Search Results

Many marketing reports I have reviewed over the years have focused on ‘vanity’ metrics like impressions, likes and views - which look impressive on the surface - but made no mention of profit or return on investment (ROI). In the spirit of challenging assumptions, this is the first in a series looking at whether any of these ‘vanity’ metrics are correlated with or predictive of profitable growth, based on the work we do with our clients to create a single customer view across their various marketing data sources. I have always been fascinated with alternative indicators – for example measuring light pollution from space as a proxy for African economic growth or using satellite imagery of car park utilisation to predict retail like for like growth. First up in this series is email open rate. We have looked at this in two contexts: in a long sales cycle business (think B2B enterprise software or high value consumer goods) vs conversion to purchase, and in a transactional B2C business vs lifetime value. Example 1 – long sales cycle conversion This example represents a very high value B2C purchase, with a sales cycle of c. 1 year – so I think of it more like a B2B sales process. We see that there is a linear relationship between marketing email open rate (i.e. excluding 1-1 contact with salespeople) and ultimate conversion. Example 2 – transactional B2C lifetime value In this typical B2C ecommerce example, in a category with a high purchase frequency, the relationship is slightly different – getting email open rate above c.20% correlates with a meaningful increase in customer lifetime value (measured in terms of profit of course). Above this, there is a still a positive relationship but less strong than in our first example. What we have also looked at here is whether there might be covariance with the number of emails received – but when you isolate to just those customers who have received >50 emails, the trend is almost identical. How can we use this insight to drive growth? Of course, you may be wondering- is this just correlation or more fundamental causation? In the first example, common sense says that a prospect who is more engaged is more likely to open emails. In the second example, a customer who feels a connection to a brand and its content may well be more likely to open emails. I would make the case that in some ways this does not really matter, because the most valuable way to use this insight is as a correlation, in other words a predictor of prospect conversion or customer lifetime value. This could allow you to prioritise sales resources, direct churn prevention activities or indeed simply to produce a more accurate forecast of business performance. As to whether working on your email strategy can increase the correlated business metric – that is something you should test. With both client examples described above, the next layer of detail suggests the opportunity to make gains – looking at the specific email campaigns, automated journeys, and scope for more A/B testing. One of the best characteristics of email marketing as a Chief Marketing Office (CMO) is that compared to your website, app, or other digital products, you are likely to have full control of A/B testing without the need for your tech team to get involved. Send days, times, subject lines, and email content can all be optimised. If you have the data available, check this comparison to conversion rate and lifetime value for your business. If you do not have this at your fingertips, it is worth the effort to start to tie your different marketing data sources together to create a single view of the customer journey to uncover insights such as this. Next up in this series will be enquiry response time – please do suggest any other indicators you would like to see tested. If you’d like to discuss how you can join together your marketing data sources to understand these relationships for your business, please Contact Us. All views expressed in this post are the author's own and should not be relied upon for any reason. Clearly.

Around two thirds of trackable web traffic comes from search engines, whether from paid listings (paid search or PPC) or organic/free listings (organic search or search engine optimisation - SEO). The chances are that search represents a very meaningful source of online traffic, leads and customers for your business – even if it is at the start of a long B2B purchase journey. It follows that when you are setting your digital marketing strategy, you should be seeking to understand your potential opportunities for growth within paid and organic search, and then tracking changes on an ongoing basis. Search engines helpfully provide a lot of information of advertisers on the performance of their paid search activities, but this is not the case in organic search meaning that marketers must rely on third party tools to track their SEO rankings. In our experience, organic search is overlooked in terms of its commercial importance to most organisations, receiving much less Management time, fewer metrics in the board pack and insufficient investment than other marketing channels. Your SEO rankings can often account for 50% of new customer acquisition once you have clear picture of marketing attribution, at a very attractive Cost Per Acquisition CPA compared to other channels. This lack of attention results from a combination of the difficulty of measuring/tracking the value of your SEO rankings and the (misplaced) idea that organic search traffic is both hard to influence and in terminal decline, so why spend time focusing on it. A Search Headroom analysis that is based on your SEO rankings can help change some of these perceptions and help to bridge the gap between senior managers and technical SEO practitioners. What is a Search Headroom analysis? A search headroom analysis highlights a business’s share of its potentially addressable organic search traffic at a specific point in time. The higher up your business appears in the organic search rankings for any given keyword, the greater your share of traffic will be. You can think of this like a digital version of a traditional ‘market share’ analysis. The difference is that traditional market share is based on the ‘stock’ of customers in a market (e.g. a car manufacturer’s share of all the cars on the road today), where as a search headroom analysis considers the ‘flow’, the customers who are actively searching for a given product or service (e.g. a car manufacturers share of the new cars sold this year). Businesses that are growing will often have a higher share of search traffic than their overall market share – hence this can be a valuable leading indicator of growth. In principle there are a handful of steps to follow when creating a Search Headroom analysis: Build a list of your own web domains and those of your competitors; Use a third-party tool to produce a list of all the keywords where each domain appears in the search results, and their respective SEO rankings; Aggregate the results together and remove duplicated keywords, irrelevant keywords, and those where the ranking is so far down the results, they are unlikely to generate any traffic; Combine with data on the overall monthly searches for each keyword; Translate the rankings into estimated traffic for each domain on each keyword (considering both the ranking and other search results page (SERP) features which could impact click-through rate (CTR)); Group the keywords into common sense segments for your product/service; Explore the results at a segment, keyword and even landing page level; and Review the search results for your most important keywords to check for any additional competitor domains to include the next time you update the analysis. Figure 1 - example summary from a Search Headroom analysis showing 'market share' by domain and keyword segment. A Search Headroom analysis is a very powerful tool as it can be built both ‘outside in’ using 3rd party providers of search results tracking, as well as being enhanced with more accurate internal data, for example when estimated CTRs. We have used this approach both as operators and investors as a result, to understand a market overall, dig into competitor strategy or track who is gaining/losing share. You can also apply this methodology in other channels e.g., Amazon. A Search Headroom analysis is also very useful when you are planning big changes in your digital marketing strategy – launching a new website, re-platforming an existing website, or planning a domain consolidation. All these changes can cause significant and immediate change in your SEO ranking that you need to carefully monitor and mitigate. What digital marketing insights can a Search Headroom analysis generate? Understanding your business’s search headroom can yield many