Strategy
How to Build Customer Loyalty and Boost LTCV by Putting Customers First
Welcome to Viral Octopus Magazine’s knowledge series. This is an article for anyone who wants to get beyond a single sale, and beyond basic metrics of repeat business to build a deep and abiding relationship by truly putting customers first.
What is marketing? Our first answer might be some variation of the basic concept: communication designed to result in a sale. We don’t seek the sale as an end in itself; the idea is to bring profits. And if we really want to maximize profits, we need to think beyond a single sale and consider lifetime customer value – LTCV. Acquiring customers can be very expensive. If you focus on making a single sale, you are missing a major opportunity. If, instead of focusing on a single sale, you focus on maximizing total sales over the customers lifetime, you get a much greater return on your efforts to acquire customers. Let’s talk about how to build customer loyalty to increase lifetime customer value.
The simplest approach to marketing focuses on a transactional approach. You tell the customer what you have to offer and the price, and if they like the price, they do a transaction and purchase. To truly maximize LTCV, you have to move beyond this purely transactional type of relationship. You need to start thinking about building an emotional relationship with your customers. Aim to form a lasting bond based on mutual respect. Understand your customers and show you share their values to create a sense of alignment. By learning how your customers communicate, you can learn to talk in the right voice to create a natural affinity. And always be forthright and honest with your customers so that you can establish trust, a key component of loyalty. Stop thinking about what you need first and start thinking about what they need first. Everything becomes easier when you love your customers and they love you back.
The Four P’s, place, product, price, promotion have been a staple framework for marketing strategy for a long time for a good reason, but this should not be your sole focus. When you base your strategy on the Four P’s you are putting your own needs first. Consider putting the customer needs first instead with the four C’s: core needs of the customer, cost to customer, customer conversation, and convenience for the customer.
With the Four P’s you might think: “I have a bricks and mortar outdoor sports store that is willing to work with me and a website, so there is my place. I want to make knitted ski covers so that’s my product. If I set a price of $70 I can pay for my yarn and make good money for my knitting and administrative time, and I will promote the product with Facebook ads.”
With the Four C’s you might take a different approach. “Core needs: Are there any potential customers out there who even want a knitted ski cover? Drat, no, turns out the metal edges on skis would eat right through yarn, a skier tells me. Further conversation identifies a core need that could be met with knitting. Ski passes on lanyards in jackets are hard to grab. A fun whimsical knitted creature could sit atop the pass, making an easy target for fumbling gloves. Asking several skiers revealed a cost that customers would be comfortable with. Convenience: rather than only sell them online and at the bricks and mortar outdoor store, we will try to arrange to sell them at the convenience store at the ski mountain.
Marketers talk about targets. They mean people. But many of us have developed very reductive habits of thought in our efforts to reach targets.. I mean people. When you think about targets, you think about reaching them effectively and getting them to buy, and to buy more, and to buy more often. Those are certainly valid goals. But if that is your focus, you may fall short of delivering customer engagement that feels real and intimate. If you are solely focused on maximizing sales to your target, you won’t be able to deliver the kind of memorable brand experience that leads to powerful lifetime emotional loyalty that can send your LTCV through the roof. When you make the time to research your potential customers and understand them deeply, whether by interviewing them or observing them on social media or any other approach, you give yourself a powerful tool for building loyalty. Remember, customers are not just buyers, they are people. If you make the effort, you can effectively befriend your customers and build relationships.
Companies tend to view loyalty from their own perspective rather than the customer’s perspective. Loyalty is reduced to overly simplistic numbers like the Three Rs: rewards, recognition, and repeat purchases. Recency, frequency, and monetary value form another useful trio of metrics. But these numbers really only measure transactional loyalty.
In order to build real emotional loyalty, a company has to look beyond these metrics that dehumanize their customers and strive instead to rehumanize them. Reverse your roles and demonstrate deep respect. Put yourselves in the customer’s shoes and understand how they feel when they interact with your company. Respect their time and their needs. Show honesty, integrity, and empathy.
Stop thinking about targets to lock onto or marks to peddle to. Instead consider your customers as important friends that you care about our crucial partners. Seek to create a mutual exchange of information and value in a safe and trusted environment. Build a real relationship that can be the foundation of durable emotional loyalty that drives lifetime customer value. Serve your customers like you would serve someone you love and watch the love and profits grow.
