Are You Looking to Make a Sale or Create a Customer? Put sales on the backburner, and focus on increasing your customer lifetime value.
By Daniel Newman Edited by Dan Bova
Opinions expressed by Entrepreneur contributors are their own.
We measure most of our success in marketing by our return on investment (ROI). If a tactic generates revenue in relation to what we invest in it, we call it a success. Unfortunately, I think this mindset boxes us in and keeps us from realizing our own potential. If your goal is just to make a sale, then you can easily call any marketing tactic that generates revenue a success. But shouldn't we be looking for something more?
A sale is merely a transaction. It doesn't necessarily create a consumer for life. A loyal customer believes in your brand and sticks with you for the long haul. We should be looking beyond the sales funnel and into a buyer funnel - the process by which you forge a long-term relationship with consumers.
Transform the customer relationship experience.
Technology has changed many aspects of our lives for the better. I can remember a time when people had to take a day off work when a cable repair rep was scheduled to make a house call because their arrival timeframe could be anywhere between an hour and all day. (Don't get me started on the time spent on the never-ending loop of a customer service line.)
Today, we can book appointments online at times that are convenient for us, and chatbots take our information for us. While this change is mostly for the better, technology can move us yet another step away from engaging with customers.
Related: How to Calculate the Lifetime Value of a Customer
More than ever, the power of the Internet means consumers choose who they want to buy from. Gone are the days when you bought something subpar or inexact because it was the only thing you could find in the store. With shoppers wielding that kind of power, it's important for marketers to think about who's in the driver's seat. Online competition and innovation by startups have taken the power away from businesses and put it into the hands of individuals. That's why creating loyalty - not just a sale -- is more important than ever.
Source your revenue. Don't generate it.
Marketing's role of churning out revenue streams is dated. Modern marketers should think in terms of sources, not end games. Creating loyal customers requires a shift in current thinking that will reshape your entire process before, during and after a sale. To me, frontloading efforts towards a purchasing decision is short-sighted. Don't aim for making a sale. Aim to thrill. Once you shift your focus, the entire process will transition into thinking for the future, not just for today.
An advancing technological landscape has been a boon to the business world, but it's also meant businesses must work harder to form relationships with their customers. They can go anywhere. Why should they choose you?
Related: Why a Client's Lifetime Value Changes, Depending on the Month
Remember when answering this question that the true source of revenue comes from creating customer value. We generate customer value by considering them in every aspect of the buyer funnel, from planning to market analysis, product development, and even hiring and HR.
Creating a rich customer experience ultimately drives ROI because cultivating repeat customers is less expensive than creating new ones. Focusing on your customer experience from the ground up increases the likelihood that people will come back. If you want a good ROI, spend as much time and money on improving the customer experience as you would on conversion.
Related: What Buffer Can Teach Us About Customer Service
What keeps a consumer coming back for more?
A clear perception of benefits, for one thing. Whether it's convenience (like two-day shipping) or company culture (donating a pair of shoes for pair they sell), customers need a compelling reason to choose you time after time. Appeal to their emotions and sensibilities, and you'll figure out what makes your target audience click.
With some dedicated research and plenty of nurturing, you'll find that brand loyalty and creating long-term relationships with your customers drives your ROI, not simple sales. Focus on what's most important: creating a customer for life.
