Get ready for a high-impact 20 minutes! John is the solo host of this episode, where he breaks down your 4 best opportunities to make additional sales and increase the lifetime customer value of your brand. Using tons of real-world examples, John teaches you how to pinpoint the moments WHEN your customers are ready and willing to make additional purchases and HOW to capitalize on these opportunities (including a Shopify app that makes the whole process super easy). Let’s go!
You’ll Learn:
- The 4 best opportunities to increase Lifetime Customer Value (with examples)
- The “Customer Value Optimization Process” John learned from Ryan Deiss
- How BOOM! uses its post-purchase email campaign to generate additional sales
- The difference between natural and manufactured moments of relevance
YOUR ENGAGEMENT MATTERS!
Here’s how you can make a difference:
- Subscribe to The Smart Marketer Podcast
- Leave us a review on Apple Podcasts
- Repost this episode to your social media
- Share your favorite episodes with a friend
- Tag us in your next post and use the hashtag #WeOutHere
Links to Join:
Timestamps:
00:50 – The definition of “Lifetime Customer Value”.
01:05 – Why LCV is so difficult to calculate (and the metric John likes to use instead).
01:40 – The “Customer Value Optimization Process” John learned from Ryan Deiss.
02:20 – The only 2 ways to increase Lifetime Customer Value.
04:30 – Your 4 opportunities to increase Lifetime Customer Value.
04:50 – Opportunity #1: Upsell right after the purchase.
06:45 – OneClickupsell: The easiest way to make post-purchase upsells on Shopify.
07:48 – Opportunity #2: Cross-sell a week or two after the purchase.
11:18 – Opportunity #3: When your product is about to run out.
14:00 – Opportunity #4: At a key moment of relevance to the buyer.
15:20 – The difference between natural and manufactured moments of relevance.
20:00 – Thanks for listening! To share your feedback or get a question answered on the podcast, follow and message Molly on Instagram at @mollypittmandigital.
Transcript Of Episode 53:
0:00 John:
I’m gonna give you the four best opportunities for you to make an additional sale, which, in turn, are four of the best opportunities for you to increase the lifetime value of a customer. And we wanna pinpoint these moments when people are ready, and willing, and engaged, and excited to make another purchase.
Hello and welcome to episode 54 of “The Smart Marketer” podcast. I’m your host, John Grimshaw. And today’s episode is gonna be a solo show by me, and we’ll make it pretty short. But it should be a very high-impact episode for you and your business. That’s because we’re gonna be talking about four ways to increase lifetime value. Lifetime value, if you’re not familiar with this metric, refers to the value of an average customer over their lifetime, right, kind of self-explanatory. But it’s a really, really important number for businesses.
So lifetime value is a super hard metric to calculate because it’s really hard to know exactly what a lifetime is for a customer. If someone hasn’t bought a product from you in 10 years, are they still a customer? I think common sense tells us no. So I’m actually gonna do another episode for you guys if you like this episode, and send me some emails to support at smartmarketer.com and say, “We wanna hear this other episode.” Because I have this whole training I do around a metric I made up that I think is better than lifetime value, which I call customer value velocity. But, because most people are more familiar with the term lifetime value, that’s what kind of stick with for today’s episode. Anyway, today, we’re here to talk about the lifetime value.
So when I was working at DigitalMarketer, Ryan Deiss, the CEO, had this thing that I found very smart and useful to think about. And it’s what he called the customer value optimization process. And he said there only three ways to grow a business. You can increase the number of customers, you can increase the average transaction value per customer so every sale is worth more, and you can increase the number of transactions per customer, so selling more to the same people.
So those are how you can grow a business, right? Those are kind of bigger and a little outside of the scope of what we’re talking about here. Instead, we wanna talk about how to increase lifetime value. And so we need to look at two of those, right, there’s two real options. You can increase the lifetime value by charging more for your products, right, which would be one way you could increase the transaction value, or you can sell more products to the same people. You can increase the number of transactions per customer to put in that customer value optimization term Ryan was using. And that’s where I think we need to focus our energy and attention.
Because, yes, you can just charge more for your products, that is true, and it’s probably something worth thinking about your business. There is inflation across the board that is just the nature of life, right? It is commonplace where people talk about “Oh, I used to be able to pay for college by working a summer job,” or, “Gas used to cost a nickel back in my day.” All that’s true, all that is just the reality, right? Things used to be cheaper than they are now, so increasing the cost of your products is reasonable. But that’s not as useful, I think, when you’re trying to think about lifetime value, right? We’re really thinking about what we do to get people to come back and buy more? That, I think, is the key lever we wanna pull to increase lifetime value.
So I’m gonna give you the four best opportunities for you to make an additional sale, which, in turn, are four of the best opportunities for you to increase the lifetime value of a customer. And the idea is that the best way to increase lifetime value, like I’m saying, is to sell somebody more. And we wanna pinpoint these moments when people are ready, and willing, and engaged, and excited to make another purchase. That is the best way to pull that lever is you need to find these moments, these opportunities, these pinpoints in time when you need to start a conversation with that prospect again. Say, “Hey, you know, what, you bought this from us in the past, you should buy this for reasons XYZ.” Now you don’t need to be as directed that you’re marking, we never are. But just, when you’re thinking about this on the business side, that is essentially what you’re doing.
So what are those four opportunities, those four moments when you need to try to make an additional sale? Well, let me tell you what they are, and then I will go a little bit deeper into each of them, and talk about what the background of that is. So the four opportunities are right after a purchase is made. The next one is within a week of a purchase being made. The next one was one that so many people don’t do, when your product is about to run out. And then the last one is when there’s a key moment of relevance about your product. So those are four opportunities. Let’s dive in and talk about what they are.
So the easiest one that people have been talking about marketing since before I was born, right, this idea of an upsell, selling somebody something right after they made a purchase, and, in some sense, you could also do right before they make a purchase, right? I don’t know exactly what the upsell term for that is, but to get a cart bump right before somebody makes a purchase. But you’re essentially bundling a purchase with another purchase so think about the grocery store, right? You are checking out of the grocery store and you buy a bag of candy that you see in the check-out aisle that you weren’t gonna buy otherwise, right? That’s, like, an order bump.
And then they say, “Ah, do want to add any ice?” “Oh, yeah, actually you’re right, I did. I need two bags of ice.” Right? You essentially bought your groceries, and you’re adding some ice, that is an upsell, and that’s a real-world example, right? But it’s so easy and common and really just, kind of, the nature of the land now in digital. When you rent a hotel room, they’re like, “Hey, do you wanna upgrade?” When you book a seat on an airplane, they say, “You know, you can get from economy to economy plus to economy super plus to ultra economy for just an extra 99 bucks, right.
Every time, they’re trying to bump up what you’re spending, they’re selling you essentially a second product, right? Sometimes it’s an expansion of the previous one, sometimes it’s a totally unrelated offer in terms of it’s not the same product, but it fits in nicely, right? You might buy a grill, and they say, “Hey, why don’t you get our grill master package, which includes tongs, an apron that says, ‘Kiss me, I’m the cook,’ and a 54-gallon jug of barbecue sauce,” right, the Texas recipe for grilling. But an upsell was just a product that is relevant and interesting and loosely or strongly affiliated with the purchase somebody just made. Somebody’s in a buying mood already, right, why not give him an opportunity to buy more, to buy something that does it faster, to buy something that does it better, to buy something to accentuate the experience. That is a huge opportunity for increasing lifetime value, and one of the easiest ways to do it.
And, of course, how could I mention this without making a quick plug for One-click Upsell, right, that is Zipify, Smart Marketer’s partner company, one of their Shopify tools, and it lets you add upsells to your purchase. So after somebody purchases smart email marketing from Smart Marketer, we say, “Hey, you just bought smart email marketing. You probably also really wanna step up your paid traffic game, right? Why not gets some more email leads that you can email with ads? Why don’t you pick up ‘Train My Traffic Person Digital,’ our on-demand course, all about Facebook ads and paid traffic, for a small discount because you’re getting this as an upsell to your previous purchase?”
We do that, and it sells fairly well, right? I think we average something like a 7% to 11% take rate on our upsells, I can’t exactly remember what it is off the top of my head, but we upsell a relevant related course after somebody buys one of our courses. It makes perfect sense because people are trying to solve a problem, let’s give them more tools to do it better. It works in any industry, right? So the first opportunity is right after purchase is made.
Our second opportunity is within a week of purchase. And this is a really good one because even if people are not in the buying mood in the sense that they didn’t just literally whip their credit card out, they still are more attuned to thinking more about and more interested in your business, your brand, your products than they are at almost any other time, right, if they purchase, right? They’re anticipating that product getting shipped to their door. They’re checking every day to figure out, when is gonna arrive? They’re thinking about you, and that’s awesome, and you need to capitalize on that energy. Because it is a noisy world out there, folks, and if you are not grabbing people’s attention when their eyeballs are turned toward you, you are going to miss out on a lot of opportunity and you are going to lose engagement with customers, which is why you wanna optimize your post-purchase campaigns.
