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.
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! 😉