Cheerful businesswoman discussing strategy with clients.
Your business cannot exist without customers. At least not for long. That’s why marketers spend most of their time thinking of ways to attract new leads. Growth marketers also create strategies to convert as many prospects as possible.
However, they are not satisfied with bringing in leads, winning the sale and onboarding them as a customer. While these are great short-term goals, real growth happens when a company keeps those newly acquired customers happy. It’s even better if 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 buys, the more sales a company earns. To increase lifetime value, marketers can encourage customers to buy more often or spend more at once. Growth marketing strategies do this by nurturing long-term customer relationships. Let’s take a closer look at how these methods affect lifetime value.
They optimize conversion rates
Think back to when you were learning something new. Did you understand everything right away? 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 start with an experimental mindset to discover how to fine-tune each stage of the customer’s journey. These phases include one of the most crucial: acquisition. You can’t keep customers if you don’t get them in the first place. But it’s not uncommon for companies to struggle with less than excellent conversion rates.
Leads come in because they become aware of a company’s shiny new object down the road. Still, convincing them to take it up is a challenge. Growth marketing strategies experiment with reassuring and convincing prospects that it’s okay to take the next step. “One of the best ways to improve conversion rates is to test different value propositions,” notes my friend Chris Dayley of 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 are also using more tactical means to increase conversions, customizing call-to-action buttons on web pages, A/B testing email content, and retargeting leads based on their behavior. The idea is to optimize the company’s approach so that fewer prospects drop out of the acquisition phase. If you can make people happy in the beginning, it will be much easier to nurture the relationship later on.
They build loyalty through personalization
In hyper-competitive markets, what prevents someone from thinking that the grass is greener elsewhere? Think supermarkets, cell phone services and insurance plans. It is difficult for consumers to distinguish these products and services over time. For them, the core offering is the same regardless of which company provides it.
So why shouldn’t customers stray based on price or other convenience? Growth marketing strategies try to address this behavior by making things personal. You see this with supermarket chain loyalty programs that offer personalized savings. These exclusive discounts are not for random products, but for items that every customer usually buys. Online retail giants are also leveraging personalization through subscription services and product recommendations.
Essentially, they build a relationship with each customer by showing that they know them as individuals. Personalization also encourages repeat business by rewarding loyalty, and it can go beyond mere purchases. Growth marketing strategies can include unique educational content, adding relationship value for the customer.
They bring in valuable referrals
Who do you trust the most? A person you just met or someone who has been by your side for years? Chances are, it’s the person you’ve had countless conversations with and maybe even reached out for support. Of course you are more skeptical of what a stranger says.
This human tendency helps explain why 86% of consumers rely on referral marketing. In fact, they are 50 times more likely to buy products that their friends and family recommend. Businesses don’t have to work so hard to influence referrals because word of mouth is persuasive enough. The icing on the cake is that the lifetime value of referrals is two times higher than that of customers converting through traditional advertising.
Growth marketing strategies recognize and amplify the power of word of mouth. Incentive referral programs are common, but they’re not the only tactic worth pursuing. Acquiring customers 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 happy 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 that customers with higher lifetime values contribute more to a company’s bottom line. But since high-value customers don’t usually start out that way, companies need to nurture each relationship to increase its value. Growth Marketing can achieve this by discovering what matters to each customer and rewarding them for taking the next step.