So if you want to take advantage of that week or two weeks or so after purchase, the key to doing that is to optimize post-purchase campaigns. So we used two general post-purchase campaigns. The first post-purchase sequence we run offers people a discount on the specific product, right? So you buy a product and we sent a few emails saying, “Hey, you just bought this product, here’s a little bit more about it. Here’s how to make more use of it, you know, here’s some cool facts about it.” And then, we say, “You know, if you like this product, here’s a great related product, right, something that’s relevant and related and ties into their interests. We’re gonna give you a small discount on that.”
So the example I can think of off the top of my head for Boom is when somebody buys a Boomstick, right, the kind of core frontend product for Boom, we offer them a 10% discount on Boomsilk, which I believe is the moisturizer. That’s a really great email, something like “Five things your skin will love,” and then it’s like, “Hey, guess what, these five ingredients are in Boomsilk, and we’ll give you 10% off on that right now.” So we make a direct offer for a specific product that we think is a really good fit. And some people buy that, some people don’t.
What we do after that, you know, and this is maybe like a week-and-a-half or so, maybe two weeks after. Okay, so when I said a week of purchase, let’s say a week to three, somewhere in there. What we’re doing is if somebody has not bought a second product from us, we say, “Hey, we’re gonna give you 10% off in our store. You can go use this on any one product.” And we sent a few emails with that. If they don’t take it, we go up the discount ladder, right? So we say, “You know, we will give you 15% off in our general store right on a product.” And then I believe we go as high as 20%, but it’s only a few emails for each of the stages and the idea that if somebody takes a product with the 10% discount, well, then they bought the product at the 10% discount. That’s great, they got a discount. But it means you’re not gonna see the 15% discount or the 20% discount. And I don’t have the emails open in front of me. I kind of think we actually don’t ever go above 15% for Boom. So, maybe, it’s 5%, 10%, 15%.
But the idea is that you’re essentially figuring out what point it is where people are ready to make another purchase, right? You find that point and this win-back campaign helps you get that offer in front of people. And so wherever people are ready to make a second purchase, right, many times, I’m happy to buy something now for 5% off because I want more of it. Or, maybe, there’s something where I’m kind of on the fence. I don’t know if I need this. You know what, they’re gonna give me 15% off for a couple days, I should just take this, and then I’ll buy that, right? So that is the second-best opportunity for making an additional sale, it’s within that week to three-week period, right, sort of expanding it as I’m talking about it. But, essentially, it’s post-purchase campaign and then a win-back campaign following that immediately.
So the next one, right, our third best opportunity to make an additional sale, which in turn will increase our lifetime value, is when your product is about to run out. And this is one that so many businesses do not do. And it’s one that honestly works well for a lot of different kind of businesses, right? The obvious easy example is skincare. I buy this great high-end face wash from this company called Angelee. And I buy it in bulk because I really like it, and I don’t want to ever miss… using it. And when I start to run out, a good idea that company should be doing…and I actually don’t know if Angelee does this. So I actually know the owner of it, Meryl. Meryl, if you’re not doing this, I recommend this strategy.
But it takes me about, I’m gonna say, 45 days to go through a bottled face wash. So around 30 days, maybe 35 days, I probably need to order another bottle so that I don’t have to go a day without being able to wash my face with this super nice stuff. Well, this is the opportunity that all businesses should be capitalizing on. This moment when people are about to run out, say, “Hey, you know, do you want to get some more this product, right? This is a great time to a refill because we’re in the middle of the summer sale, or, you know, it’s a good time to refill because you’re probably running out,” right?
Well, when we’re selling digitally or selling, you know, through e-commerce or, you know, when we’re selling using the internet, we don’t necessarily have that storefront access where people say, “Ah, I’m almost out of dishwasher pods. Ah, I’m almost out of foil.” We don’t have those moments of storefront access when we can get people to purchase more. And so we need to create that relevance in their mind by emailing them and essentially being like, “Hey, remember me, I’m a product that you use and love. And I know you’re about to run out.” And this is another great time to do one of those discount letters, right?
Okay, so somebody needs about 45 days on average for the product to run out. At 35 days out, you email and remind them 2 to 3 times saying, “Pick this up,” right, you know, “you’re about to run out.” At 45 days, when they should be roughly done with the product, you say, “Hey, you know, if you wanna pick some more up, you can buy in bulk and get two bottles for 10% off.” And then the further you get out, you can bump the discount ladder up as you see fit. And so, again, we’re capitalizing on being top of mind by doing this.
So I recommend you do some research on when your product runs out, estimate by using it yourself. And you just want a slow, steady campaign, and it really does transcend all industries. I can’t think of anything off the top of my head that doesn’t have an ending point, a point when you kind of want them to restart. So that’s a really great way to increase lifetime value is when your product is running out, when a service is completed, when a contract is about to expire, reaching out and making another offer is a really great strategy.