interesting insights about your business, your competitors, and your market. For example: Your ‘market share’ of organic search traffic, and how this varies by segment and keyword Trends in your ‘market share’ over time Level of fragmentation/concentration of traffic in your market Seeing where your competitors are winning traffic, but you are not Growth YoY in terms of search volume (10 years ago it seemed like every keyword was going in volume terms, but overall search volumes are now relatively stable, so growth in searches tends to correlate with overall market growth)) The level of volatility in your market i.e., how often SEO ranking changes How commercial/sophisticated the digital marketing strategies are in your market i.e., understanding the mix of organic vs paid traffic (search ads and shipping ads in some categories) Where you are doing well in organic search but not paid search and vice versa, by comparing the Search Headroom analysis to your paid search data How overlapped your market is with other markets that may have similar search terms – think about a market like cyber security where you will find many different overlapping niches as well as job seekers and students searching very similar keywords Seeing your SEO rankings at keyword level (where do you rank vs. where you ‘should’ rank based on the product/service offering of your business) Where you may have recently lost high volume SEO rankings Whether your SEO/ content team are spending time in the right areas to both protect your most valuable SEO rankings and grow your visibility in the areas of biggest opportunity Comparing the performance of your different landing pages (and those of your competitors) Figure 2- example keyword level market share from a Search Headroom. What makes this difficult? Whilst the benefits of a Search Headroom analysis are hopefully clear, this is something that many businesses have never attempted. One of the challenges in the complex, technical nature of search marketing, and in particular SEO. In our experience, many talented, technical SEO professionals don’t think about top-down opportunity enough and for most management teams SEO is the ultimate ‘black box’ where cause and effect are very hard to understand. The closest teams often get to quantitative reporting of their search marketing is a page in the board pack listing their top 10 keyword rankings. There are a few other factors that make producing a Search Headroom analysis hard: The (very) long tail matters – previously businesses I’ve worked with have generated as much as 90% of their organic search conversions from keywords with fewer than 100 monthly searches. You will likely need a dataset with thousands or tens of thousands of keywords, potentially more if you are an established business in a large market e.g., online travel. This means that completing the Search Headroom analysis need more advanced analytical skills which your team may not have. Most SEO tools – and there are lots – track a selection of SERPS and produce various metrics like ranking, perhaps even estimated traffic, but this is rarely out in the context of overall category and certainly doesn’t highlight opportunities and risks – so you need to do your own analysis to produce an overall view of your ‘market share’ as well as being able to drill down. To get a complete view of your SEO rankings you may need to combine data from multiple tools. There are many features that can appear on the search results page and influence the click-through rate for any given ranking. The number of paid search ads, shopping ads, maps, and featured answers all play a role – you ended to look carefully at your own data to make sensible estimates for each potential scenario, again adding to the analytical complexity. The recent emergence of generative AI is going to lead to a lot of change in the SERPs over the next couple of years which will only add to this complexity. Deciding how to segment your keywords can be subjective and requires some test & error – how many groupings to create and how to define them. In our experience, we find it helps to remember that not all traffic is equal in terms of its likelihood of converting, so we will create segments that differentiate by level of intent e.g., whether a search includes a high purchase intent word like ‘buy’, ‘compare’ or ‘reviews’. We will also always create a segment for branded terms as these behave very differently with very high click-through rates on your own brand terms. The changing search engine landscape – this will vary by business and geography, but Google has c.85% share globally, and Bing has been gaining share and has reached 8%. For now, if you build your Search Headroom analysis based on Google you will get an accurate enough answer, unless you are focused on one of the handful of markets where Google is not the outright market leader (e.g. China, South Korea). Novel products / services with limited directly relevant search traffic - I’ve worked with businesses at the vanguard of a new category where consumers are not yet searching explicitly for their product or service in high volumes. This means a Search Headroom analysis will typically show the business as having a very low share of some large, adjacent keyword categories – which isn’t especially actionable in the short term. In these cases, we narrow down the keyword focus to the handful of directly relevant keywords but monitor closely for new keywords which will be likely to appear every month. How can I create my own Search Headroom analysis? None of these difficulties should prevent you from undertaking a Search Headroom analysis – the insights you can generate will be truly insightful, helping you to both spot opportunities and manage risks. At Coppett Hill, we've created our own tool to create Search Headroom analyses for our clients, "Searchscope". We've combined our experience of SEO across many different industries and geographies with proprietary AI to rapidly produce actionable insights that can be updated every month. This saves our clients considerable time and effort in understanding this critical area on an ongoing basis. If you’d like to discuss how you can use your SEO rankings to use our Searchscope tool to create a Search Headroom analysis for your business, please Contact Us. All views expressed in this post are the author's own and should not be relied upon for any reason. Clearly.

Among the many ‘data gathering’ approaches that I learned as a strategy consultant, I always found mystery shopping to be one of the most powerful ways of both understanding the proposition of a business and highlighting an issue with a customer journey or competitive challenge. Ask yourself – when was the last time you mystery shopped your own business, or one you are invested in? If I look at the photo library on my phone from my time at CarTrawler, it is full of screenshots of the Google search results, our booking funnel and emails. Some of my best moments as a strategy consultant were from mystery shopping exercises, including: Countless golf buggy rides around caravan holiday parks in 2009-2010 were a key part of understanding how the propositions of different operators compared – claiming to be interested in purchasing a caravan for my retired mother; Getting thrown out of Chiswick Sainsburys in my first year at PwC for taking photos of the merchandising of the nappy aisle; Visiting 15 pubs in the Channel Islands in one day (which turned out to be a Champions League day making the last few visits particularly tricky); Getting questioned by security at a garden centre – admittedly I can appreciate that it was a bit weird that three 20-something men were walking round taking pictures on a weekday afternoon; and Spending two weeks visiting men’s formalwear shops in Lagos, Nigeria while working with a British brand. Figure 1 - some of my many mystery shopping experiences as a consultant Why is mystery shopping so effective? Businesses tend to work in vertical silos across the journey, whereas customers move through ‘horizontally’. When one aspect of the journey is designed or updated; there is no guarantee that it will fit with the whole. Some teams responsible for part of the customer journey may be incredibly customer-aware, others may be more concerned about improving their own team’s operational efficiency. It is just plain difficult to really put yourself in your prospect or customer’s shoes without going through the same journey as they do. Mystery shopping is a great way of doing this. I’ve worked with a law firm who prided themselves on incredible client service, but were seeing disappointing Net Promoter scores (NPS) . When they dug into the feedback, they found that their accounts team were issuing often incorrect invoices and following up aggressively with clients, eroding