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when you see the ROI/ROAS go up or the CPA go down.
In one sense, you are doing exactly what you are supposed to do; you’re measuring actionable metrics and delivering increased performance, and you’ll probably get a well-deserved bonus for your efforts. But what happens after that customer checks out (other than the firing of your conversion pixel on the thank-you page)? Does that customer get great customer service? Does he feel like the product he received was worth the money he spent? Does he come back to make future purchases? Does he tell his friends and family about how great your company is?
In many cases, the companies that are the best at driving ROI/ROAS are the worst at creating loyal customers and LTV, simply because the whole company is driven by that initial purchase and not the long-term customer relationship. And, in most cases that I’ve seen, even if a company does care about LTV, it’s rare that the front-line SEM team is ever measured against, much less given insight into, the LTV that they are driving.
The result is a world where companies get hooked on marketing like a drug; if customers only buy from your business once or twice, the only way to keep driving more and more sales is to spend more and more money on marketing to drive new customers into the funnel.
When you add something to a Zappos shopping cart, they’re betting it won’t be for the last time.
Of course, there are companies out there that aren’t addicted to marketing. The poster child of this type of company is Zappos.
Zappos doesn’t offer coupons, doesn’t offer the lowest prices, and doesn’t advertise on products unless they know the product is in-stock (and if they advertise a product by mistake, they buy the product for you from a competitor).
What they do focus on is offering the world’s best customer service, free shipping, an incredible return policy, and zealous focus on LTV.
The result is a multi-billion dollar company with ecstatic customers, passionate employees, and incredible growth.
Do you think the Zappos SEM team is compensated solely on ROAS? Do you think they encourage their Web development team to add lots of pop-ups and flashy banners to try to close that extra .02% of customers? Of course not, and yet here they are, the world’s biggest online shoe store.
If Zappos ran this cruise line, I can assure you that the seminars on buying beautiful tanzanite rings would be eliminated and the Diet Coke would flow freely. The price to get on the ship might be a little more expensive, but people would happily pay it and happily return year after year for more cruises.
One of my favorite books ever is Customer Loyalty
by Frederick Reichheld. If you doubt that a customer-first, LTV-over-CPA model can work for your business, read this book (by the way, Zappos has it in their lobby!). Whether you run a cruise ship, a shoe store, or an e-commerce business, the days of just focusing on the initial sale and not the long-term customer relationship are ending. As some might say, that ship has sailed!
Opinions expressed in the article are those of the guest author and not necessarily Search Engine Land.
In one sense, you are doing exactly what you are supposed to do; you’re measuring actionable metrics and delivering increased performance, and you’ll probably get a well-deserved bonus for your efforts. But what happens after that customer checks out (other than the firing of your conversion pixel on the thank-you page)? Does that customer get great customer service? Does he feel like the product he received was worth the money he spent? Does he come back to make future purchases? Does he tell his friends and family about how great your company is?
In many cases, the companies that are the best at driving ROI/ROAS are the worst at creating loyal customers and LTV, simply because the whole company is driven by that initial purchase and not the long-term customer relationship. And, in most cases that I’ve seen, even if a company does care about LTV, it’s rare that the front-line SEM team is ever measured against, much less given insight into, the LTV that they are driving.
The result is a world where companies get hooked on marketing like a drug; if customers only buy from your business once or twice, the only way to keep driving more and more sales is to spend more and more money on marketing to drive new customers into the funnel.
When you add something to a Zappos shopping cart, they’re betting it won’t be for the last time.Of course, there are companies out there that aren’t addicted to marketing. The poster child of this type of company is Zappos.
Zappos doesn’t offer coupons, doesn’t offer the lowest prices, and doesn’t advertise on products unless they know the product is in-stock (and if they advertise a product by mistake, they buy the product for you from a competitor).
What they do focus on is offering the world’s best customer service, free shipping, an incredible return policy, and zealous focus on LTV.
The result is a multi-billion dollar company with ecstatic customers, passionate employees, and incredible growth.
Do you think the Zappos SEM team is compensated solely on ROAS? Do you think they encourage their Web development team to add lots of pop-ups and flashy banners to try to close that extra .02% of customers? Of course not, and yet here they are, the world’s biggest online shoe store.
If Zappos ran this cruise line, I can assure you that the seminars on buying beautiful tanzanite rings would be eliminated and the Diet Coke would flow freely. The price to get on the ship might be a little more expensive, but people would happily pay it and happily return year after year for more cruises.
One of my favorite books ever is Customer Loyalty
by Frederick Reichheld. If you doubt that a customer-first, LTV-over-CPA model can work for your business, read this book (by the way, Zappos has it in their lobby!). Whether you run a cruise ship, a shoe store, or an e-commerce business, the days of just focusing on the initial sale and not the long-term customer relationship are ending. As some might say, that ship has sailed!
Opinions expressed in the article are those of the guest author and not necessarily Search Engine Land.
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