And then the final reason is one that I think people maybe use the least effectively, but it’s still a very good one. And this opportunity is when there’s a key moment of relevance about your product. So the idea is relevance, right? Selling to people when your product is a particularly good fit for them is a really, really important strategy for growing your business, and kind of the default lowest level that this is is when you run a sale. There is a key moment of relevance when somebody is giving you a discount on a product, right? You say, Oh, well, I wasn’t really gonna buy this, but somebody’s give me 10% off so I’m gonna go purchase it because I want that discount.” That is a classic way that we create relevance as business owners.
And we recommend you run at least every six weeks, for e-commerce, a sale of some kind, and I would say you want to do a little bit more often for information. But you don’t need every moment of relevance to be, “Hey, I’m discounting this product,” and that is the trap that we fall into as marketers and business owners. And people that sell stuff is we think relevance equals sale, not true, not correct. Swimsuit companies do not need to focus on selling their swimsuits when it is sum-sum-summertime, right? People are thinking about getting a new swimsuit because there are new styles and new fashions, and it’s time to go strut your stuff at the beach or pool.
There are natural moments of relevance for all products, and then there are manufactured moments of relevance, right? When you think mattress store, I’m almost positive that you think of random national holidays when mattress stores decided that what you need on president’s day is 15% off a mattress, right? They have made those moments of relevance for their business. I don’t think they’re particularly good ones, but that is kind of a long-standing tradition. And, honestly, you can capitalize on that a little bit too if you do a sale around the holidays.
But, really, I think it’s much better to think for your products, think about when there are moments of relevance. And they don’t all have to be time-bound events, right, it’s not always summer, it’s not always this holiday. Oh, there was a story in the news that was talking about how UV pollution has gotten a lot worse. Well, hey, that’s a good time to pitch some sunscreen to people, right? “Crazy new study says UV is getting worse,” which, I mean, that’s probably true. And it’d be a good news story to use to talk about selling some sunscreen. Or, you know, study says people that drink 8 glasses of water a day live an extra 20 years. Hey, that’s a good reason to sell somebody a water bottle, right? I have my handy-dandy Nalgene that I use every single week, I drink a lot of water because I have water bottle by me. Finding some relevance to pitch people on a water bottle is a really good strategy.
And so the idea is you want to be on the lookout for key moments of relevance. We wanna watch for these moments when it is a logical step for people say, “I should go buy some more of XYZ. Hey, if you send people an email, if you run a Facebook ad, if you get the attention of people at the moment when they’re doing that consideration, guess what, that is one of the best ways to increase the lifetime value of a customer. And that is, again, what we’re talking about here.
So we’re gonna bring it full circle. These are four opportunities to make an additional sale. And making an additional sale is the best way to increase a customer’s lifetime value. You just need to make sure you connect with them at the right moments, so that is what it’s about. If you want to bump LTV, you need to think about these four opportunities, but you also need to think about how do I become the best business I can be, right? You need to know who you’re serving, you need to know how you’re serving, you need to know what your products do to help them, and how to make them as good as they can be.
So general business advice always factors in here, of course, right? Be a good business, serve people well, create good s#$@, as Ezra would say. There’s probably a bleep on that. But if you do that and capitalize on these four opportunities, that is gonna be the best way to increase your customer lifetime value, which is a great way to help grow your business, right? Having more money for people that have bought from you in the past is the best way to go out and acquire new customers, right? It gives you more money that you can reinvest into acquisition, that you can reinvest into creating new products, and you can reinvest into creating awesome content.
So I think this is so important for every business to really think about their lifetime value. And, again, this is one of the ways that businesses stick around. I mean, look at Amazon’s page, they try to sell you extra products, probably 60% of any Amazon product pages, you want to buy this other thing also. So it’s a really important, useful strategy and makes you a big player when you do this well. So make sure you take advantage of these four opportunities and you will see your business start to grow. You’ll see that LTV number start to tick up. I would love to hear, as always, how you guys are boosting your LTV.
So, as always, thanks for listening. I really enjoy diving into this. And I hope that you go out and implement these strategies in your business. If you have ideas for future episodes, email us at support@smartmarketer.com and let us know what you’re looking for. And if you wanna pass on the message, find Molly or I on Instagram or send a message to our support team, we read all the emails you guys send us about the podcast. So, as always, thanks for listening. Enjoy the rest of the day, and I’ll see you soon.
Female: Thank you so much for listening to this episode of “The Smart Marketer Podcast”. For any of the resources mentioned on the show today, please visit our show notes at smartmarketer.com/podcast. If you enjoyed this episode, please leave us an honest review on whichever platform you are listening. Thanks again, and we’ll see you next time.
