{"id":11158,"date":"2022-01-19T08:03:28","date_gmt":"2022-01-19T08:03:28","guid":{"rendered":"https:\/\/www.revuze.it\/?p=11158"},"modified":"2022-01-19T08:03:28","modified_gmt":"2022-01-19T08:03:28","slug":"the-complete-guide-to-customer-value-optimization-cvo","status":"publish","type":"post","link":"https:\/\/www.revuze.it\/blog\/the-complete-guide-to-customer-value-optimization-cvo\/","title":{"rendered":"The Complete Guide to Customer Value Optimization (CVO)"},"content":{"rendered":"<p><span style=\"font-weight: 400\">Understanding your clients and their sentiment is the key towards Customer Value Optimization. In this article we will understand a few basics such as \u2013 what is customer value, why it is important, and the steps you should take after reading this blog to start optimizing your customer value.<\/span><\/p>\n<h2><b>What is Customer Value?<\/b><\/h2>\n<p><span style=\"font-weight: 400\">A click, a purchase, a review, a subscriber \u2013 it\u2019s what it\u2019s all about \u2013 the customer. That\u2019s who you cater to with your products and tailor your strategies to. However,<\/span> <a href=\"https:\/\/www.nerdmarketing.com\/customer-value-optimization\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400\">not all customers are created equal<\/span><\/a><span style=\"font-weight: 400\"> in terms of <\/span><i><span style=\"font-weight: 400\">customer value<\/span><\/i><span style=\"font-weight: 400\">.<\/span><\/p>\n<p><b>Customer Value: the cost investment into attracting\/retaining a customer vs. the revenue return of their loyalty.<\/b><\/p>\n<p><span style=\"font-weight: 400\">Customer Value is usually grouped into 3 categories, but can be adjusted to fit your company\u2019s goals:<\/span><\/p>\n<ul>\n<li><span style=\"font-weight: 400\">\u00a0<\/span><i><span style=\"font-weight: 400\">Low Value: <\/span><\/i><span style=\"font-weight: 400\">the customers that bring in minimal profit \u2013 don\u2019t buy very often, and only buy low-margin products, return products, etc.<\/span><\/li>\n<li><span style=\"font-weight: 400\">\u00a0<\/span><i><span style=\"font-weight: 400\">Mid Value: <\/span><\/i><span style=\"font-weight: 400\">the general majority \u2013 one-off or occasional customers, with an average spending and return rate.<\/span><\/li>\n<li><span style=\"font-weight: 400\">\u00a0<\/span><i><span style=\"font-weight: 400\">High Value: <\/span><\/i><span style=\"font-weight: 400\">the ideal customer profile \u2013 repeat buyers or high-margin spenders, satisfied and loyal.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400\">The goal is to turn as many low- and mid-value customers as possible into high-value ones. Read on to find out how.<\/span><\/p>\n<h2><b>Why is Value Optimization Important?<\/b><\/h2>\n<p><span style=\"font-weight: 400\">Customers aren\u2019t created equal, but they are all equally important to consider. By employing strategies that optimize (and maximize!) customer value, the business model becomes more efficient cost-wise, channeling spending into approaches that create the most useful outcomes while bringing in a profit that you can re-invest. For this to be successful you need to accurately determine the value of each customer and provide the appropriate response for each.<\/span><\/p>\n<h3><b>RFM<\/b><\/h3>\n<p><span style=\"font-weight: 400\">The first point of action is to analyze customers according to the <\/span><b><i>Recency \u2013 Frequency \u2013 Monetary Value <\/i><\/b><b>(RFM) Model<\/b><span style=\"font-weight: 400\">.<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400\"><i><span style=\"font-weight: 400\">Recency<\/span><\/i><span style=\"font-weight: 400\">: How long has it been since a customer\u2019s last activity? (i.e., purchase, interaction)<\/span><\/li>\n<li style=\"font-weight: 400\"><i><span style=\"font-weight: 400\">Frequency: <\/span><\/i><span style=\"font-weight: 400\">How often does a customer engage with the company? (i.e., number of transactions, loyalty)<\/span><\/li>\n<li style=\"font-weight: 400\"><i><span style=\"font-weight: 400\">Monetary Value: <\/span><\/i><span style=\"font-weight: 400\">What is the average spending commitment of a customer? (i.e., Average Order Value (AOV), transactions value)<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400\">Keeping in mind the specifications of your business, you may have to<\/span><a href=\"https:\/\/www.omniconvert.com\/blog\/what-is-rfm\/\" target=\"_blank\" rel=\"noopener\"> <span style=\"font-weight: 400\">adjust the way you measure<\/span><\/a><span style=\"font-weight: 400\">, allowing for average or desired customer lifecycle, frequency, and product value margins in your industry.