How to Get an Edge When Paid Search is Highly Competitive
Are you seeing CPC costs rising? Are you facing more and more competition for the same keywords? Are even your longtail keywords causing you to hit the limit of your allowable spend? If you’ve optimized your Paid Search program, then, to get that competitive edge, you need to look to increasing your customer lifetime value, thereby letting you bid higher against your competitors (because over a lifetime you’ll make more money from each of your customers).
What is Customer Lifetime Value (CLV)?
This term refers to how much value you can receive from a customer over a lifetime. Unlike profit you receive when a single customer buys one product, CLV refers to how much value you can receive if you upsell, or cross-sell your other products and services, or get repeat sales of the original product or services. For example, if you upsell a one copy sale of a magazine to a subscription, and then you renew that subscription for 5 years on average, and you also sell them on purchasing a branded tote—you’d take all of these actions into account to determine the lifetime value of a customer.
Obviously, this number is often higher than the profit that comes from just one purchase of a product or a service, which means you can afford to increase your bids, knowing that you can still turn a profit once you make that sale (and many more to come).
To calculate your own products CLV, check out this blog post by Neil Patel on How to Calculate Lifetime Value – The Infographic
5 Tips for Increasing Customer Lifetime Value
Make it Easy
Personally, I think every company should have this plastered over their walls to constantly remind employees that it’s not about them—it’s about the customer. In every stage of the sales process, whether your B2B or B2C, you need to think about how easy it is to purchase from you and to understand what it is that you’re selling. Don’t put unnecessary roadblocks like asking for them to divulge too much information in order to get product information from you, or making them re-type in their address info, or go through too many hoops to retrieve their password. The user experience of your website is so important to get conversions, we’ve written a blog about it — I Actioned SEO & SEM. So, Why Haven’t Conversations Grown? As well, be careful how much you pressure people, if you come out with too much pressure to upsell or cross-sell, then you could kill the potential sale right there. As an example, imagine if Amazon ran pop-ups to tell you what other customers already bought rather than how they do it now (see image). If you want to peruse their suggestions, you can, but it’s not in your face or in your way.
Drive Repeat Business with Great Experiences
It goes without saying that if you give people a great experience with your product—they’ll want more. In a study conducted by Microsoft in 2017, they found 96% of respondents say customer service is important in their choice of loyalty to a brand. With the rise of digital technologies there has been an equal rise in customer service expectations. To compete, you’ll need to have a variety ways for people to contact you. Make sure you know your customers really well, enough that you can map their customer journey. This will help you to solve their problems, give them information when they need it, and increase the chance you’ll give them a great experience which will make it easier to upsell and cross-sell.
Increase Loyalty By Making Customers a Part of Your Brand
Brands that engage with their customers win their loyalty and learn a lot in the process. By engaging with your customers, you can receive valuable feedback, which you can use to improve your products or services or the way in which you do things. Another tactic is to feature their content, whether that’s reviews or shorts stories about their experiences with your product. You can also offer exclusivity for loyal customers thereby giving them an experience or product that they can’t get anywhere else. Obviously, it can be expensive to giver personalized experiences, so we suggest automating whenever you can, but always making sure people can get a personalized touch when they need it. A recent study by Mind Share World found that 79% of users would want a human to step in if a chat bot can’t solve their problems.
Upselling and Cross-Selling
Although I mentioned it above, I’d like to take a second and define them because they often get mixed up. Upselling is selling more expensive upgrades of a specific product or service. Cross-selling is selling a similar, or complimentary product or service. So, to increase your CLV, you need to have a portfolio of products or services in which you can upsell or cross-sell to your current customers. Assuming you do, you can offer bundled products, or offer discounts to purchase more, or offer temporary upgrades to get people to buy more. Amazon is perhaps the king of cross-selling, with showing you popular choices, complimentary products, free shipping with a minimum spend and so on.
Reward and Loyalty Programs
Reward and loyalty programs basically reward customers with discounts, time-limited offers and other benefits for continuing to buy their products or services. They are so abundant in the retail industry that most of our wallets are packed with reward and loyalty program cards. If you want to increase customer lifetime value, having a reward or loyalty program that regularly rewards customers is one of the best ways to do it. Here’s a link to a Hubspot article on Customer Loyalty: The Ultimate Guide that we thought you might find helpful regarding building customer loyalty.
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