Improving Customer Lifetime Value: Conversion Lessons from Donors Choose
Peter Sandeen
One of the most overlooked ways to make your business more profitable is increasing the average sale value.
That is to say, instead of going after more sales, you make each sale more profitable – and repeat them if possible.
Customer lifetime value one of those things usual conversion optimization doesn’t really help you with.
But when you do it well, it can make a big difference in your business.
This applies to you even if you don’t sell anything because you can make each opt-in more valuable.
In this post and video we’ll look at a great example of how to increases average sale value…
The Beginners’ Strategy (a.k.a. Special Discount)
You’ve probably seen companies use the “special discount” offer; when you’ve added something to the shopping cart, you’re offered a discount if you buy more of those same products.
That’s the beginners’ strategy.
Just like in most beginners’ strategies, the idea itself is okay, but the execution isn’t quite right.
You shouldn’t just push people to buy more of the same stuff. It might work, but you’d be missing out on a bigger opportunity.
Instead, you should help them get different things they want to get from you.
Download the PDF that helps you find the core of your value proposition…
How to Sell More of What People *Really* Want From You
When the up-sell offer ties into the real reasons people buy from you instead of your competitors-your customer value proposition-it’s likely to create great results.
It has to deliver more of what people want; not just more of what they already bought.
And it’s not just that you offer “something related.”
In the case of DonorsChoose, people are essentially paying for two things; the opportunity to help kids and the chance to feel like a “good person.”
When you first decide to donate something, you do it for the opportunity to help kids.
The up-sell offers give you a chance to get external validation for being a good person; if the kids make you personal notes, they have to know you helped them, and the friend who gets the gift card from you will know you’re giving money to charity. Odds are they’ll do it again too – and that’s where you start to see the real improvements in customer lifetime value.
So, you’re actually buying something different -but that you also really wanted in the first place.
Know What People Want But Aren’t Already Buying
When you know what people truly want from you – why they choose you instead of your competitors – you can make much more profitable up-sell and cross-sell offers.
If you don’t know it, you can only hope to guess it right.
That’s why you need a strong value proposition.
It’s not just the reason people choose you instead of your competitors, it’s also what guides you to the most profitable opportunities.
You should up-sell things that deliver more aspects of your value proposition or deliver the same aspects better than the original purchase.
For example, DonorsChoose could try to up-sell the bigger donation by telling how much more it will help. But it wouldn’t be as effective as their current strategy.
It wouldn’t be a better way to help kids; you’d only help them more in the same way. And it wouldn’t give you anything the original donation wouldn’t give.
If they offered you the chance to donate to another project, the results wouldn’t be too good either because it wouldn’t help you get anything the first donation doesn’t already give.
But when they add the personal notes from the students you’re helping, you get more of what you probably wanted all along.
Similarly, being able to show-off your charitable nature to friends couldn’t be easier than with a gift card you give them.
If you need help figuring out what your value proposition is, download the free PDF I mentioned earlier that explains a simple system for finding the core of your value proposition.
And then help people buy more of what they want from you.
As always, the comments are open for a reason. If you have anything to ask, don’t hesitate! 😉
about author
Peter Sandeen
Peter Sandeen dreams of sailing with his wife and dogs on the Finnish coast-unless he's helping someone build a clear marketing message and strategy that creates sales consistently. Download the quick 5-step exercise that shows what ideas are most likely to make people want to buy your products and services.
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Francesca StaAna
Great post on upsells, Peter! You make a lot of great suggestions.
On a slightly different note, your post also reminded me of the fact that a lot businesses make the mistake of focusing too much on customer / subscriber acquisition rather than retention, when the cost to gain a customer is greater than the cost of keeping one. Not to mention that it’s easier to sell to someone who already bought from you, as compared to trying to convince a first-time to get on board.