<\/span><\/p>\n<p><span style=\"font-weight: 400\">The next step is to apply these measurements to your advantage.<\/span><\/p>\n<h2><b>Optimizing Your Customer Value<\/b><\/h2>\n<p><span style=\"font-weight: 400\">The strategy of extracting the maximum value from your existing customers by transforming them into a growing base of high-value customers is called <\/span><b><i>Customer Value Optimization<\/i><\/b><b> (CVO)<\/b><b><i>.<\/i><\/b><\/p>\n<h3><b>CVO &amp; Jay Abraham<\/b><\/h3>\n<p><span style=\"font-weight: 400\">When talking about CVO, you\u2019ll often hear references to marketer<\/span><a href=\"https:\/\/www.omniconvert.com\/blog\/what-is-customer-value\/\" target=\"_blank\" rel=\"noopener\"> <span style=\"font-weight: 400\">Jay Abraham and his theory<\/span><\/a><span style=\"font-weight: 400\"> that a business can only be grown in three ways:<\/span><\/p>\n<p><span style=\"font-weight: 400\">By increasing:<\/span><\/p>\n<ol>\n<li style=\"font-weight: 400\"><i><span style=\"font-weight: 400\">The number of customers<\/span><\/i><\/li>\n<li style=\"font-weight: 400\"><i><span style=\"font-weight: 400\">The average transaction value per customer (Monetary Value &amp; AOV)<\/span><\/i><\/li>\n<li style=\"font-weight: 400\"><i><span style=\"font-weight: 400\">The number of transactions per customer (Frequency)<\/span><\/i><\/li>\n<\/ol>\n<p><span style=\"font-weight: 400\">This model also effectively connects with the components of a high-value customer base \u2013 many customers who buy a lot and return often.<\/span><\/p>\n<p><span style=\"font-weight: 400\">So where do you start with building a Customer Value Optimization system? There are several clear steps to take, making sure to delight customers at every checkpoint of this<\/span><a href=\"https:\/\/www.digitalmarketer.com\/blog\/customer-value-optimization\/\" target=\"_blank\" rel=\"noopener\"> <span style=\"font-weight: 400\">well-known and well-used funnel<\/span><\/a><span style=\"font-weight: 400\">.<\/span><\/p>\n<h3><b>The 7 Steps<\/b><\/h3>\n<h4><b>1.<\/b><span style=\"font-weight: 400\"> \u00a0<\/span><b>Find the Fit<\/b><\/h4>\n<p><span style=\"font-weight: 400\">The first step is to <\/span><b>align the Product\/Market fit<\/b><span style=\"font-weight: 400\">.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Figure out what your market is and where your <a href=\"https:\/\/www.revuze.it\/blog\/product-insights\/\">product<\/a> fits in \u2013 <\/span><i><span style=\"font-weight: 400\">what is the problem that your customers have and how is your product a solution?<\/span><\/i><\/p>\n<p><span style=\"font-weight: 400\">Define in detail both your<\/span><a href=\"https:\/\/www.productplan.com\/glossary\/product-market-fit\/\" target=\"_blank\" rel=\"noopener\"> <span style=\"font-weight: 400\">target market and product relevance<\/span><\/a><span style=\"font-weight: 400\">, and from there work through understanding what your customers want at each value level. In this way, you can optimize your marketing to address their needs better, focusing especially on the mid- and high-value level customers.<\/span><\/p>\n<p><span style=\"font-weight: 400\">If you want to go further, determine how your product is the<\/span><a href=\"https:\/\/delighted.com\/blog\/how-to-measure-and-track-product-market-fit\" target=\"_blank\" rel=\"noopener\"> <span style=\"font-weight: 400\">best solution out of all the competitors<\/span><\/a><span style=\"font-weight: 400\">. The wider the gap between your target customers\u2019 concern and the state of satisfaction when it is solved by your product, the more value your product holds for them \u2013 which can be reflected in the pricing.<\/span><\/p>\n<h4><b>2.<\/b><span style=\"font-weight: 400\"> \u00a0<\/span><b>Target Traffic<\/b><\/h4>\n<p><span style=\"font-weight: 400\">The second step is to <\/span><b>narrow down your most effective traffic sources<\/b><span style=\"font-weight: 400\">.<\/span><\/p>\n<p><span style=\"font-weight: 400\">There are many traffic sources and platforms available, both paid and unpaid. Spreading efforts across many inefficient sources can be hard to manage and measure, which becomes a waste of time and resources.<\/span><\/p>\n<p><i><span style=\"font-weight: 400\">Focus on the traffic sources that bring the most value<\/span><\/i><span style=\"font-weight: 400\">. Your aim is to<\/span><a href=\"https:\/\/www.digitalmarketer.com\/blog\/find-my-market-traffic\/\" target=\"_blank\" rel=\"noopener\"> <span style=\"font-weight: 400\">filter and attract<\/span><\/a><span style=\"font-weight: 400\"> the prospective and most engaged customers and drive them to the rest of the CVO funnel; have the correct tools and metrics in place to measure the value of the traffic.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Measuring the value is incredibly important, as your aim is to<\/span><a href=\"https:\/\/www.yesoptimist.com\/roi-of-seo-value-of-organic-traffic\/\" target=\"_blank\" rel=\"noopener\"> <span style=\"font-weight: 400\">track engagement and relevant data<\/span><\/a><span style=\"font-weight: 400\"> of the traffic to understand what is working and what isn\u2019t. With the proper targeting, the resources you invest into the traffic source (and each visitor or click) should be eventually providing a reliable return on investment in the form of a high rate of attracted visitors turning into engaged customers.<\/span><\/p>\n<p><span style=\"font-weight: 400\">When you get to a point of stable growth from your traffic source, you might find that you may well be able to afford investing even more than the face value of the traffic, because you have established a stream of proven conversion down the line.<\/span><\/p>\n<h4><b>3. <\/b><b>Lure in with Lead Magnets<\/b><\/h4>\n<p><span style=\"font-weight: 400\">You can look at Lead Magnets as the customer hook, where you <\/span><b>offer useful products for free in exchange for contact info.<\/b><\/p>\n<p><span style=\"font-weight: 400\">Lead magnets are usually placed on landing pages or squeeze pages to attract attention and ask for names and emails in return. By receiving the customer\u2019s info, you are officially opening up an avenue of direct marketing, where you can follow up and further engage.<\/span><\/p>\n<p><i><span style=\"font-weight: 400\">Lead magnets should be valuable to the customer and free of charge.<\/span><\/i><span style=\"font-weight: 400\"> If they are useless, vague, or misleading, they will be ineffective at convincing customers to volunteer their info and open up mutually beneficial communication.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Ebooks, courses, guides, templates, discounts<\/span><a href=\"https:\/\/optinmonster.com\/9-lead-magnets-to-increase-subscribers\/\" target=\"_blank\" rel=\"noopener\"> <span style=\"font-weight: 400\">are all lead magnets<\/span><\/a><span style=\"font-weight: 400\">. Offer various lead magnets of interest to your target market, segmenting them by topic or type. Specificity in Lead Magnets helps encourage a high conversion rate as their appeal is in being highly tailored to your target audience\u2019s needs.<\/span><\/p>\n<h4><b>4.<\/b><span style=\"font-weight: 400\">\u00a0<\/span><b>Tease with a Tripwire<\/b><\/h4>\n<p><span style=\"font-weight: 400\">A Tripwire is <\/span><b>a low fee product offer with the aim of converting leads to paying customers.<\/b><\/p>\n<p><span style=\"font-weight: 400\">This is the first financial transaction in the funnel, where your audience is presented with a valuable offer at an irresistible price, encouraging them to make the<\/span><a href=\"https:\/\/www.autogrow.co\/tripwires-that-inspire\/\" target=\"_blank\" rel=\"noopener\"> <span style=\"font-weight: 400\">transition to buyers<\/span><\/a><span style=\"font-weight: 400\">, and drawing them in to higher priced products.