Hi Community!
As mentioned, a couple weeks ago I shared what CVO is and why it’s so impactful as a business. But for Pt. 2 today, we’re going to hit the ground running with the last installment of this series on how you can practically apply this to your marketing and Klaviyo today. Let’s get started!
Where do you start and how can you do this in Klaviyo?
I’ll go briefly over the whole CVO Methodology and explain some possible use cases in Klaviyo. In short CVO is a process. The process is similar to most Build, Measure, Learn; PDCA cycles; or something like the Double diamond framework. It includes the following steps:
-
Begin with research (quantitative and qualitative) to find the most important issues that impact Customer Lifetime Value.
-
Move into the ideation phase where you use these insights to come up with improvements.
-
Implement or test these improvements.
For the (qualitative & quantitative) research phase, work on RFM, NPS, surveys, JTBD interviews, and deep dives into data to understand what impacts RFM positively and also negatively. Below, I’ll shortly share a couple of these researches.
RFM analysis: What is it? How to use it?
RFM stands for Recency, Frequency and Monetary value, and each of these 3 elements can be given a score (i.e. 1 being the worst and 5 being the best).
-
Recency – How recently did the customer purchase?
-
Frequency – How often did they purchase?
-
Monetary Value – How much did they spend?
If a customer ordered recently (today), then you give recency a 5; whereas, if a customer’s last purchase was over a year ago, you may give them 1. If they’ve placed over 10 orders (depending on what your customer base looks like) you may assign them a score of 5 for frequency; whereas, if they only purchased one time you may give them a 1. The same process is true for monetary value.
Example:
An RFM segment with a score of 555 represents the very best customers, and a score of 111 is the very worst customers.
Once you do this exercise (we use Reveal for this), you’ll have a good understanding of the distribution of your customer base. This can help you to identify which customers you should interview and learn more about.
Reveal uses names for the various groups like soulmates (the very best) to flirting (high value orders), about to dump you (placed last order some time ago), or breakups (no longer active).
At this point, you should already be starting to think about possible email flows that you can now trigger. Since we’re using Reveal, this adds so many customer profiles and events that you’d be able to send out automated emails once a person is about to churn (based on the data). In that case, employ a winback flow based on this data to accurately reach a customer at the time that makes sense based on their journey thus far with your brand.
Jobs to be Done: research interviews
Once we know who the best customers are, it’s time to conduct interviews and gather insights from your best customers.
Understanding your customers is key to relating and communicating with them in a way that makes them feel understood. It is also key to understanding why people are buying your products. As Daphne Tidemann phrased it:
“A JTBD (job to be done) is not what your customers buy but rather the change they wish to experience with your product.”
To give a very simple example, if you sell drills, then your customer’s goal is to drill a hole. However, the job is completely different — e.g., the job might be to create a nicer home environment by putting up some paintings. Now, consider the construction worker: their job to be done for the same drill might be getting work done faster and better, and having a durable long-lasting product.
Understanding your customers, combined with RFM segmentation, is a very powerful way to make sure that your messaging to your most valuable customers is spot on. You want to resonate with them, communicating the story that’s already playing in their head with the words they’re using. This is extremely helpful when creating your Klaviyo onboarding flows, or when doing progressive profiling (i.e. collecting information and knowing what to ask for) in popups, emails, or text messages.
NPS
Implementing guardrails is important to measure improvements in customer satisfaction over time. Measuring pre-delivery NPS and post-delivery NPS is a great place to start.
NPS stands for Net Promoter Score; it allows you to find out if there are issues you’re unaware of. For instance, is there something about the experience that’s not good (pre-delivery), or about the service and product that does not match your promise?
A cool thing you can do is create automatic tickets in Gorgias for the very best customers who gave a low NPS score. That way, your support team can proactively reach out to them or add automation for customers with self-service options to solve issues themselves.
When you set up NPS, don’t forget to add a follow-up question for each group to understand why they gave a specific score.
Deep dives in RFM / NPS
One aspect that’s interesting as you go through your company’s data is to see if there are elements that specifically cause bad customers. In other words, are there (toxic) products that cause low NPS scores or cause good RFM customers to churn, or are there specific regions that score lower — maybe because of delivery issues.
How does this help with Klaviyo?
There’s no denying that using discounts helps to boost conversions and sales, but does this also create better customers?
The knowledge that: (1) revenue is not the only important metric you should look at, (2) that profit is even more important, and (3) that there are different segments of customers (not all customers are equal) within your database is key. This is where you’ll start making a difference for your business (or for those businesses you're helping).
Below are a couple ways you can improve your content in Klaviyo using this newfound CVO knowledge.
-
Send better onboarding & customer welcome emails
It’s all being relevant to the customer. The better we are at doing this, the better the experience is for the customer. In the end, you must work to improve the whole customer journey, from start to finish. -
Exclude from Klaviyo
Take segmentation to the next level by excluding those not best RFM (111) customers (i.e. those who have churned and are unlikely to return as customers). Focus instead on those who are about to churn. Use insights from your surveys and discovery talks to win them back via flows. -
Exclude from discounts
Does it make sense to keep sending discounts to customers who do not bring in any profit to your business? Knowing which groups are not profitable helps you to be smarter about who you send discounts to. -
Send Post delivery NPS survey
As soon as you know someone received and has been able to use/try their products, it’s a good time to send out a post delivery NPS survey. This helps you to understand if the experience of your service and product matched your promise to the customer who bought that product. If NPS is low then you need to find out why and how to improve. -
Send better timed winback emails
Knowing the reasons why people churn (after interviews or surveys) will prepare you to create better emails and unlock the best send time, i.e. when people fall back from a RFM recency score. -
Align loyalty programs with RFM
Knowing your RFM segments is a very smart way to improve and align your loyalty programs and tiers for those specific groups. -
VIP segment & flows
Knowing who your very best customers are using RFM is the best way to set up VIP flows. Whenever someone becomes a high-value brand evangelist build upon this engagement by sending them a personalized email written by your CEO or even a gift as a token of your brand’s appreciation. Also, learn from them — what else would they like from you as a company? Send them some samples or include them when testing new products. -
Referrals
Chances are, a VIP will be more willing to give a referral for your brand than a customer within the RFM 111 segment. Test this out, and maybe even employ a new system of offering a couple of vouchers that they can hand out as influencers of your brand.
Customer Value Optimization allows you to:
-
Research and improve the whole customer journey
-
Become more relevant to customers
-
Improve the value both of the customer, but more importantly for the customer.
It takes some hard work, data analysis, and a deeper understanding of your customers, but in the end it can help you build a stronger brand.
-
Learn more about me on my Champion profile page or connect with me for questions or custom solutions on my Partner Page!
Resources Available to Keep Learning from Omar and the Community: