Customer Value Optimization (also known as CVO) is a system based on increasing the lifetime value of your customers. It’s a very versatile and easy to understand system that has been used by large companies and corporations (like Amazon and McDonalds), local family-owned businesses across the country and everything in between.
This post is intended to help you understand how to leverage Digital Marketing to achieve CVO.
The system is primarily based off Jay Abraham’s three laws of growing a business into a successful one.
- Increase the number of customers
- Increase the average transaction value per customer
- Increase the number of transactions per customer.
The system is comprised on five different steps that eventually have attracted converted customer’s comeback and partake of your business’s offerings, each step is crucial for increasing your customer’s value and your business’s rate of success. The following image provided by Digital Marketer will show you the system in its entirety. You can obtain a PDF of it on their website.
While it may look complicated at first, it is rather simple. During the rest of this article, we will go over each step and see how it can make a business grow. To illustrate the CVO process, we will create a company to use in our examples.
The company is a small but growing hotel/resort chain called “Wilderness Getaway”. The company has resort locations in forested areas like Northern Arizona and parts of Nevada. Currently, they are getting enough business to stay afloat and occasionally hire the extra pair of hands to handle the busy hunting seasons. However, management thinks they need to step up their game and find how they can generate more revenue from their current flow of customers while attracting new ones. This company would benefit from the CVO process.
STEP 1 – IDENTIFYING YOUR TARGET
The foundation of any CVO process and any business in general is identifying the market/audience you want to focus on (i.e. target, hence the term “target market”). This can be achieved through research from various sources like Google Analytics, customer data, feedback from both customers and employees, and other sources.
To put into the example of “Wilderness Getaway”, they realize that based on their research, their target market is mainly an older more refined audience that enjoys the outdoors and hunting.
Now that your company has found its target audience, there is still more identification work to be done. Businesses get paid to get from a “before” to an “after” status. When they are “before” they are unhappy or discontented in some way. When they are “after” they feel better.
So what your business needs to identify what moves your target audience from the “before” to the “after.” To expand on this further, think of these simple questions:
- What does the audience HAVE before getting your produce/service and after it.
- How do they FEEL before and after getting your product/service
- How is their AVERAGE DAY before and after you have given them your product/service?
- What is their STATUS before and after they get what you offer?
Going back to “Wilderness Getaway”, management sat down and went over this strategy. They offer getaways in the wilderness areas of Arizona and Nevada to their target audience of older, refined hunters and nature lovers. They conclude on their customers’ before and after statuses.
BEFORE HAVE: Drab vacations in an overly expensive area
AFTER HAVE: A vacation that lets them get in touch with nature.
BEFORE FEEL: Frustrated, overworked.
AFTER FEEL: Fully energetic. Feel more in touch with nature.
AVG. DAY BEFORE: Boring day to day routine.
AVG. DAY AFTER: Ready to tackle the day! Adventure awaits!
BEFORE STATUS: Feeling out of touch. No feeling of belonging.
AFTER STATUS: Courageous person of nature and animal-kind.
As long as you can identify these factors, you are on the first step to success.
STEP 2 – ATTRACT
Attracting and driving your target audience to your business is the next step of generating audience members into show interest of your goods/services (those individuals are called “leads”). As a result, your revenue potential will increase.
Attracting potential customers can come from various channels.
- Organic SEO (organic search results)
- LOCAL SEO (organic search results from online local-centric directories/sites like Yelp & Google Maps)
- Email Marketing
- Blogging and online content
- Social Media (Facebook, Twitter, Linkedin, etc.)
- Paid Media
In the past, people have put the blame on these channels for the lack of business success. However, they shouldn’t be. Social media and paid adverts on them want to send you business and SEO wants to make your business the best ranked site possible. There’s some things you need to understand.
- How to measure what the traffic from these sources are worth
- How to extract the most from these sources of traffic
~Ryan Deiss of Digital Marketer
In order to generate leads from these sources, you need to understand the system on the whole. A suggested path is to master one and then subtly add on others.
In our example company, “Wilderness Getaway” had a history of meager success in SEO, Social Media, and email marketing. The management then thought they were stretched too thin and needed to refocus. They decided to shift their efforts solely on paid adverts on Facebook that would lead interested people to their sites for more information and potential bookings. It was a success. To take the next step, they would have their paid adverts lead to their site and also blogging content on their site to generate more interest.
STEP 3 – CONVERT
Converting is the next step of the CVO process. Its focus is changing leads to actual customers. This is done through offering lead magnets.
Although no money changes hands, you are giving something away for their contact information like email and name. Companies give away items such as downloadable PDFs with vital information, downloadable software that can perform certain tasks, and other creative ideas to gain contact information.
After getting the leads contact information, now would be the time to make offers, this is where the revenue can start generating.
Offering a Tripwire
You have to remember that the main focus is to increase the number of converts (i.e. paying customers). So you have to make them feel like they are getting a lot for a little bit of money, hence this is where the tripwire comes into play.
A tripwire is an irresistible, super low-ticket offer that converts prospected customers into buyers.
EXAMPLE: Wilderness Getaway sends an email advert to its prospects that for a limited time only, they can get one night in one of their rooms for as low as $25.
Your business is not to be make a living off tripwires, it is to be making a living off the core offers and the profit maximizers.
Offering the Core Product
Now that have customers’ attention through tripwires, now is the time to show the core offers (i.e. products/services of your business) to those you have gotten through. Most businesses don’t get much from offering their product straight up, they get it through tripwires’ and lead magnets’ combined strengths. Offering the core product up front is like proposing to your date after the first date night (it might work in Disney films but it doesn’t work in real life).
EXAMPLE: Wilderness Getaway notices a lot of customers taking in their tripwire offer. Because of that, they can now offer their core product, hotel room stays for their set price. As a results, customers are booking for the $25 night and then a couple nights afterwards at around $99 a night.
Some core offers can be lived off of but others are there to break even. Most companies don’t make much off their core offer and make most of their revenue through profit maximizers.
Offering a Profit Maximizer
As you recall from earlier, another way for success is to increase the average value/transaction value of a customer. This is done through profit maximizers. In a sense, it’s an upsell or paid addon that the customer will be enticed to enter into after taking the core offer. Think of it as the fries to your McDonald’s hamburger.
EXAMPLE: Wilderness Getaway is getting people taking their core offer and their tripwire offers. Now is the time to obtain more revenue while they have customers reeled in. They can offer paid services like four course romantic dinners in their outdoor 4-star restaurant and hunting lessons for inexperienced hunters.
Regarding Customers That Refuse Your Offers
Even the best baseball players don’t hit a homerun or an RBI when they are at bat, so every offer isn’t going to be accepted. If you noticed in the convert image in this section, there are options when customers/prospects/leads say no. You engage them in a follow up series. Follow ups can be through communicating with them and asking them “are you sure?”. If they still refuse, you can reengage them through the next step, which is engage (or in this situation, re-engaging).
STEP 4 – ENGAGE
Creating a return path is a way for a business to grow the number of transactions per customer. Its goal is focused on frequent, strategic communication with buyers and prospects in order for them to buy and buy again. This can be done by the obtained contact information you have gotten near the start of CVO process. By utilizing this information, you can offer them new lead magnets, tripwires, core offers and profit maximizers.
In the end, it’s an ongoing cycle of getting more value from your customers, which means more success.
Some examples of this re-engaging return path can be things like:
- Exit Offers
- Organic Social Media
- Loyalty Programs
- Content Marketing
- Outbound Sales Calls
- Ad Retargeting
- Email Follow Ups.
To put in our example company, Wilderness Getaway, they would focus on getting people to come back to their locations more frequently after the first visit. They would start a campaign of email follow ups to those who went through the whole process and took up the core offer (nightly stays) and some profit maximizers (hunting lessons, full course romantic dinner dates, etc.). This would re-engage those people and encourage them to come back. The chain can also re-engage by offering information about their loyalty program to customers who are checking in and out frequently.
STEP 5 – SELL
While the other steps were part of the process, piece by piece, selling is a difference on its own. In a sense, the step of selling is the entirety of the system, that focuses on how you do it instead of what you do with it.
There are many different approaches to selling. One form of selling is by Strategic Seduction. This form is more of a way of life as it can be used in any situation. You will have to seduce yourself first (by making outcomes that are appeasing) then patiently start seducing your prospects. It’s not manipulation, because manipulation is basically gaming your customers through force.
Rather you want your clients to thank for you giving you money. This can be achieved through multiple exit points for someone who wants to say “no”. However, it’s where you create a path that they’ll eventually say yes because they wanted to of their own free will. The prime factor here is patience. Patience of getting them from point A to point B.
To put in example with Wilderness Getaway, let’s say they built their entire CVO process, but they need to execute it. While competitors use manipulations to get their customers to say, Wilderness Getaway can use patience and subtly seductions to those who are not willing to stay at their locations. They can devise an exit plan of sincerity and promise to make people’s experience feel better, hence turning their “No I’m not staying here” to “For that price and accommodations, I’ll say yes”.
Utilizing and Optimizing your Customers
The CVO process is very easy to establish and very hard to mess up, as long as you follow its steps. It’s versatility and its simplicity is how many businesses (large and small) grow success through their customers and their values.