with the lowest margins knowing that acquiring new customers, selling them more items, and selling them more often is how you get unstoppable.
At the Audienceops website, we found a strict definition of an ideal customer: “Your ideal customer is someone who gets their exact needs met by what you’re offering”
Steps to Define Your Ideal Customer
Defining your ideal customer is the very first step to understanding how to communicate with your audience, how to better solve their problems, and how to establish a long-term relationship. Here are 3 main steps that would help a business to create the ideal customer profile.
Determine the Value of Your Product From the Customers’ Point of View
What can your product give to a client? The thing is, we don’t buy things, but we purchase the impact it has on our lives. This before-after process is the reason all purchases are made. Once we start to understand that we are selling not products, but solutions to human problems, then we can really understand the customers’ needs.
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Define the Ideal Customer for Whom You Sell or Offer
One of the most important things that you need to define is your customers’ gender, age, occupation, marital status, education, level of income, financial situation, and etc. In general, you need to collect all possible information about your client while creating a product or service.
Collecting this information could also help you define how, where, and when you can connect with your potential customers and what to do to attract their attention. By creating a strong online and offline based on the information about how your customer spends their time, constantly getting new customers and retaining the old ones would not be a problem anymore.
Determine the Uniqueness of Your Product
What are the most important benefits you offer for a potential customer? What should a customer buy from you rather than from your rivals, what particular needs does your product satisfy?
The Nord VPN apps set a great example on how you should determine and focus on the unique sides of your product, as some of them are being so popular because of affordable pricing, the other – because of the speed that is much faster than one of their competitors, and another because of great compatibility with your operating system. Any product or service should develop its uniqueness and then capitalize on it. The current market is being highly competitive, so you need to stand out from the mass of similar products.
Determine the Geographical Location of Your Customer
Define when and where they buy your product or service? People in various geographical locations differ in mentality and purchasing habits, so you need to craft your marketing strategy accordingly. If your company is multilingual and offers product / services in different languages, it is very important to track this. For example, the Preply company constantly analyzes how many clients choose English classes and how many in all other languages.
Determine Your Customer’s Buying Strategy
How has your customer bought similar products or services in the past if they did any? F.e, a customer decided to purchase a pair of nice kitchen towels on your site and is about to complete the purchase. You can offer them teacups that beautifully match the towels so they also add them to a card and double your profit.
Main Steps to Acquire Your Customers
Since a core idea of CVO is to build a marketing funnel that allows you to spend more than your rival company to acquire customers. Those who can spend more to acquire customers wins. To do that, the marketing specialists use the 4-step process.
#1 Segment Your Customers
Dividing all of your current customers into groups according to the RFM segmentation model would help you detect those who are very loyal and those who are not, so you know which group visits your store the most frequently and which group spends the most money there. RFM stands for recency, frequency, and monetary and the main benefit of this model is that it allows the business to segment customers into groups based on their behavior. So after the successfully done segmentation process, a business can craft a particular communication strategy for each group. Such an individual approach is known for significantly increasing the conversion rates as you provide your customers only with relevant information that fits their current needs.
#2 Monitor vital Customer Experience Metrics
You need to constantly track the vital Customer Experience metrics paying the attention to Customer Lifetime Value and Buying Patterns. By calculating the Customer Lifetime Value you can optimize your cost on acquiring new customers the way that is the most profitable for your business.
By analyzing the Buying Patterns of various customer groups, you can learn the preferences, purchasing behaviors, and other characteristics of each group. Working with the needs of each specific group would help you satisfy their needs to the biggest extent.
#3 Conduct the Qualitative Research
After doing the qualitative research, you would understand why various groups prefer different types of products, what their purchasing motivation is, and the expectations from the product. To get the fullest image of what your customers need and want, make sure to utilize various methods of qualitative research such as individual interviews, working with offline and online focus groups, in-home videos, customer’s journal analysis, and “shop-alongs”.
#4 Define the Ideal Customer Profile
Qualitative Research would give you more data about your ideal customer, so you could create the Ideal Customer Profile which would describe their gender, location, age, purchasing habits, buying anomalies, motivation to use certain products, and barriers that stop them from some brands.
An ideal customer profile is valuable for business because it helps companies identify whose needs they can satisfy to the biggest extent. Instead of focusing on all groups of potential customers, a company can focus only on those who would be willing to pay for the service provided and whose elements they can really solve. By defining an ideal customer profile a business can curate a more focused marketing and sales strategy.
Online commerce is not a revolutionary idea in the modern world. To succeed, companies not only have to be aware of the latest trends and demands of users but to have an idea of how the CVO and CRO strategies work. Despite sounding similar, these two notations represent core different directions. CRO focuses solely on getting customers to make a purchase, which is only good in short-term strategy. On the other hand, CVO is a long-term strategy that helps brands build fruitful relationships with customers and keep them coming back. By investing time and money into learning about your customers, defining the needs, and refining your product so it can really solve customer’s problems, businesses gain loyalty and trust. CVO is a great way to create a stable flow of loyal customers that keep coming back.