Peter Sandeen | Conversion Specialist
Hey Francesca,
Thanks 🙂
That’s true. I think it’s partly because there’s so little talk about retention; it’s not as hip and cool as building your list etc. 😀
-Peter
Al
…errr whats going on with my emoticons…smh
Al
Thanks for the post Peter.
You’ve got such a great eye for marketing. I appreciate you because your ideas are so fresh and immediately applicable. Thanks again my friend and stay warm in all that snow =-)
Al
Peter Sandeen | Conversion Specialist
Hey Al,
Thanks, that’s great to hear.
And thanks 😀 I’ll try to survive…
Cheers,
Peter
Jane Robinson
Great advice. As the Executive Director of a small non-profit organization we use this technique to engage our donors. I am also an artist and blogger and have found that appealing to the customer’s needs (rather than my own) is the only way to sell artwork and engage blog visitors. Most sales are emotional since they often don’t “need” another piece of art, but when they can imagine it in their home or office they begin to see the value. My offering my artwork to enhance their life it becomes an equal value exchange. We both win.
Peter Sandeen | Conversion Specialist
Hey Jane,
You’re right, most sales are emotional. But I wouldn’t limit that to just buying art, but rather to all purchases. Understanding why people would be interested in buying what you sell (on an emotional level) is really the only way to go 🙂
Cheers,
Peter
Shannon Lagasse
What I really loved from this: People aren’t just buying the donation, they’re buying the gift card that shows other people that they’re a “good person”. I had never thought of it that way! It’s not just about helping other people, it’s about making yourself feel good by doing so (and maybe having a way to show other people that you’re a great person).
Trying to think of how this would apply to my business coaching emotional eaters. They’re not just looking to lose weight and regain control, they’re looking for happiness, freedom, etc. (hence the business name). But what else are they looking for? The ability to go out in public and eat what they want without feeling ashamed or guilty. The ability to show off their new body with confidence. Going out with friends and being the person that everyone looks up to. Maybe? I’m going to ask, because I think this is really important.
Peter Sandeen | Conversion Specialist
Hey Shannon,
I might be way off here, but I’d guess your clients want to show off their “achievements.” And isn’t just sticking to an exercise rhythm or diet or getting a coach to help an “achievement” for them?
What if you’d give them a super-easy way to tell their friends when they’ve hired you that “they’ve taken a great step towards changing their lives” or something like that?
Just an idea 🙂
Cheers,
Peter
Bobbie
If I get slimmer, my fave is to go into a dress shop and pick up a smaller size and it fits! Looking in the mirror, I can say, ‘Now, that’s better.’
Shannon Lagasse
Ooohhh. Peter, I like the way you think.
What can I do for them that will allow them to show off, not just results, but the fact that we’re working together? Posting on Facebook with a tag in it (with permission, of course)? Discounts for friends? Bonuses to share with their support team? Hmm…
Peter Sandeen | Conversion Specialist
Hey Shannon,
Without knowing more about your business I can’t say much (feel free to email me if you’re interested to talk more).
But I think you have the general idea right. Give them opportunities to show people they’re working with you.
Suggest to them that they’ll post something to Facebook and Twitter about working with you.
And offer to post something on their behalf (“Just started working with Jane Doe. She was brave enough to start the ‘Run Until You Don’t Feel Your Legs’ training with me…”)
And giving discount coupons they can give to their friends is a great idea (for many reasons). But you can also encourage them to just tell their friends what they’ll have to do and tell them to justify it with “this creates accountability” even though they just like to brag 🙂
What do you think?
Shannon Lagasse
Peter,
You are just FULL of great ideas!
Kornelia
I think this is the first time ever I have watched any such video on-line from the very beginning to the very end (usually I just read the content and omit video and other downloadable extras) and I must say this as extremely useful. Thank you very much for this piece of advice, I’m gonna use it straightaway for my online store.
Peter Sandeen | Conversion Specialist
Hey Kornelia,
Thanks, that’s really good to hear 🙂
Cheers,
Peter