<\/span><\/p>\n<p><i><span style=\"font-weight: 400\">The Tripwire must be and a proper taste of your product or services<\/span><\/i> <i><span style=\"font-weight: 400\">on a low-cost or discounted scale <\/span><\/i><span style=\"font-weight: 400\">\u2013 depending to the industry you\u2019re in, this could be products, books, special introductory prices, free trial access. The aim of this transaction<\/span><a href=\"https:\/\/powerdigitalmarketing.com\/blog\/what-is-a-tripwire\/\" target=\"_blank\" rel=\"noopener\"> <span style=\"font-weight: 400\">isn\u2019t to generate profit<\/span><\/a><span style=\"font-weight: 400\">, it is a way to get customers over the hurdle of hesitance.<\/span><\/p>\n<p><span style=\"font-weight: 400\">You can publicize your Tripwires on your website, but they are most often used in the direct marketing stage with the contact info obtained earlier, when your Lead Magnet has made a positive impact. This is also where your Customer Service and Experience should<\/span> <a href=\"https:\/\/blog.marketo.com\/2010\/07\/email-marketing-tips-trends-and-techniques-with-return-paths-stephanie-miller.html\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400\">start shining through<\/span><\/a><span style=\"font-weight: 400\">, making communication a<\/span> <a href=\"https:\/\/www.campaignmonitor.com\/resources\/knowledge-base\/how-do-you-give-the-best-customer-experience-with-email\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400\">delight for the customers<\/span><\/a><span style=\"font-weight: 400\">.<\/span><\/p>\n<h4><b>5.<\/b> <b>Prepare the Core Offer<\/b><\/h4>\n<p><span style=\"font-weight: 400\">This is the main event, where the Core Product comes in: <\/span><b>the flagship products or services of your business<\/b><span style=\"font-weight: 400\">.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Hooked and reeled by the Lead Magnet, and over the hurdle and happy with the Tripwire, your customer has been primed for continuing the relationship with the brand. <\/span><i><span style=\"font-weight: 400\">If they have been satisfied with the service, quality, and value so far, customers will be more interested and inclined to buy into your higher-value core items<\/span><\/i><span style=\"font-weight: 400\">.<\/span><\/p>\n<p><span style=\"font-weight: 400\">You offer them your core product \u2013 clearly advertised and thoroughly marketed \u2013<\/span><a href=\"https:\/\/assemblo.com\/blog\/how-to-identify-your-core-product-or-service-offering\/\" target=\"_blank\" rel=\"noopener\"> <span style=\"font-weight: 400\">your specialization in what is most valuable for your customers<\/span><\/a><span style=\"font-weight: 400\">, the features they should invest in and keep coming back for. Customers are much more likely to buy at this point after having had several different positive transactions and experiences with the business than if the Core Product was marketed via cold campaigns.<\/span><\/p>\n<p><span style=\"font-weight: 400\">And although this part can be profitable,<\/span><a href=\"https:\/\/www.impactplus.com\/blog\/what-is-a-core-product\" target=\"_blank\" rel=\"noopener\"> <span style=\"font-weight: 400\">usually<\/span><\/a><span style=\"font-weight: 400\"> the main money usually comes in the next step\u2026<\/span><\/p>\n<h4><b>6.<\/b> <b>Provide a Profit Maximizer<\/b><\/h4>\n<p><span style=\"font-weight: 400\">Profit Maximizers are <\/span><b>extra products that complement and enhance your core offer<\/b><span style=\"font-weight: 400\">.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Would you like fries with that? Every purchase is a <a href=\"https:\/\/www.revuze.it\/blog\/customer-experience\/\">customer experience<\/a> with a product and items or services that enhance that experience are usually where most businesses<\/span><a href=\"https:\/\/www.impactplus.com\/blog\/what-is-a-profit-maximizer\" target=\"_blank\" rel=\"noopener\"> <span style=\"font-weight: 400\">make their profit<\/span><\/a><span style=\"font-weight: 400\">. These products are usually offered during or after the sale of the Core Product. By working enticing Profit Maximizers that are useful to the customer into your plan, you can create a rich brand ecosystem.