This is article #3 in our 4-part series covering the 4 Pillars of Effective Digital Marketing. To bring you up to speed, the 4 Pillars are:
Today we’re focusing on Pillar #3, Customer Value.
Why Is Customer Value Important for Digital Marketing?
You may be wondering why one of the four Pillars of Effective Digital Marketing has to do with the value of your customer. What does that have to do with digital marketing?
This may come as a surprise, but your customer value is actually one of the most critical factors in your marketing success. That’s because in any given market, the business with the highest customer value can afford to invest more to acquire customers. When your business can invest more, then you’ll be able to dominate your market. It’s just basic math.
Let’s say the average customer value for your competitors is around $100 and they can profitably invest $30 in marketing to generate a new customer. What happens when your customer value increases to $120 (20% increase)? Now you can invest $50 in marketing ($20 more per customer than your competitors) and generate the exact same profit as your competitors!
This is why many businesses are left scratching their heads wondering how competitors can afford such high marketing and advertising costs. It’s likely because they have a higher customer value!
Now that you know why this is so important to your digital marketing success, let’s explore 3 areas where you can increase your current customer value.
1. Increase Prices
This is by far the easiest tactic because you simply increase the price of your product or service. Of course, just because you increase your price doesn’t mean your customer value automatically increases. This only works if your sales conversion rates don’t plummet when you introduce a price increase.
The key to make this work (and ensure your conversion rates don’t drop too low), is to fully explain the value of your product or service. Chances are good that you’re not currently defining all of the value you provide to your customers. For example, does your product or service save your customer’s time? Does it save her money over the long run? Does it replace something else that is even more costly?
Take some time to list out all the value you provide and then determine if the price point makes sense from the customer’s perspective. It’s possible you can safely raise your prices as long as you’re providing (and clearly explaining) your value.
2. Add Up-Sells
The next tactic to increase customer value is to add up-sells. An up-sell is an additional product or service that you offer to customers in order to provide even more value. The classic example is the fast food industry up-selling fries or a supersized proportion for a minimal additional cost. Or when you’re buying something online, then you may have noticed the up-sells (additional relevant products) are often introduced right before checkout or immediately after checkout.
The beauty of up-sells is that there’s no additional marketing and advertising costs associated with the sales. You’ve already invested to get the customer and now you’re simply presenting an additional offer (or multiple offers). Depending on what you’re selling, it’s possible to increase your customer value by 50% or more by introducing up-sells in your sales process.
The key action item here is to brainstorm relevant products and services that would further help your customers after they make their initial purchase.
3. Add a Continuity Program
The final tactic we’ll discuss to increase your customer value is a continuity program, or subscription program. Every business should find a way to introduce a continuity program that benefits their customers.
Think about how much time, effort, and money goes into generating one new customer. If you’re selling one-off products and services, then every month you’re starting all over again at square one to drive sales. But with a continuity program, you’ll start building up a recurring revenue source that will not only increase your customer value, but also make your business more stable over time.
To help you get started, here are some ideas for how you could add a continuity program:
- Monthly retainer for your services
- Newsletter subscription
- Subscription to access one of your tools
- Monthly or yearly support/maintenance
- Recurring pre-scheduled appointments
Want More Advice to Increase Your Customer Value?
This month we’re celebrating the 3rd Anniversary of Main Street Inner Circle, our subscription service — we practice what we preach! :) — where we share our best marketing advice every month.
When you sign up this month, you’ll get these 21 marketing guides for $1 – including our step-by-step guide on How to Increase Your Customer Value. Plus, you’ll lock in a special low rate on your membership.