the goodwill that the firm has built. This part of the customer journey was effectively ‘hidden’ from the lawyers and senior management. How to mystery shop your own business Think of this like role play – imagine the situation of a typical customer for your business and try to replicate it. This is the time for some method acting, so be prepared to go full Day-Lewis to best match the real customer experience. When they might decide to start looking for the product/service you offer, and how might they try to find a provider like you? Are they searching online, talking to a trusted advisor, looking at reviews or asking their network? You could even get as specific as when in the day/week they are doing it, and on which device, and from where. Then consider what a customer’s needs and expectations are. Do they want a fast, low friction purchase journey? Or will most of them need advice and the opportunity to ask questions? Is this a purchase that they will be making at a time of personal/corporate distress, or as an indulgence? Will they be comparing you against a handful of close competitors or only be considering your product/service? Once you are ‘in character’ you can start the mystery shopping process. You might want to have a pseudonym and non-identifiable email address ready, if your colleagues would recognise your name on a list of prospects! Or you could ask a family member or close friend to do it for you – their feedback may be brutal but it isn’t tempered by having been told by your CTO just how hard it would be to change those landing pages or create an online demo. The exact nature of your mystery shop will vary based on the product/service offered by your business – you might be sat behind your desk, out on the high street or on the phone (or all the above). There are a few items on my standard mystery shopping checklist which might help you: At each stage, capture what you experienced, whether this met your expectations, and how you felt. Take notes, photos, screenshots, make a few videos, and time things (e.g. how long to respond to your enquiry) How well does your messaging (across all touchpoints) describe what a customer is looking for or the problem they have? How clear and compelling are the calls to action – did you feel like it was obvious what you should do next? Go through any online process that your business operates – e.g. a full purchase journey, content downloads, or 'contact us' form submissions. Where are the points of friction? How many steps do you have to go through? What jars with you, for example input validation warnings before you’ve even started typing! At what point(s) did you want to give up? If in your typical customer journey, they might go and look for online reviews or discount codes – make sure to do that as well. Try each mode of contact – contact form, webchat, phone numbers, messaging. Assess the speed of response and the nature of it. Ask a realistic but detailed question and see what kind of response you get. Ask for a demo or call with keenness – and see how quickly it is set up. Could you hypothetically have been speaking to a competitor in that time? If your journey involves engaging with a salesperson and it is possible for you to do this – what did you make of their materials, clarity of communication, understanding of your needs as an (imaginary) customer, and how is price communicated? What supporting comms do you get e.g. emails, content being shared. This is one of those times when you should always subscribe to the mailing list. If your business sells B2B, you could try and present as a poorly fitting customer (e.g. too big or too small) – do your sales team say no? What to do with your mystery shopping findings To summarise your findings, I’d suggest coming up with some relevant criteria and scoring your experience out of five on each. Create a highlight and lowlights list. Try to specifically call out the points at which you might have walked away. This might be more impactful if you are able to make a comparison to a couple of competitors who you’ve also mystery shopped, in particular if that would be the typical customer journey. Then to share with your team, consider the feedback you have for your teams on both (a) having the right process/journey and (b) following the process that’s in place. Understand that aspects of your experience might be exceptional/unusual so don’t instantly extrapolate - mystery shopping isn't the only valid way of understanding the effectiveness of the customer journey and will always be somewhat subjective. But ask the question of how common such an experience might be and seek data to support this. If you are a senior leader, be wary of how your view may be treated. Your team will no doubt know many (but probably not all) of the issues & opportunities that you identify, so communicate your findings accordingly. You also don’t want them to place too much weight on your input vs other research & data gathering activities - don’t be a HiPPO (the Highest Paid Person’s Opinion). And a last piece of advice – don’t use your real address or phone number. My mum still receives brochures from those caravan parks 15 years on and has never forgiven me! If you’d like to discuss how you can better understand and improve your customer journey, please Contact Us. All views expressed in this post are the author's own and should not be relied upon for any reason. Clearly.

The question of “how much to spend on marketing” is one that every business should ask itself. The answer is often “what we spent last year plus a bit more”. Imagine that instead of simply making tweaks from last year’s budget, you had a blank sheet of paper to design a set of activities and costs with the goal of maximising profit growth over a 3-5 year time horizon – a form of ‘zero-based budgeting’. When I took on responsibility for the consumer brands at CarTrawler, I had to answer this question so that I could build a strategy and budget at a time where my knowledge of each marketing channel was fairly limited, so I approached it from economic ‘first principles’. A recent conversation with a value creation leader at a mid-market private equity fund prompted me to try to set out my thinking and share it. In trying to answer the question of “how much to spend on marketing” through an economic lens, what we are really talking about is treating the process of acquiring customers as a demand & supply problem. In this problem, ‘supply’ means the number of customers that we can acquire at any given average Cost Per Acquisition (CPA) and ‘demand’ means the average CPA that a business is willing to pay for a given number of customers to meet its goal for profitable growth. I’m going to describe each of these components in turn, talking through the theory then coming back to the practical application of this way of thinking. The ‘supply’ of new customers & problem of diminishing returns A very common issue in business plans that I see when a business is seeking private equity investment is forecast year-on-year growth in the number of new customers alongside a reduction in CPA. There may be one-off factors that may explain this, but on the whole, if you want to acquire more customers you should expect your CPA to increase. The reason for this is simple – to add more customers you will have to start additional marketing activities which are likely to be less efficient and/or more costly than your existing activities (assuming some level of optimisation has happened over time to lead you to these existing activities). A good parallel to this is the oil cost curve – which plots different sources of oil against their ‘breakeven price’, i.e. the $ per barrel at which it makes sense to ‘activate’ these supply sources. When oil is >$100 per barrel almost all supply sources become economically viable, whilst when <$50 per barrel a range of sources become too costly to extract for the return you will achieve. Figure 1 - Oil Cost Curve, Goldman Sachs Research, “Top Projects 2022”, April 19, 2022) In marketing terms you could think about this as starting with word of mouth as your ‘cheapest’ source of new customers on the left side of the curve, moving through organic search, partnerships, through to paid search, then paid social and perhaps with sports sponsorship as the most ‘expensive’ on the right hand side. I would recommend thinking about what this supply curve looks like for your business – being sure to factor in the full cost per acquisition, including things such as agency & technology costs as well as personnel costs & sales commissions. It can help you to understand whether you are really maximising the potential of your most effective marketing channels before moving ‘up the supply curve’ to more expensive activities. For example – almost every marketing team is leaving ‘money on the table’ with a limited focus on customer advocacy. Of course in real life, the confidence you could have in such a curve would rely on the level of marketing attribution you had in place to allocate new customers fairly between the marketing channels that originated them. It would also be hard to account for new marketing activity where you don’t yet have the data to really understand the true cost per acquisition. It is important to note that we are thinking here in terms of average cost per acquisition. Such an average will almost certainly include some areas of marketing activity which have a very high, uneconomic cost per acquisition that you could focus on to find efficiencies - a great example of the Flaw of Averages in marketing. For some businesses, this curve will also look unusual, for example it might have a finite end – beyond a certain point you can’t acquire any more customers at any ‘price’ (cost per acquisition), because there aren’t any more in the market; or there might be step functions where beyond a certain volume of customers, CPA increases very significantly. How much to spend on marketing - the ‘demand/supply equilibrium’ for marketing I’ve asked many management teams: ‘if you could buy customers off the shelf at Tesco, what would you be prepared to pay for them’ – in other words, the maximum CPA you would pay. This is a difficult question to answer, but we can use our demand-supply thinking here to attempt it. If you’ve already got an understanding of your ‘customer supply curve’, then there are two factors to consider: Your expected customer lifetime value over a time horizon that makes sense for your business & how to overlay this on your supply curve to understand the profit maximising average CPA; and Other constraints for your business, primarily the maximum cash that you are able to temporarily invest in customer acquisition, for example as customers may be loss making for an initial period before they ‘pay back’ the cost of acquisition (this isn’t the same as your marketing budget but rather in finance terms the working capital required to fund marketing activities). Once you have these inputs, you can work out the cost per acquisition you should target in order to profit maximise over your chosen time horizon. For example, let’s assume that customers generate on average £800 contribution before acquisition costs in year 1, and a total contribution before marketing costs over five years - their lifetime value - of £2,500. We can apply this lifetime value of £2,500 to each point on the customer supply curve, to work out how much overall profit we would make: Lifetime Value of Customer Cohort = (LTV per customer – average cost per acquisition) * Number of customers. When we plot this curve on the chart, we identify that the ‘profit maximising’ cost per acquisition is c.£1,650, which will bring us 7,100 customers. At this level, we will spend £11.6m on marketing and an annual cohort of customers will make £6.2m of profit after marketing spend over the five-year time horizon. Targeting a higher average cost per acquisition will lead to more customers but less profit per customer, and less profit for the cohort overall effectively meaning that each extra customer acquired beyond this point is loss-making. Now, clearly if average CPA is £1,650 but year 1 contribution is £800, these customers are going to be 'loss making' at first - and not every business would be willing or able to support this. Let’s assume that you (and your CFO!) are willing to temporarily invest up to £2,000,000 cash (working capital) in customer acquisition at any point in time. We can this constraint into a maximum number of customers at each level of cost per acquisition and plot it on our chart: Number of customers = Cash available/(Year 1 customer lifetime value – average cost per acquisition) The point at which the 'Customer demand curve' line that we've added crosses your customer supply curve reflects the average cost per acquisition you should target, given the cash constraint. At levels of cost per acquistion below Year 1 contribution of £800, you can see that the line doesn't appear on the chart as you aren't constrained by working capital at these levels in this scenario. In this *highly illustrative* scenario, you would only be able to afford an average cost per acquisition of £1,270, hence your cash constraint would limit your marketing spend rather than marginal customer profitability becoming negative. In this simple example we are looking at customer ‘breakeven’ over a full year, in practice you might think about this at a monthly level or an even shorter timeframe – but the takeaway is that often from a ‘demand’ perspective, it is often (but not always) the appetite of a business to invest in temporarily loss-making customers that will set a ceiling on the number of customers you are willing to acquire - in particular in business models with subscriptions or other types of recurring/reoccuring revenue. In reality, other constraints will also come into play, such as the operational capacity of your business to service any given volume of customers, or perhaps that your input assumptions around unit economics will change because beyond a certain point you would end up acquiring less attractive customers. How to put the theory into practice I’ve found that this way of thinking about customer acquisition is a helpful way to evaluate marketing strategy and make decisions, rather than something to be used as a precise ‘model’. As with much economic theory, the real world doesn’t always behave, input data will always be imperfect and relationships will change over time. But if you have a clear enough starting point of your current marketing effectiveness and customer lifetime value, you can apply this approach in a few areas, for example: Use the concept of the customer supply curve to identify and prioritise improvements to your customer acquisition activities, for example improvements to your conversion rate, demand efficiency eg PPC quality score, or renegotiating partnership terms; Calculating the overall impact of improvements to customer lifetime value and the resultant change in your maximum cost per acquisition, for example when considering investments that could improve lifetime value; Answering my favourite question for marketing leaders of ‘where would you spend your next [£1m]?’ by identifying whether simply having a greater willingness to invest in working capital for customer acquisition could allow you to increase the number of customers you acquire profitably; and Use this approach to zoom in on a specific channel, for example we’ve recently used this approach with a client to deep-dive into non-brand PPC. This helped us to highlight that their average cost per acquisition was well above the profit-maximising level, and a lower cost per acquisition / higher ROI could significantly increase business profitability. If you’d like to discuss how you can accelerate customer acquisition in your business, please Contact Us. All views expressed in this post are the author's own and should not be relied upon for any reason. Clearly.

Most of us have probably at some point written a list of the pros and cons, or advantages and disadvantages, of a particular decision in our professional lives. Perhaps you’ve even written one for a personal choice – like Charles Darwin, who in 1838 created a list of the pros and cons of marriage, concluding in the end that the pros outweighed such disadvantages as having less money for books or perhaps not being able to live in London. Sometimes however, we need to frame a more complicated set of choices or other data, and one dimension is not sufficient. That is where the consultant’s favourite decision-making tool comes in, the matrix, or four box grid. Years of conditioning as a strategy consultant mean that I get (too much?) satisfaction from untangling a problem onto the skeleton of a matrix or grid, but for many people it represents a simple and elegant approach to communicating something complex. The four-box grid (or in consultant shorthand, the 2x2 grid) can be applied in many different situations. For example, I’ve recently covered the Important vs Urgent matrix, or Eisenhower matrix, that I use to separate out those tasks which are important but not urgent in a business context. I also frequently use a 2x2 grid to compare strategic initiatives, perhaps in terms of impact and effort. You can also sometimes add a third dimension where the size of ‘bubble’ or shape on the grid is used to denote the size of an opportunity (e.g., profit potential) or another quantitative variable. Let’s talk about three of the most well-known four-box examples that you can use in your own decision making. What is an Ansoff Matrix? The Ansoff Matrix, also known as