<\/span><\/p>\n<p><i><span style=\"font-weight: 400\">Upsells, cross-sells, recommendations, accessories, bundles, subscriptions, premium tiers, memberships are all examples of profit maximizers\u2026<\/span><\/i><span style=\"font-weight: 400\"> Think of the adage whereby cinemas make most of their profits on selling popcorn rather than the movie tickets.<\/span><\/p>\n<h4><b>7.<\/b> <b>Retain with a Return Path<\/b><\/h4>\n<p><span style=\"font-weight: 400\">As a customer goes through this Customer Value Optimization system, their value increases. Step-by-step they are turned into high-value customers, buying at high margins and returning often. Maintaining an ongoing relationship with your customers is crucial to keeping them high-value.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Use a Return Path to gently <\/span><b>direct existing customers to the start of your CVO funnel<\/b><span style=\"font-weight: 400\">.<\/span><\/p>\n<p><i><span style=\"font-weight: 400\">Incentivizing customers to return is key to continuing the cycle of providing value and receiving profit.<\/span><\/i><span style=\"font-weight: 400\"> A Return Path restarts the process of overcoming hesitation and easing them into their next purchase. This reinforces you work through the steps of the RFM model \u2013 increasing the frequency and monetary value of interactions with your customer base.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Loyalty programs, discounts, exit offers, personalized email marketing, ad retargeting, social media, and other incentives are all ways of maintaining contact and<\/span> <a href=\"https:\/\/customerthink.com\/6-strategies-to-kick-start-your-customer-value-optimization-cvo-strategies\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400\">reengaging<\/span><\/a><span style=\"font-weight: 400\">.<\/span><\/p>\n<h2><b>Recap and Conclusion<\/b><\/h2>\n<p><span style=\"font-weight: 400\">By understanding how your customer base works and measuring it with the correct metrics, you can use Customer Value Optimization to increase the potential of your customers.<\/span><\/p>\n<p><span style=\"font-weight: 400\">By applying the Recency \u2013 Frequency \u2013 Monetary Value (RFM) model to your customer segments and following the 7 Steps of: Product\/Market Fit, Lead Magnet, Tripwire, Core Offer, Profit Maximizer, and Return Path, you can streamline your inbound business model, making it cost-efficient and extracting the maximum value from each customer while providing top-quality service to meet their needs.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Understanding your clients and their sentiment is the key towards Customer Value Optimization. In this article we will understand a few basics such as \u2013 what<\/p>\n","protected":false},"author":17,"featured_media":11170,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[1],"tags":[],"acf":[],"_links":{"self":[{"href":"https:\/\/www.revuze.it\/blog\/wp-json\/wp\/v2\/posts\/11158"}],"collection":[{"href":"https:\/\/www.revuze.it\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.revuze.it\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.revuze.it\/blog\/wp-json\/wp\/v2\/users\/17"}],"replies":[{"embeddable":true,"href":"https:\/\/www.revuze.it\/blog\/wp-json\/wp\/v2\/comments?post=11158"}],"version-history":[{"count":0,"href":"https:\/\/www.revuze.it\/blog\/wp-json\/wp\/v2\/posts\/11158\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.revuze.it\/blog\/wp-json\/wp\/v2\/media\/11170"}],"wp:attachment":[{"href":"https:\/\/www.revuze.it\/blog\/wp-json\/wp\/v2\/media?parent=11158"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.revuze.it\/blog\/wp-json\/wp\/v2\/categories?post=11158"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.revuze.it\/blog\/wp-json\/wp\/v2\/tags?post=11158"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}