How much does it cost to get a new customer to buy from you? If you’re lucky, you’re still able to pull off a profit once you consider the full cost of customer acquisition, COGS, and fulfillment. However, many brands (in industries across the spectrum) know that a first or one-time sale is never going to be enough to hit those elusive revenue goals. A thriving business knows success comes from increasing the lifetime value (LTV) of a customer. That is, how much revenue a specific customer brings your business over that customer’s lifetime. How you handle your relationship with a customer after that first sale is critical to increasing a customer’s LTV.
Engaging in high-quality post-sale communications with your customers is essential to increasing their LTV; all it takes is the right plan to turn your one-time customers into uber-buying advocates. That plan is an advocacy marketing program.
Start With The Right Tools In Place
Before you use any of the below LTV-increasing tactics you need two foundational things:
- An advocacy marketing program that lets your best customers and Superfans easily share your branded content with their friends and family. (You can learn more about starting an advocacy marketing program here, here, and here.)
- To recruit your customers and Superfans into your advocacy marketing program. Some common recruitment tactics include:
- A call-to-action on your website
- Emailing your top customers
- Publishing information about the program to your social feeds
- Paid social media and digital marketing
- On-location recruitment in stores or at trade shows
Advocacy marketing program ready to go? Let’s dive in.
5 Ways to Increase the Lifetime Value of your Customers with Advocacy Marketing
1) Drive Repeat Sales
It’s not rocket science! If you want to double the LTV of a customer, get them to make a second purchase. The probability of selling to a new prospect is 5-20%. The probability of selling to an existing customer is 60-70%. Fish where the fish are.
Use your advocacy marketing program to stay top-of-mind with your customers and Superfans. Sending content on a regular basis helps ensure your customers don’t forget about your brand. You continue to take up space in their field of consideration so that when a new need or want arises, you’re their first choice in meeting that need.
Push the opportunity for a repeat sale even further by including regular discounts or promotional notices as part of your advocacy content mix. The steadier your customers, the more likely your businesses will weather lean economic times. On average, businesses with 40% repeat customers generated nearly 50% more revenue than similar businesses with only a 10% repeat customer average.
2) Provide Cross-Sell And Upsell Opportunities
Two classic sales techniques summed up in the simple phrase, “Would you like fries with that?”
Unless you only sell one single product period, every customer sale represents an opportunity to cross-sell and upsell your customers with other products from your catalogue. As a quick reminder:
- Cross-selling is when you sell a complementary product to your customers that goes with a product they’ve already bought
- Upselling is when you sell a customer a higher level of a product or service than they were initially looking to purchase
Advocacy marketing is a prime tool for both upselling and cross-selling products or services. To push an upsell or a cross-sell, be sure to create and share content and messaging that:
- Shows how multiple products work together to create an even better experience
- Compares the differences between products or service levels
- Shares discounts or provides a trade-in program that lets advocates “level-up” their purchase
- Talks about how customers are already buying certain product mixes
Don’t have a top-tier level product? Create one! Sure, not everyone may be in the market for saffron-scented, gold-infused beard wax, but having that higher level opportunity gives those big-spending customers a way to say, “Yes, please let me give you more money!”
3) Educate Your Advocates So They Can Get The Most Out Of Your Product
Cut back on returns and help foster customer satisfaction by educating your customers on how to get the most out of your product. The more satisfied a customer is, the more likely they are to make a repeat purchase from you.
If your customer buys a product and then never uses it, yeah, you got the money from that first sale, but you can kiss any repeat business goodbye. And as we mentioned before, repeat business is where the real money is at.
Pro Tip: Create fun educational videos that teach your customers how to use your product, then have your customers share those videos through their advocacy marketing program. Not only are you providing education to your current customers, you’re also showing your advocate’s family and friends how easy it is to use your product. The more confidence you can build in a potential consumer, the more likely they are to purchase from you!
4) Provide Opportunities For Advocates To Refer Business To You
To get a complete picture of a customer’s LTV, you need to consider both direct and indirect sales you can attribute to that customer. Indirect sales are referral sales that come in because your awesome customer told their best friends over-and-over again about your brand.
Sometimes the most valuable customers aren’t necessarily the ones that buy from you the most – they just might be the ones that refer the most business to you! Advocacy marketing is synonymous with referral marketing. By sharing your content through their social feeds, your advocates are providing a stamp of approval for your business with every share. That endorsement carries an enormous amount of weight amongst their following, and that pays dividends in driving new sales for you.
5) Connect With Your People
The number one way to increase an advocates’ LTV? Form a connection with them. According to a study by Harris Interactive, 56% of participants said they would switch to another company if an alternative offered more options to connect with them.
Connection is created through dialogue. Talking to your customers is great, but listening to your customers is one of the most powerful ways of forging loyalty.
Send regular emails and surveys to your advocates asking them for feedback on your product, brand, and marketing initiatives. Then take that information and use it to better service your customers. A small tweak to your operations or marketing shows your top customers that you heard what they said and fosters next-level engagement and loyalty.
Want to take your connection to the next level? 64% of survey participants said that shared values were the primary reason for maintaining a relationship with their brand. Create and share content with your advocates that highlights your brand guidelines and acting philosophy. If your company is big into community outreach, create a video that your advocates can share that highlights the work you’re doing in the community. Likewise, if you’re an outdoor brand, don’t be afraid to mix in blog posts that highlight your brand’s conservation work.
Getting a new customer is important, but you need to have a plan in place for how you’re going to nurture that customer relationship AFTER the sale. The greater the LTV of your customers, the less you need to work (and spend) to see your revenue grow.
Increase LTV With SocialToaster
Want to learn more about how advocacy marketing can help grow the lifetime value of your customer? Email or call us today for a free demo and let one of our advocacy marketing strategists help you create a program that fits your needs.