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20-09-14 07:45

Back to the basics with customer value optimization


Back to the basics with customer value optimization

20-09-14 07:45
Back to the basics with customer value optimization - featured image

Back to the basics with customer value optimization

CEO of Amazon Jeff Bezos approach was to concentrate on a customer's lifetime value, instead of pursuing short-term gains. And this speaks for itself when it comes to his success. Customer Value Optimization is a key if you want to be a leader in customer loyalty and grow your business over the long term. Easy? No. Essential? Yes.

Peter Drucker

How's "Customer Value Management" shifting the approach?

Customer Value Optimization (CVO) is a process for building a better customer journey and optimizing ROI for all marketing activities. It focuses on maximizing brand and satisfaction over the consumer lifecycle — and building loyalty.

Growth eCommerce Formula

Although the formula can be extremely beneficial as a basis for optimization, many businesses are making the mistake of pinning long-term market success on growing T. However, an increase in traffic does not inherently mean an increase in revenue, income or customer satisfaction. Since consumer behaviour evolves over time, e-commerce firms need to recognize those customers — and their data — are not stagnant. Creating consumers for a lifetime allows businesses to keep pace. Many reports show that rising consumer satisfaction by as little as 5% will boost earnings from 25-95%. Customers who have had a very positive experience are 3.5x more likely to repurchase and 5x more likely to recommend the business to friends and family (than if they have had a bad experience).

How do you measure the value of the customer?

Customer Value Optimization strengthens the conventional model with Jay Abraham's three development foundations in mind:

  1. Increase customer base
  2. Increase average transaction by client
  3. Get each customer to buy from you more often
Growth eCommerce Formula

The formula weaves businesses from an obsession with traffic, and instead focuses on increasing customers with the lowest acquisition and retention costs generating the most revenue. Omniconvert eCommerce Retention Benchmark report shows that 65% invest at least 70% of their acquisition budget and that NPS, CLV, and retention are among the least monitored KPIs. We also see that the cost of customer acquisition has increased over the past five years by more than 50 %. Customer acquisition costs are high, but not at the expense of customer lifetime value. And consumer procurement becomes more expensive.

A methodology for Customer Value Optimization

Methodology for Customer Value Optimization takes time and organization buy-in. Focus on the steps where you know you're underperforming the most. You may already have the data or persona research, for example, but just haven't put it to work.

  1. Every company has its own ways of measuring "success" . Don't get bogged down by short-term metrics at the expense of long-term growth. The first step is pinpointing the impact of customer value.
  2. Get into customer segmentation habit to find out who are your most valuable customers and how their needs change over time and take care about customer experience and retention.
  3. Run qualitative research per RFM community.
  4. Find customer anomalies in quantitative data.
  5. Create your Ideal Customer Profile (ICP) via RFM evaluation
  6. Improve Retention Approach
  7. Continuous optimization

Key points to deep dive:

RFM analysis reveal behaviours and anomalies which highlight the most important customer groups, like:

  • How many times they visit your store before making their first purchase
  • The days and times when they make the most purchases
  • Whether they buy online or offline
  • How much time they spend on your site before making a purchase




Margin - applied to profitability, the pareto principle suggests that, on average, 20 percent of repeat customers bring in 80 per cent of the margin.


Customer Experience. Is hard to measure; however, some KPIs can provide clarity:

  • Reviews of product. Note positive and negative feedback from product reviews.
  • Net Promoter Score. If you trigger a pre and post delivery NPS survey, detect where your customers are satisfied (or not) with your product or service. (Know NPS limits, however.)
  • Score customer effort. How hard can a customer use the product, find information, or solve a problem? The customer effort score tells you.
  • Rate of resolution. How does your support team solve customer problems? Are most of your customers happy with your support? Is there a room for improvement?
  • Return of product. A high product return rate may mean a problem with your products or a bad job describing your product or service.

Retention Rate. Calculating your acquisition and retention rate regularly allows you to understand whether you are successfully cultivating your clients, attracting the right people in your campaigns.

New Customers stickiness. A deep dive into your email marketing strategies will show which promotions took you to repeat clients versus one-off purchases. It is an important customer acquisition report which any ecommerce company should be monitoring.

Email Cohort

Once you have RFM groups, you'll better understand the distribution of your customers. For each RFM group, ask a set of questions, starting with demographics, reasons to buy, NPS, barriers, reasons for not returning, and other custom questions. For smaller RFM groups, you can opt for live interviews (in person, phone, Zoom, etc).

Anomalies give you hints about what differentiates a certain group from others. They can help you discover toxic brands or categories, cities with loyal customers, and so on.

Customer Experience

After launching RFM and finding your best customers, define your Ideal Customer Profile (ICP) by combining the quantitative and qualitative data you have obtained with purchasing trends from RFM research.

Consider the following when building your ICP:

  • Who they are (location, gender, age);
  • When they buy (buying habits);
  • What they purchase (anomalies in product assortment);
  • What holds them back (reasons and barriers);
  • What they need (qualitative research).

This method exposes areas for optimization:

  • Better ad targeting and lower CACs by concentrating on unique product and brand reviews for a particular RFM user.
  • Better range and merchandising based on what RFM groups purchase and optimized inventory (reduce inventory on less-popular products).
  • Better customer service offering priority assistance, improved response times, or tailor-made return services to most relevant customers.

When you have mapped all touchpoints and features, it's time to build the perfect customer experience based on your study. Throughout the path, we apply the ideal customer findings to create an endless loop that drives sales and encourages repeat orders, almost on autopilot.

You can do this by:

  • Great customer support with best customers;
  • Acquiring more customers like ICP (custom and looklike);
  • Creating a wider product range;
  • Creating better campaigns (email, advertising, SMS, website personalization).

Let's combine concrete enhancements with customer lifecycle phases.

Campaings Types


When the Consumer Value Optimization process ends, the job is not finished. CVO is an endless operation. The next steps to take for long-term growth are:

  • Continuous testing;
  • Loyalty programs;
  • Referral programs;
  • Customer acquisition;
  • Email orchestration;
  • Website experimentation

Finally run personalization at scale & orchestrate campaigns across channels. Ongoing personalization keeps consumers interested not only on the website but in other channels such as social media, email, and SMS.


Customer Value Management is an ongoing task for many companies. Although it's overwhelming in nature, it's much more successful than just growing your ad spending. More traffic doesn't ensure growth.

A robust Customer Value Management program takes full attention from your organization, but with the right resources, people and technology, you'll discover the qualitative and quantitative data you need to take action.




















20 lat doświadczenia w pracy z globalnymi markami, ekspert w branży konsumenckiej z pasją do wykorzystywania transformacji cyfrowej i innowacyjnych rozwiązań technologicznych do napędzania długoterminowego wzrostu.
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