How Growth Marketing Strategies Increase Customer Lifetime Value
Without customers, your business cannot exist. At least not for long. This is why marketers spend most of their time looking for ways to attract new leads. Growth marketers create strategies to convert as many leads as possible.
However, they don't just generate leads, they make sales and convert them into customers. While these are great short-term goals, the real growth happens when the business delights its new customers. Better yet, those customers will buy more and recommend to others. Word of mouth makes the marketer's job easier and loyalty increases customer lifetime value.
CLV is the engine of business growth. The more customers buy, the more revenue the company gets. To increase longevity, marketers can encourage customers to buy more often or spend more at once. Developmental marketing strategies achieve this by building long-term relationships with customers. Let's take a closer look at the effect these methods have on life expectancy.
They optimize conversion rates
Remember when you learn something new. Do you get it right from the start? Probably not. If you're like most people, it took some trial and error to get to the level of understanding you have today.
Growth marketers use the same approach. They begin testing to figure out how to improve each stage of the customer journey. One of the most important of these steps is: Acquisition. If you don't get customers from the start, you can't keep them. But it's not uncommon for businesses to struggle with stellar conversion rates.
Potential customers arrive as they discover a shiny new company structure in the future. But it is difficult to accept them. Growth marketing strategies promise to reassure that there is nothing wrong with taking the next step. “One of the best ways to improve your conversion rate is to test different value propositions,” notes my friend Chris Daley of Smart CRO . "If you find the right value proposition that appeals to the prospect, you can typically increase your conversion rate by 10-20%."
Growth marketers use more strategic ways to increase conversions by setting up call-to-action buttons on website pages, A/B testing email content and retargeting leads based on their behavior. The idea is to streamline the company's approach so that less potential customers leave the acquisition stage. If you can please people in the early stages, it will be much easier for you to build relationships later on.
They build loyalty through personalization
What's to stop anyone from thinking the grass is greener somewhere in a hyper-competitive market? Think about products, mobile services and insurance plans. Consumers find it difficult to differentiate between these products and services over time. For them, the core proposition is the same, regardless of which company is offering it.
So why don't customers leave because of price or other benefits? Growth marketing strategies try to combat this behavior by personalizing things. You see this in supermarket chain loyalty programs that offer personalized savings. This exclusive discount does not apply to random items, but applies to items that every customer purchases regularly. E-commerce giants are also using personalization through subscription services and product recommendations.
In short, they connect with each customer by showing that they know them as a person. Personalization also drives customer retention by rewarding loyalty and can go beyond purchase. Growth marketing strategies can include unique educational content that increases the value of customer relationships.
They provide valuable advice.
Who can you trust? A person you just met or have been with you for years? Chances are, this is someone you've talked to countless times and even asked for help. Of course, you'll be more skeptical of what a stranger says.
This human bias helps explain why 86% of consumers trust referral marketing. In fact, they are 50 times more likely to buy products recommended by their friends and family. Companies don't have to go to great lengths to influence referrals, as word of mouth is persuasive enough. The icing on the cake is that the lifetime value of referrals is double that of customers who convert through traditional advertising.
Growing marketing strategies recognize and amplify the power of word of mouth. Referral incentive programs are common, but they're not the only strategy that works. Recruiting customers for your company testimonial video is another matter. The same goes for using user-generated content, which allows brand representatives to express their enthusiasm for a product or service. Empowering passionate customers to speak up for a company often has more impact than they say themselves.
Using growth marketing to increase CLV
Marketers know that higher lifetime customers increase a company's profits. But since valuable customers usually don't start out that way, companies need to develop a relationship to add value. Growth marketing can achieve this by understanding what is important to each customer and rewarding them for taking the next step.
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