the Product/Market Expansion Grid, is a strategic management tool used to visualise and evaluate potential growth strategies for a business. Developed by management theorist H. Igor Ansoff in 1957, it presents four growth options based on the new dimensions of (i) products (new and existing) and (ii) markets, or customers (new and existing): Market Penetration: This focuses on selling existing products in existing markets. The aim is to increase market share, achieved through strategies like pricing, promotions, or increased distribution/marketing activity. Product Development: Here, companies introduce new products to existing markets. This involves innovation, research and development, and often requires understanding customer needs to introduce products they'll adopt. Market Development: This entails selling existing products in new markets. Strategies can include entering new geographic territories, targeting new customer segments, or using different sales channels. Diversification: normally the riskiest strategy, diversification involves selling new products in new markets. This can be related (a similar field or technology) or unrelated (in effect a completely new business venture) to your core business. I find this matrix particularly useful when a business is considering focusing on customer acquisition vs driving cross-sell and up-sell to existing customers. In general, I’ve found it to be a more straightforward route to growth for mid-sized companies to focus on acquiring more customers (in existing markets or new markets) rather than trying to diversify their product offering and cross-sell. What is a Boston matrix? The Boston Matrix, also known as the Boston Consulting Group (BCG) Matrix, is a strategic tool used by companies to evaluate their product portfolios. Developed in the 1970s by the Boston Consulting Group, it categorises products based on the two dimensions of (i) their market growth rate and (ii) their market share relative to competitors. This matrix divides products (think business units or brands, or even countries) into four categories: Stars: These are high-growth, high-market-share products, and are leaders in expanding markets. They often generate more cash than they consume in their routine operations but may also require substantial investment to maintain their position over time as the market evolves. Cash Cows: Products in mature markets with high market share but low growth. They generate more cash than is reinvested, providing funds for other parts of the business. But beware - these businesses are ripe for disruption as competitors will be tempted into the market Question Marks (or Problem Children): These have low market share in high-growth markets. They often consume more cash than they generate, and their future is often uncertain. Strategic decisions must be made about whether to invest in them or divest. Dogs: Low market share in low-growth markets. They may generate enough cash to be self-sustaining but are generally considered for divestment. The Boston Matrix aids companies in allocating resources among products and deciding where to invest, maintain, or divest. What about a SWOT analysis? Possibly the most used four-box grid, a SWOT analysis is a strategic planning tool used to evaluate an organisation's Strengths, Weaknesses, Opportunities, and Threats. Strengths and Weaknesses are internal factors, reflecting a company's resources, capabilities, and internal processes. Opportunities and Threats, on the other hand, are external factors, emerging from the environment, competitors, or market trends. This might be controversial, but I see very limited value in a SWOT analysis vs a simpler ‘Opportunities and Risks’ analysis, such as Darwin’s list. It is hard to create a SWOT analysis without some level of duplication between Strengths/Opportunities and Weaknesses/Threats – there is an inherent relationship between internal and external factors. For me, SWOT analyses are up there with pie charts as on balance hindering understanding and communication rather than helping. When to use a matrix or four-box grid? If you’ve not had occasion to use a matrix or four-box grid to date, then hopefully you’ve got a sense of how this simple tool can help you to frame a decision or clearly communicate a complex dataset, for example when you are: Writing a 100-day plan (axes: impact vs effort) Creating your business plan (axes: impact vs effort) Creating your ideal client profile (axes: likelihood, likeability) Comparing marketing channels (axes: ROI, headroom) Evaluating your customer base for white space (axes: share of wallet, growth potential) You don’t have to be a consultant to use it, and I’d recommend giving it a go! If you’d like to discuss how you can make strategic decisions in your business, please Contact Us. All views expressed in this post are the author's own and should not be relied upon for any reason. Clearly.

I’m fascinated by nominative determinism – the notion that our names can influence our professions or personalities. Usain Bolt, William Wordsworth, Tom Kitchin – to what extent was their path in life even slightly, subconsciously influenced by their name? Is it possible to invert the historical tradition of a a family surname originating from the profession of the bearer (as any Archer, Fletcher, or Mason could testify)? The ‘Feedback’ column in New Scientist magazine coined the phrase 'nominative determinism' in 1994 and ran a regular column on the subject for a number of years. An academic paper was published in 2002 in the Journal of Personality and Social Psychology entitled 'Why Susie Sells Seashells by the Seashore: Implicit Egotism and Major Life Decisions'. The authors found that 'people prefer things that are connected to the self (for example, the letters in one's name)', and are hence disproportionately likely to 'choose careers whose labels resemble their names (for example, people named Dennis or Denise are over-represented among dentists).' I think that this concept extends into how we choose names in business – for teams, roles, processes, even meetings. The name we chose can have some impact on the outcomes that can be achieved if it has even a modest framing effect on the participants. Those in the UK will be familiar with the ‘Ronseal effect’ – based on the advertising slogan that the best-selling wood stain ‘does exactly what it says on the tin’. What is customer acquisition? Customer acquisition is the combination of activities that a business uses to attract and convert new customers. It can include the work of a marketing function, a sales team, and perhaps even elements of product and operations. It is influenced by the strategic choices made by the board and management team. It also includes the brand and reputation of a business, and the extent to which current customers are wiling to act as advocates and recommend it. All these teams, individuals and other factors can influence the number of new customers that a business wins over a given period. I believe that using the term ‘customer acquisition’ is a powerful way to make this point and show how counter-productive an organisation’s structure can sometimes be, for example, the myriad ways I’ve seen marketing and sales teams fail to collaborate (including in one case barely being on speaking terms). I prefer to other terms such as 'Go-To-Market' as I think it more readily meets the Ronseal test. Given its multi-faceted nature, to accelerate customer acquisition, we have to consider both the strategic choices that a business can make, as well as how these translate into day-to-day operations – the people, processes, technology and data - which come together to attract and convert customers. Businesses that can successfully join the dots have the opportunity to create competitive advantage from their customer acquisition efforts. This is the reason that I describe the work that we do at Coppett Hill as ‘accelerating customer acquisition’. Most of our work involves helping our clients to improve their marketing and sales efforts, to support future growth and improve efficiency. We could describe our services as ‘strategic marketing & sales consulting’ – but we could provide ‘strategic marketing & sales consulting’ and not help our clients to win a single extra customer. So we use the name that best describes what Management teams are looking for and what we aim to achieve – it’s all in the name. How could you use the ‘power of a name’ in your business? Renaming your weekly meeting to encourage action-orientation? Or even – changing the name of your marketing function to ‘customer acquisition’. If you’d like to discuss how you can accelerate Customer Acquisition, please Contact Us. All views expressed in this post are the author's own and should not be relied upon for any reason. Clearly.

