How Growth Marketing Strategies Increase Customer Lifetime Value
Without customers, your business can’t exist. At least not for long. That’s why marketers spend the bulk of their time drumming up ways to attract new leads. Growth marketers, too, create strategies to convert as many prospects as possible.
However, they aren’t satisfied with drawing leads in, getting the sale and onboarding them as customers. While these are great short-term goals, real growth happens when a company keeps those newly acquired clients happy. It’s even better when those customers buy more and refer others. Word of mouth makes a marketer’s job easier, while loyalty increases customer lifetime value.
CLV is the fuel behind a company’s growth. The more a customer purchases, the more revenue a business earns. To boost lifetime value, marketers can encourage clients to buy more often or spend more at one time. Growth marketing strategies do this by continuing to nurture long-term customer relationships. Let’s take a closer look at how these methods impact the lifetime value.
They Optimize Conversion Rates
Think back to when you were learning something new. Did you understand everything right off the bat? 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 a similar approach. They go in with an experimental mindset to discover how to fine-tune every stage of the customer’s journey. These stages include one of the most crucial—acquisition. You can’t retain clients if you don’t land them in the first place. But it’s not uncommon for companies to struggle with less-than-stellar conversion rates.
Leads come in because they become aware of a company’s shiny new object on the road. Yet convincing them to pick it up is challenging. Growth marketing strategies experiment with reassuring and persuading prospects it’s OK to make the next move. “One of the best ways to improve conversion rates is to test different value propositions,” notes my friend Chris Dayley from Smart CRO. “If you can find the right value proposition that resonates with a potential customer, you can usually increase conversion rates by 10% to 20%.”
Growth marketers use more tactical means to up conversions, too, tweaking call-to-action buttons on website pages, running A/B tests with email content and retargeting leads based on their behaviors. The idea is to optimize the company’s approach so fewer prospects drop out of the acquisition stage. If you can delight people at the beginning, it’ll be much easier to nurture the relationship later on.
They Build Loyalty Through Personalization
In hypercompetitive markets, what’s to stop someone from thinking the grass is greener somewhere else? Think grocery stores, cellular phone services and insurance plans. It’s difficult for consumers to distinguish these products and services over time. To them, the core offering is the same regardless of which company delivers it.
So why wouldn’t customers stray based on price or some other convenience? Growth marketing strategies attempt to tackle this behavior by making things personal. You see this with grocery chain loyalty programs that offer personalized savings. These exclusive discounts aren’t for random products but for items each shopper typically buys. Online retail giants also use personalization through subscription services and product recommendations.
Essentially, they’re building a relationship with each customer by showing they know them as individuals. Personalization also encourages repeat business by rewarding loyalty, and it can extend beyond purchases. Growth marketing strategies can include unique educational content, adding relationship value for the customer.
They Bring In Valuable Referrals
Whom are you more likely to trust? A person you’ve just met or someone who’s been by your side for years? Chances are it’s the person you’ve had countless conversations with and maybe even leaned on for support. Naturally, you’ll be more skeptical of what a stranger says.
This human tendency helps explain why 86% of consumers trust referral marketing. In fact, they’re 50 times more likely to buy products their friends and family recommend. Companies don’t have to work as hard to sway referrals since word of mouth is persuasive enough. The icing on the cake is that referrals’ lifetime value is two times higher than that of customers who convert through traditional ads.
Growth marketing strategies recognize and reinforce the power of word-of-mouth advertising. Referral programs with incentives are common, but they’re not the only worthwhile tactic. Recruiting clients for testimonial campaign videos is another. So is leveraging user-generated content, which allows brand ambassadors to express their enthusiasm for a product or service. Letting delighted customers speak for the company often has a greater impact than what it can say about itself.
Using Growth Marketing to Boost CLV
Marketers know customers with higher lifetime values add more to a company’s bottom line. But since high-value customers usually don’t start out that way, companies need to nurture every relationship to increase its worth. Growth marketing can accomplish this by discovering what’s important to each customer while rewarding them for taking the next step.
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