How Nespresso Maintain
Market Dominance
- admin
- July 22, 2024
- 2:35 pm
When acquiring new customers is 5-25X more expensive than retaining existing ones, focusing on retention and lifetime value is a no-brainer for growth. We sat down with Webprofits’ Chief Strategy Officer, Ben Fitzpatrick, to discuss why Customer Value Optimisation (CVO) is the biggest opportunity for ecommerce and D2C brands this year and what we can expect from the upcoming event, The CLV Revolution, taking place in February.
How do you describe Customer Value Optimisation?
CVO is more than just a marketing strategy, it’s a change in business philosophy that prioritises customer satisfaction and growth.
CVO combines quantitative data, qualitative data, behavioural marketing profiles and real-world reviews to identify areas of opportunity. This information is then used to optimise the customer experience and deliver maximum value to customers. The process involves segmenting customers into different groups and identifying those who have the biggest margins, have spent the most or have the potential to spend the most with the business if communicated with effectively.
By investing in the right customers, businesses can create a virtuous cycle of customer loyalty and growth that benefits everyone involved. From the business to the customer, everyone wins in a CVO approach to marketing.
Why is this so important in the current retail environment?
Think about the last three years and how much the marketing landscape has changed. As a business you need to assume that there is further disruption coming. There is going to be uncertainty. For example, are we going into a recession?
The challenges today for ecommerce brands are very real. With surging acquisition costs, fierce competition and the impending cookieless future, as a business the best thing you can be doing right now is growing through customers who already love you; customers that will buy into your brand because those are the ones that are going to be ones that stick with you through whatever is coming. It could be a really positive disruption, but it is still going to be a change we need to be prepared for and this is the best way to go about it.
If the way that a business is growing is just by paying to acquire customers on the acquisition side, the second budgets get cut or there’s a shift in the dynamics of paid media, then all of a sudden, what your business depends on to grow and survive has been cut out from under you.
“We see the opportunity to revolutionise the way we view marketing, and change the focus from acquisition to retention.”
By switching the focus onto CVO, businesses can cultivate long-term relationships with their customers, reducing customer churn and increasing customer lifetime value. CVO also helps businesses understand their customers’ pain points and challenges, allowing them to continuously improve their products and services to meet their customers’ needs.
“A successful CVO strategy can create a lifetime cycle of growth, where satisfied customers lead to more business and a stronger brand.”