'Would you tell me, please, which way I ought to go from here?' If there was one lecture at university that impacted my professional path more than any other, it was Mark de Rond’s very first ‘Introduction to Strategy’ at the Judge Business School. He posed the question ‘What is Strategy?’ to the assembled students, and received a few volunteered answers, which were all in the right postcode but didn’t quite seem to nail it. He then put a cartoon on the screen, an excerpt from Lewis Carroll’s Alice in Wonderland. In the picture, Alice is attempting to find her way home when she is met by the magical Cheshire Cat, and asks him ‘Would you tell me, please, which way I ought to go from here?’, to which the Cheshire Cat answers, ‘That depends a good deal on where you want to get to’. Professor de Rond argued that at its essence, business strategy is the answer to these two questions: where are you trying to get to, and how are you going to get there. This definition has stayed with me, and has shaped every strategy consulting project, strategic review, and investment case I’ve worked on since. I am drawn to its simplicity and obvious common-sense qualities. In a sea of buzzwords and stilted AI-generated content, this short passage from Lewis Carroll could well be one of the best (unintentional) pieces of business writing. The question ‘what is strategy?’ is one that is worth revisiting if your business is about to start a business planning process, or if you are developing a value creation plan. A strategy is not the set of detailed initiatives you will no doubt come up with, nor is it a financial model with its underlying assumptions. It is a set of choices, revisited periodically, that should shape every aspect of how a business operates and how it is structured. Where to play and how to win? I think Alice’s question maps directly onto my favourite language for framing strategy development - ‘where to play and how to win’. This originates from the work of Michael Porter on the theory of Competitive Strategy – that to succeed a business must deliberately chose a different set of activities (to competitors) to deliver a unique mix of value to customers. Using this approach to setting business strategy entails making two types of choices: The proposition of a business – such as the markets and customers a business will serve, the products & services it will provide, how it will charge for these services, and how it will grow (for example undertaking M&A and/or focusing on organic growth); and The advantages a business has or can build vs its competitors that will allow it to ‘win’ – such as unique intellectual property, access to the best talent, sourcing advantages, a superior brand or reputation, and operational excellence. Of course - these choices are not made in isolation; you should logically choose to play where you have at least some chance of ‘winning’. To quote Michael Porter, ‘the essence of strategy is choosing what not to do’. This is a helpful way to ensure a ‘tight’ definition of the market you are trying to serve, which in turn can lead to real clarity on your sources of competitive advantage. Most of world’s largest companies today started out just trying to serve one market where they built a clear competitive advantage (Amazon > books, Google > search, Microsoft > PC operating system). There are some common traps to avoid with this approach to strategy as well. There are many examples where businesses have assumed that the advantages that allowed to win in their existing markets would be the same in a new market, most commonly when expanding into a new geography for example Tesco in US, BestBuy in the UK, or Starbucks in Australia. What does it mean to ‘win’ in strategy? The definition of ‘winning’ will be different for each business and is dependent on the timeframe we are considering. Some common factors that I think define ‘winning': Gaining market share / growing faster than market – the clearest sign that a business has some form of competitive advantage. Top quartile profitability among a set of relevant competitors – to prove that a business is not ‘buying’ market share growth and that growth is sustainable. Clear path for future growth – current success is not just a ‘flash in the pan’. Meeting the needs of different groups of stakeholders: shareholders, customers, employees, community. If you can demonstrate success in these areas, then it is safe to say you are probably ‘winning’ and that any investors will be happy! So if you are about to start a strategic planning process, develop a value creation plan or start a strategy consulting project – take a lead from Alice in Wonderland and ask 'would you tell me, please, which way I ought to go from here'. If you’d like to discuss how you can create a strategic plan for your business, please Contact Me. All views expressed in this post are the author's own and should not be relied upon for any reason. Clearly.

Perhaps your business has just received private equity investment, or you’ve recently joined a private equity backed business as the Chief Marketing Officer. Your first board meeting is approaching, and you’ve been asked to create a marketing update to include in the board pack. You want to make a good impression but have no idea what is expected. Based on my experience of both creating and reading many board packs, I’ve created this simple ten-point guide that might just save you time and a few long evenings, and hopefully help you to create a constructive conversation with your board. Demand indicators – think of these as your ‘inputs’: e.g., share of traffic in organic/paid search (ideally on more than just your Top 10 search terms); partner introductions / referrals; content views. Funnel conversion metrics and change over time: this could be vs last year in a seasonal business or last month / quarter otherwise. You might not own all the conversion steps, but you are best placed to show the end-to-end journey. If you have a longer sales cycle – show your pipeline by segment (e.g., customer or product type), stage and change from last month. I’m always wary about using a weighted pipeline unless the %s are based on robust historical data, so as a minimum show both weighted and unweighted values. Overlay your target customer segment(s) / Ideal Client Profile(s) on your pipeline / won customers – to show whether you are winning where we want to be. ROI analysis of your marketing spend based on proper attribution – potentially on single transaction/ contract value and/or estimated lifetime value. Include a breakdown by channel to avoid the Flaw of Averages! Depending on scope of your marketing team – include a focus on existing customer performance. This could potentially include lifecycle marketing, a separate pipeline and funnel for cross-sell and up-sell, together with gross and net retention metrics. Update on competitive positioning and relative performance – such as share of traffic, financial metrics where publicly disclosed, presence of direct competition in proposals for B2B, or any significant news from competitors. This is all about giving context on your performance and demonstrating that you are aware of what is going on in the wider market. Summarise customer feedback – including public reviews, and with a comparison to competitors where possible. Show the new/change rather than just the total or average which will move slowly. The gold standard is your own measurement of customer NPS (or a similar measure of customer advocacy) and a summary of the key issues for detractors with your plan to address them. In my experience, marketers are best placed to champion customer views, as opposed to leaving this for the operations section of your board back. Distil your main marketing activities into 3-5 initiatives and explain what you are doing, what outputs you expect, and how these translate into value creation (growth and/or improved margins) and reduce risk. For example – building a new suite of landing pages, thought leadership development, appointing a new agency, launching new marketing channel, developing an app. Provide a view on status and delivery timelines, with a clear summary of what the board should expect to see delivered ‘by next month’. This is last in my list, but could well be first in your presentation – a summary of key messages. You could write this as a list of things that are working vs need improvement, a summary by market, by channel or even just a summary of things that are on your mind. But think of this as your opportunity to shape the conversation you want to have with the board, as well as to demonstrate that you know what will be on their minds. Could these topics help to improve the quality your board conversations about marketing? Of course – please treat this list of topics as a starting point, you will clearly want to tailor this to your business model, the remit of your marketing function, and to evolve it over time. It might be that you don’t have all of the data available that I describe here – in particular if you are new to the business. It is okay to have a placeholder at first, or to describe that you are working on creating improved KPIs (and certainly better than just excluding a topic from your update). In terms of length, it is entirely credible to have just one page on each of the above topics, so 10 slides. You might have a couple of additional pages ad-hoc if you are sharing some deep-dive analysis, but the emphasis should be on clarity of communication. I thought it would also be helpful to offer some general tips to keep in mind when preparing your update: If you include an KPI, include a comparison and ideally a target. Numbers without context can be confusing and frustrating for those who aren’t in your business every day. Minimise jargon – talk about website visits rather than sessions, display ads rather than programmatic. Focus on the money – conversions, revenue, margins, spend and ROI. Use top of funnel metrics sparingly (e.g., ‘impressions’ or ‘eyeballs’). Avoid spin – you should give equal weight to what is ‘working’ and ‘needs improvement’. Your investors should understand that not everything will work first time and are instead looking to see that you test and learn at pace. If something ‘needs improvement’, be clear on your plan to get it back on track. Avoid historical description of activities and instead give a forward view of initiatives. Make sure your CFO is comfortable with how you are using financials – if an investor sees a discrepancy in the numbers this will be a distraction. Step back and think about your key messages. Run it through with a board member beforehand e.g., the Chairperson. Ask for feedback after your presentation. If asked for additional analysis, avoid them becoming regular slide unless necessary - otherwise your 10 slides will quickly become 20+ (I speak from experience!) Every company and board will be different, with established ways of working and preferences – so make sure to seek guidance from your CEO, chair and potentially investor ahead of preparing your board update. I hope that the above structure will help you to go into your first board meeting feeling prepared and demonstrating that you’ve tried to put yourselves in the shoes of your board colleagues and anticipate what they are seeking to understand. Have a try and let me know what you think, I’d love to hear your feedback. If you’d like to discuss how you can understand and improve marketing performance for a private equity-backed business, please Contact Me. All views expressed in this post are the author's own and should not be relied upon for any reason. Clearly.