Moving Past A Sale To A Larger Goal – LTCV
What is marketing? Our first answer might be some variation of the basic concept: communication designed to result in a sale. We don’t seek the sale as an end in itself; the idea is to bring profits. And if we really want to maximize profits, we need to think beyond a single sale and consider lifetime customer value – LTCV. Acquiring customers can be very expensive. If you focus on making a single sale, you are missing a major opportunity. If, instead of focusing on a single sale, you focus on maximizing total sales over the customers lifetime, you get a much greater return on your efforts to acquire customers. Let’s talk about how to build customer loyalty to increase lifetime customer value.
Putting The Customer First – Moving From Transactional to Emotional Relationships
The simplest approach to marketing focuses on a transactional approach. You tell the customer what you have to offer and the price, and if they like the price, they do a transaction and purchase. To truly maximize LTCV, you have to move beyond this purely transactional type of relationship. You need to start thinking about building an emotional relationship with your customers. Aim to form a lasting bond based on mutual respect. Understand your customers and show you share their values to create a sense of alignment. By learning how your customers communicate, you can learn to talk in the right voice to create a natural affinity. And always be forthright and honest with your customers so that you can establish trust, a key component of loyalty. Stop thinking about what you need first and start thinking about what they need first. Everything becomes easier when you love your customers and they love you back.
Trade The “Four P’s” For “Four C’s”
The Four P’s, place, product, price, promotion have been a staple framework for marketing strategy for a long time for a good reason, but this should not be your sole focus. When you base your strategy on the Four P’s you are putting your own needs first. Consider putting the customer needs first instead with the four C’s: core needs of the customer, cost to customer, customer conversation, and convenience for the customer.
With the Four P’s you might think: “I have a bricks and mortar outdoor sports store that is willing to work with me and a website, so there is my place. I want to make knitted ski covers so that’s my product. If I set a price of $70 I can pay for my yarn and make good money for my knitting and administrative time, and I will promote the product with Facebook ads.”
With the Four C’s you might take a different approach. “Core needs: Are there any potential customers out there who even want a knitted ski cover? Drat, no, turns out the metal edges on skis would eat right through yarn, a skier tells me. Further conversation identifies a core need that could be met with knitting. Ski passes on lanyards in jackets are hard to grab. A fun whimsical knitted creature could sit atop the pass, making an easy target for fumbling gloves. Asking several skiers revealed a cost that customers would be comfortable with. Convenience: rather than only sell them online and at the bricks and mortar outdoor store, we will try to arrange to sell them at the convenience store at the ski mountain.
Remember Customers Are Not Just Targets, They Are People
Marketers talk about targets. They mean people. But many of us have developed very reductive habits of thought in our efforts to reach targets.. I mean people. When you think about targets, you think about reaching them effectively and getting them to buy, and to buy more, and to buy more often. Those are certainly valid goals. But if that is your focus, you may fall short of delivering customer engagement that feels real and intimate. If you are solely focused on maximizing sales to your target, you won’t be able to deliver the kind of memorable brand experience that leads to powerful lifetime emotional loyalty that can send your LTCV through the roof. When you make the time to research your potential customers and understand them deeply, whether by interviewing them or observing them on social media or any other approach, you give yourself a powerful tool for building loyalty. Remember, customers are not just buyers, they are people. If you make the effort, you can effectively befriend your customers and build relationships.
Reconsider The “Three Rs” Of Loyalty
Companies tend to view loyalty from their own perspective rather than the customer’s perspective. Loyalty is reduced to overly simplistic numbers like the Three Rs: rewards, recognition, and repeat purchases. Recency, frequency, and monetary value form another useful trio of metrics. But these numbers really only measure transactional loyalty.
In order to build real emotional loyalty, a company has to look beyond these metrics that dehumanize their customers and strive instead to rehumanize them. Reverse your roles and demonstrate deep respect. Put yourselves in the customer’s shoes and understand how they feel when they interact with your company. Respect their time and their needs. Show honesty, integrity, and empathy.
Stop thinking about targets to lock onto or marks to peddle to. Instead consider your customers as important friends that you care about our crucial partners. Seek to create a mutual exchange of information and value in a safe and trusted environment. Build a real relationship that can be the foundation of durable emotional loyalty that drives lifetime customer value. Serve your customers like you would serve someone you love and watch the love and profits grow.
Put These Digital Marketing Tips Into action
We hope you are recognizing some opportunities to apply these tips on building lifetime customer value by putting the customer first. If you have not already, consider how you can apply the perspectives above to your own organization to improve results. Find ways to apply these ideas, make sure you have a baseline measurement, take action, and check results. There are more free articles in the magazine covering a wide range of topics in digital marketing. Please join the Viral Octopus collective and share and discuss your results with others who are striving for excellence.
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