How to build customer loyalty - Psychology for Marketers

The secret to doubling Customer Lifetime Value






“It Costs Five Times More to Acquire a Customer than to Retain a Customer.”
It’s one of the most well known quotes among marketers, and for a good reason. To boost your bottom line look at selling more to your existing customers rather that finding new ones.

Or in other words, for the same money that it takes to acquire a new customer, you can get 5 new sales from your existing ones. Others sources point to an even higher ratio: even 6 or 7.

So here comes the question: HOW do I sell more to my customers?

Read on to find out about a powerful and easy technique that you can use in your business to double (or even triple) your customers’ lifetime value.

Let me illustrate the concept on the example of direct marketing – which is based on emails sales funnel. The same logic applies to any other business as well (not just online), so what you will learn today, is something you can use no matter what business or industry you’re in.
Now it’s not something you will read about in books or hear from any marketer. This is a fresh new idea, and you are among the first to hear about it. Ready?

Let’s look at a standard sales funnel. It goes like this:

The secret to doubling Customer Lifetime Value - Psychology for Marketers

It’s a normal flow for direct marketing. It works ok, but it is NOT maximizing your sales.
What’s the problem with this model? It’s not using any social triggers. There is no leverage that will help you get the results you want.

Now here is how to organise your sales funnel so that it talks to your customers’ unconsciousness, and make it impossible for them to resist your offer:

The secret to doubling Customer Lifetime Value - Psychology for Marketers

Here is why it works:

A person goes through the sales funnel for Product A. When they buy Product A, they get – as a bonus (for free) – a part of another product of yours (Product B). Your customer will now consume the full Product A and a part of Product B. You just opened a loop.
(Note: It is important that the two products are related and make sense together.)

Why is this so important?

Because it is in our nature to want to close it. We are searching for closures in everything. Think of the last time you read a book or watched a movie that you didn’t like. Did you stop or continued to the end anyways? Have you ever been following a TV series that you lost interest in, and yet you still finished the season? Are collecting anything?

You see where I’m going? The need to continue and close what we started is very strong and people are not strong enough to resist it.
This is why introducing open loops to your funnel will make such a significant difference. It’s your job to open a loop – but it’s your customer’s job to close it.

And how can they do it? By purchasing Porduct B. This is where you enter with your second sales funnel, for Product B, and linking to the free part of that product they already have.

The beauty of this approach is not only that it’s powerful, but also that it’s re-applicable. You can continue this model with as many products as you want. So when a customer buys Porduct B, you can give them a sample of Product C. And so forth.

Now that you have this powerful tool in your hands, what are you going to do with it? I hope you apply it. I can’t wait to hear about your results. Leave your comments or questions below.

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5 Comments

  • Kevin

    Reply Reply March 10, 2013

    Hi Magda, this is a really great post and a useful reminder for all business owners.

    I want to add to this and create a conversation around the actual implementation of it.

    Do you think its better to just give them a bit of the actual product (for example, a free chapter of an ebook or a free video from a course that is product B) that they can access whenever they want.

    OR… do you recommend creating a launch sequence around that same content. taking that free chapter or free video and making it content piece #1…. email 2 case study or social proof element, etc.

    I figured it’d make more sense to use that content in a launch sequence to sell product B but you brought up an interesting point about completion by giving them the actual “thing” from the product itself so they consume it and feel compelled to consume the rest.

    Perhaps this conversation can stir up a way to merge the two for maximum impact. The launch approach would probably lead to more sales since you are leading and guiding the sales sequence while using other conversion triggers. However, there IS something to say for actually giving people a part of the product itself to create the desire for completion as you said, and not just some free content for a launch.

    Curious to hear your thoughts on this Magda.

    • Magda Kay

      Reply Reply March 18, 2013

      Hi Kevin!

      Thanks for your feedback.

      The essence of this idea is to open a loop for your prospect and then give them the opportunity to close it by buying your product. So after giving away a part of your product for free, you need to follow up with the sales funnel. Merging your 2 ideas together will be the most successful.

      Firstly, whatever content you are giving for free, it should be honest. You are giving it away because you know it gives value to your audience. And make it a real gift, meaning that you don’t want anything in return; you are sharing it because you know it will benefit them.
      Only after that change the tone of your communication and point to the fact that this is just a part. Here you can start your sales process linking to the free content you gave away in the beginning.

      Remember that even if you give people something for free, but they expect you’ll want something in return, persuasion becomes more difficult. They will feel as you are forcing them to buy your product.
      So for the open loop to work its magic to the fullest, make it honest. Point out that the free content they got is just a part of the full program/product, and for the best results they should take up your offer BUT if they don’t – you are still happy. They are consuming the free sample, as this will also benefit them. And – as you mentioned – they should be able to always access that content for free.

      Hope that helps Kevin
      Magda Kay

      • Henrietta

        Reply Reply April 7, 2013

        That insight’s prfecet for what I need. Thanks!

    • Bubbi

      Reply Reply October 5, 2016

      Kewl you should come up with that. Exetclenl!

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