When I sat down to think about the very first piece to write for CoppettHill.com, Customer Lifetime Value was an obvious choice, as it sits at the centre of so many topics that I want to cover. In fact, most conversations about growth and marketing investment come back to the value of an individual customer or different types of customer – whether that is defining your Ideal Customer Profile (ICP), choosing how much to spend on marketing, or considering how to develop your proposition for the benefit of customers. In simple terms though, the best use of Customer Lifetime Value in my experience is to determine what a business should rationally be prepared to ‘pay’ to acquire a customer. In today’s environment of pressure on marketing & sales budgets and an emphasis on customer retention, this feels like an even more important question to tackle, so let’s jump in. What is Customer Lifetime Value? Customer Lifetime Value is the profit contributed by a unique customer over their lifetime transacting with a business. Or to put it the other way round, the profit a business would lose if a unique customer had never existed. We’ll come back to what ‘lifetime’ means in practice later. This concept has its history in database marketing - think catalogue retailers and credit card providers, those businesses where it was easiest to build a single view of customer transactional behaviour over time in days before the internet. The term ‘Customer Lifetime Value’ was used at least as early as 1988 in ‘Database Marketing’ by Merlin Stone, and first featured in the Havard Business Review in 1989. What I really appreciate about the concept of Customer Lifetime Value is that it has stood the test of time – I recently re-read this article from 1998 (the year Google was founded) it still rings true today. This makes it one of the very few marketing or growth concepts to have made the shift from analogue to digital marketing largely unscathed. I’d argue that it has become even more relevant as marketers have become more data-driven over the past 20 years. How to use Customer Lifetime Value? There are four main uses of Customer Lifetime Value that I see, starting with the most frequent: To calculate ROI on marketing spend, when combined with Cost Per Acquisition (CPA) data; To compare between different customer segments (which can tell you either attributes of customers that make them more attractive to your business and/or groups for whom your proposition is a better fit); To measure the impact of historical business changes over time – seeing how Customer Lifetime Value changed; and To model the potential impact of future business changes – to combine different assumptions and forecast customer profitability scenarios. Whilst LTV is a great concept to embed in both daily decision making and big strategic decisions, I don’t think it is well suited to routine monthly Management/Board reporting. As a lagging, historical measure it is unlikely to move by much month to month, so it is better suited for an annual strategy day, or to be operationalised into marketing decisions e.g. Paid Search bidding for different customer segments or partnership commercial models. How to calculate Customer Lifetime Value? To calculate Customer Lifetime Value, you need to consider all revenues associated with a unique customer, then remove all direct costs, a fair share of variable operating costs, and any reacquisition costs for subsequent transactions. The specifics here will vary by business model and for each customer, but to give some more examples: Revenue – this should include both the main transactional revenue from a customer, but also any ancilliaries or one-time income, for example cancellation insurance added to a holiday booking, or one-off implementation fees associated with a SaaS subscription. Don’t forget to also allow for discounts offered to customers – only count the true revenue received. Direct costs – the best way to think about this is your gross margin – either the costs of physical goods or services, as well as staff costs allocated to a specific transaction. Don’t forget to also include the costs associated with ancillaries or one-time income, as well as things like bank fees/payment processing, logistics, insurance, returns etc. Fair share of variable operating costs – these are costs that you might not allocate to specific customers on a day-to-day basis, but which broadly correlate to the number of customers you are serving – for example Customer Service or Support teams. This is the one where there is normally the most debate about what to include in an LTV analysis. Reacquisition costs – some repeat transactions will have additional marketing or sales costs, for example the staff cost to secure a renewal in a SaaS business, or a price comparison website commission fee for an insurer. Getting hold of the data put this analysis together takes time, in my experience it is normally easier in B2C than B2B businesses as you will typically already have access to customer-level revenue data. You may have to be creative - I’ve had to use invoice level data from finance systems or stitch customer data together from multiple sources - but I've always managed to find the right information in the end. Some of the inputs into a Customer Lifetime Value calculation will be at unique customer level (normally revenue data), for others you will need to make assumptions for segments of customers or for everyone (normally cost data). There are many tools available that claim to have some version of Customer Lifetime Value analysis available ‘out of the box’, but I prefer to start by calculating it directly. There will always be limits to analytical capabilities with a set of pre-configured reports/dashboards, and most will make at least one of the common mistakes I talk about later on. What does ‘Lifetime’ really mean? Every customer’s lifetime with your business will be different – and just because they may have stopped transacting with you for now, doesn’t mean they will never come back. To get round this dilemma, I use the concept of a ‘lifetime window’ in my Customer Lifetime Value analysis. This is a standard period of time, often 3 or 5 years, from the first transaction with a customer. It allows for standardised analysis and comparison between unique customers or customer segments. Determining which time period to use for the ‘lifetime window’ isn’t an exact science, but is a trade-off between the length of the window and how many customers will be eligible for the analysis. If we set a 5 year ‘lifetime window’, our historical analysis won’t include customers acquired less than 5 years ago. You should only decide this once you’ve assembled your historical data – and is why should always build the longest time-series of data as possible, within reason. This makes historical Customer Lifetime Value analysis particularly challenging for new businesses. In these situations I’ve used a much shorter window, sometimes 12 months or less. You may have seen examples of Customer Lifetime Value analysis which use a method of dividing annual revenue by an expected annual churn rate, sometimes also with a discount factor. Whilst this often produces very high estimates of Customer Lifetime Value (great when talking to potential investors), I’d always stick to using actual, historical behaviour if you are trying to make strategic choices. The pattern of revenue will vary based on your business model, or potentially within your business – is your product/service an annual purchase, a frequent purchase or a subscription? Some businesses may even only transact once with the vast majority of customers (think divorce lawyers or funeral directors!). Using a ‘lifetime window’ will help to standardise any analysis. What is a good Customer Lifetime Value? The answer is clearly ‘it depends’. This will entirely depend on your business, and I wouldn’t advocate using Customer Lifetime Value as a benchmark metric in isolation. There are some obvious rules of thumb however – within a niche of comparable propositions, you will see higher lifetime value for those businesses with (i) better margins, (ii) better repeat rates, and (iii) better ability to up-sell/cross-sell to customers. What segments should I consider when analysing Customer Lifetime Value? One of the most powerful questions you can answer with Customer Lifetime Value analysis is “Who are our most valuable customers?”