Ryan Deiss of Digital Marketer talks about CVO and it’s an important concept to grasp for any business. It’s really pretty simple, and once you understand it, you’ll be in a better position to make money with your online business.
CVO is customer value optimization and if you can maximize your CVO, you will be maximizing the potential of your business. CVO is why McDonald’s trains their cashiers to say, “Would you like fries with that?” It’s why Burger King asks, “Would you like cheese on that?” It’s why Amazon has a place on their page when you buy something that says, “More Items to Consider” or “Customers Who Bought [name of product in your shopping cart] Also Bought [name of a product that someone else bought along with what you’re purchasing].
That’s how CVO works. Everything in your business should be organized to maximize your CVO. Drew Sanocki of nerdmarketing.com puts it this way:
- Identify your best customers.
- Align your products / services / marketing to attract / create / develop more of them.
Sounds easy, right? What Sanocki teaches is that if you can increase your overall customer lifetime value (CLV), you are increasing your sales and long-term profits. CLV or CVO gets you to the same place – maximizing your sales per customer.
Think about this: how much do you have to spend to advertise to an existing customer? Minimal to nada, right? They’re in your database, whether it’s an email list or a customer list. You may have to pour hundreds and thousands of dollars into cold or warm traffic. With satisfied customers, they can reward you over and over again without you buying any advertising whatsoever. That’s the economic power of CVO.
Sanocki says, “It’s the highest ROI thing you can do, 90% of the time.” I think he’s right, but I’m not sure what the 10% is that gives you an even higher return on investment (if you know, let me know!).
While Deiss uses CVO to explain how to get the most out of your sales funnel, I find Sanocki’s thoughts compelling as well. Sanocki talks about holding onto your great customers as a way to fuel your business growth. If you can hold onto your great customers by continually meeting or exceeding their expectations, you’ve got a solid base for CVO.
Second, develop your so-so customers into great customers and you will build a solid, growing foundation for your business. Third, use your best sources of leads, whether it’s solo ads, Facebook ads, Adwords, banner ads – whatever works best for you, to find new great customers. Sanocki notes that acquiring new “great” customers is cheaper than trying to elevate your so-so customers to great status. Lock this into your brain:
“Great customers are born not made.”
That’s as true today as the day those words were first uttered.
Pegasystems has a free pdf report on Customer Value Management that offers 5 solid recommendations for maximizing CVO (yes, CVO, CLV, and DVM are similar ideas).
As always, I welcome your comments. If you found this helpful, why not share it with others?