. To answer this, you can analyse the relative LTV of different segments based on different customer-level dimensions. These could be ‘attributes’ such as age, location or industry vertical; or ‘behavioural’ such as what the customer purchased first or which marketing channel they came from. This is a process of elimination, test many different dimensions and narrow down to the ones that make a difference. When you find the combination of dimensions that allows you to create a segmentation that balances the best spread of LTV vs equal distribution of customers, you can start to operationalise this. This could be with just one characteristic, for example risk type in an insurance business, or a combination of 2 or more dimensions. It is best to not over-complicate your segmentation at first as it will be harder for your stakeholders to understand and then hard to operationalise. Make sure that you always pay attention to any outliers in your analysis - very low or loss making customers, or super profitable customers. These can lead you either to great insights or bugs in your analysis that need fixing, and sometimes both! What are the common mistakes with using Customer Lifetime Value? This isn’t an exhaustive list, but there here are five of the most common mistakes I’ve seen when reviewing Customer Lifetime Value metrics: Only considering revenue – the most common mistake, where LTV is stated at revenue rather than profit level. This can lead to poor decision making and ultimately value erosion. Ignoring reacquisition costs – repeat purchases from customers will often carry additional costs, sometimes very significant ones, for example in businesses which spend significantly on advertising. Did the customer repeat purchase because they were loyal or because they saw your advert again when searching generically online? Not factoring in customer service costs – in some business models, there is a significant amount of staff cost required to service existing customers, which can be ignored in LTV analysis. There is some subjectivity on where to draw the line, but a share of the cost of large teams such as Customer Service or Support should be factored into your analysis Ignoring changes in a business over the historical period e.g. the introduction of new revenue streams or a major change in pricing. This can complicate analysis, but if you want to use this metric to make choices today about the future, you should make adjustments to historical data to best reflect the future value of customers you have acquired today. In practice that might mean re-stating historical revenue for some customers. Using Customer Lifetime Value to make decisions in isolation. You aren’t seeing the whole picture if you do this – for example you could have a great picture on “Who are our most valuable customers”, but they could represent only a tiny proportion of your potentially addressable market, or have a very low conversion rate vs other customer segments. Make sure to combine LTV analysis with market size and conversion rate data. How to increase Customer Lifetime Value? I’ve written a separate piece about this which you can find here. If you’d like to discuss how you can better understand and use Customer Lifetime Value in your business, please Contact Me. All views expressed in this post are the author's own and should not be relied upon for any reason. Clearly.

It’s the obvious follow-on from any analysis of Customer Lifetime Value (CLV or LTV) – ‘that’s great, but how can we increase LTV’? It’s actually a great question, as it will force you to think about growth from a customer perspective – and in my experience has led to some of the highest quality discussions around the board table. It is a key part of establishing your own marketing flywheel. There are of course many different ways to increase Customer Lifetime Value, but I wanted to offer my top five. These are inevitably quite generic, but think of these as conversation starters for you to adapt to your own business. As with most choices about strategic growth, you won’t be able to tackle many of them at once, so be sure to prioritise based on potential impact on LTV and expected effort. Five ways to increase Customer Lifetime Value 1. Change the customer mix: if you’ve analysed LTV for different segments of your customer base, you will have some insights about which types of customers are worth more to your business. This segmentation might be based on ‘attributes’ such as age, location or industry vertical; or ‘behaviours’ such as what the customer purchased first or which marketing channel they came from. You can then start to adapt your go-to-market efforts to attract more of the higher LTV efforts – by changing your marketing mix, messaging or perhaps offering discounts. For example, I’ve worked with a travel business which saw that customers who booked larger properties for their first booking had a higher LTV, as they would typically continue to book larger properties on subsequent trips. They started to spend more on search terms which attracted extended family/group bookings as a result of this insight. 2. Develop up-sell and cross-sell opportunities: consider how to develop additional revenue opportunities with your customers – could be ancillary add-ons like premium delivery and insurance/cancellation products in the B2C world, or enhanced service levels and additional features in SaaS models. Often these are also higher margin than the core product or service offering so have disproportionate impact on Customer Lifetime Value. 3. Pricing optimisation: as the saying goes; ‘some of your customers would have paid more, the challenge is working out which ones’. Although it is getting more attention in the current macro-economic environment, in my experience pricing is one of the most under-used value creation levers. When it comes to increasing Customer Lifetime Value, pricing analysis can be used to design different packages for customer use cases, or to incentivise repeat purchasing behaviour through discounting. You should also consider the role of regular price increases in your business. It is also worth examining the highest value customers that your LTV analysis identifies, as this can often lead to opportunities for different proposition/pricing models – for example business customers using a B2C platform. 4. Reduce cost to serve: the process of allocating both direct costs and a fair share of variable costs to unique customers as part of LTV analysis can offer valuable insights about the efficiency of how you deliver your proposition. For example, I’ve worked with a SaaS business that saw a disproportionate number of support cases (and resultant costs) from one part of their product suite. By changing how customers are onboarded, and improving the quality of support documentation, they were able to reduce support calls and increase LTV. 5. Improve customer retention or repeat purchasing behaviour: whilst some of the ideas above might also improve customer satisfaction and retention, I’ve always found it incredibly helpful to focus directly on the reasons why customers churn or fail to repeat. This exercise requires a lot of primary research with customers, analysing reviews and listening back to support calls. One shortcut is that in my experience, Net Promoter Score is (unsurprisingly) well correlated with propensity to repeat. For example in a travel business I worked with, customers rating their likelihood to recommend a business as 9 or 10 were 3x as likely to repeat book than those rating 6 or below. This insight provided both motivation to focus on the drivers of dissatisfaction but also allowed the Management team to quantify the impact of customer service improvements on Customer Lifetime Value. And finally… Don’t forget that increasing Customer Lifetime Value might not be the best place to spend your time and money right now. The most obvious growth lever to pull next might just be more customers through better conversion. There can also be negative impacts on conversion of changes to LTV, for example imagine what would happen if you doubled prices. If you’d like to discuss how you can increase Customer Lifetime Value in your business, please Contact Me. All views expressed in this post are the author's own and should not be relied upon for any reason. Clearly.