The customer journey can help organizations of all types and sizes better understand how their customer base buys, which in turn can help them improve their overall customer acquisition costs.
The customer journey is the process of interactions a consumer goes through. From becoming aware of a need to making a purchase, followed by the post-purchase decision. By understanding this journey, an organization can discover insights about their customers that allow better decisions to be made in regards to better-generating customers.
Improving Cost Per Acquisition
The cost per acquisition (CPA) is an important metric for tracking the performance of lead generation efforts and profitability. When the costs to gain a customer grow too large, the business will struggle to remain profitable. By leaning into the customer journey, organizations can find opportunities to lower the CPA without hindering overall sales.
Below, we have mapped out some of the ways understanding the customer journey can help businesses lower their overall cost per acquisition.
Lowering the cost per lead
The most obvious yet often most difficult way to lower the cost per acquisition is to lower the cost per lead. Start by finding the overall cost per lead, and then categorize the costs by medium and platform.
Use these numbers to determine just which platforms your buyers engage with and at what point in the journey they interact with these platforms. Using the data, you will be able to do a number of strategic implementations, such as:
- Find the sweet spot of lead generation
- Generating leads too early in the customer journey can mean more time and money spent nurturing but can lead to a higher lead-to-sale ratio.
- Restrategizing advertising/marketing strategy
- Improving ad performance
- Exploring more cost-effective lead generation approaches
- Turning customers into referrers
The customer journey provides the opportunity to determine how effective the lead generation process is and can provide insights into how you can improve the process. Leveraging this information will allow an organization to optimize the lead generation process and work to bring down the cost per lead.
Improving conversion rates
Improving your conversion rate even by a single percent can have a major impact on the cost per acquisition. Understanding how and why individuals buy can help position the right call to action in the right places.
Example. Someone finds your organization’s website by searching for “what is [insert product/service]” If the only call to action is “get a quote,” that prospect will likely leave because they are still in the awareness phase of the journey and not ready to buy.
Instead, an organization could offer an additional article titled “The best way to use [product/service] to improve [pain point]. This would help lead the prospect along the customer journey on the website and increase the chances of the individual converting to a lead.
By positioning the right messaging along the buyer’s journey, an organization can improve its overall conversion rates leading to more leads (and ideally sales) with the same level of effort.
Improve the quality of leads
The more wasted leads an organization has, the higher the customer acquisition costs. Using the customer journey, an organization can better understand who their customers are, and what behaviors they take when they are ready to buy.
Once this data is collected, an organization can invest more in the platforms and messages that generate quality leads while investing less in the areas that generate low-quality leads. This can sometimes lead to fewer overall leads but more quality leads which creates a net positive overall effect on both the cost per acquisition and profit.
Improve the marketing and sales process
Knowing the customer journey allows a team to create a more efficient sales and marketing process, ultimately lowering the cost and effort of generating sales. When the customer journey is properly mapped out, marketing and sales will better understand when a buyer is more likely to engage in marketing and when the ideal time for sales is to step in.
This allows sales to spend less time with non-qualified sales prospects and more time on activities that matter. It also allows marketing to nurture prospects better so that the organization stays front of mind as they walk through their journey.
Optimizing the sales and marketing process means fewer leads slipping through the cracks and allows sales to focus on things that matter, unlike following up with unqualified prospects.
Get more out of marketing initiatives
Many organizations take a shotgun approach to their marketing simply because they don’t understand the best approach to reaching their ideal customers. Mapping out the customer journey gives organizations insights into their customer base, allowing them to fine-tune their marketing approaches. With the help of the customer journey, an organization will be able to identify the various touchpoints and the best way to engage buyers at each one.
Doing so will allow the organization to create a better marketing plan generating more leads for less!
Using customer journey to improve Customer Churn, Retention, and Referrals
The customer journey does not end once an organization makes a sale. Very rarely is a purchase a one-and-done sale. Businesses rely on continued purchases or for their customers to continue the service month after month. Even organizations that offer a one-time purchase (like selling a home) rely on the referrals of their happy customers.
That means to get the most out of a sale, there is additional work to be done. Knowing your customers’ journey helps to know what to do and when.
Improve customer retention and repurchases
The customer journey can provide insights as to why and when consumers decide to leave, switch providers, or repurchase a product. For example, most shoe stores know people will likely purchase a new pair of shoes or boots as the season changes. So, they provide incentives to their past customers to come back and purchase another product.
Knowing your audience’s journey and continuing engagement after the sale will keep them engaged which increases the likelihood of them remaining loyal or repeating their purchases with you rather than your competitors.
Limiting buyer’s remorse
Buyer’s remorse is a natural part of the buying process. This can occur even when people have good experiences with the purchase they recently made. Organizations that understand this is part of the journey can prepare for it and instill confidence in their customers they made the right choice.
Turn customers into advocates
Too often businesses ask for a review or referral immediately after a purchase. Depending on the product or service, most consumers haven’t even had a chance to experience the product yet so they can’t rate or share their experience.
However, organizations that have a better understanding of what happens after their customers make a purchase can provide a better post-sale service and can encourage referrals at just the right time.
Discovering the Customer Journey for All of Your Audiences
In theory, all of this makes sense to most organizations. They can see how understanding the journey a consumer takes to their product can improve their overall cost per acquisition. The challenge lies in identifying the steps in the journey and implementing solutions to take advantage of it.
Here are a few actions your organization can take to help map out the journey:
- Interview current customers and existing customers
- Offer exit surveys for customers who leave
- Survey individuals in the market for your product
- Understanding their digital journey through analytics
- Put yourself in their shoes
Going through this process may reveal there are multiple paths and multiple journeys your various audiences can take. This will provide insights into holes in your processes and help find additional opportunities your organization might not have been aware of.
Taking time to understand the customer journey is an investment but it is one worth pursuing. In the long run, it can lead to significant returns in the lifetime value of your client. Knowing this information will allow you to make the most out of your decision-making around customer acquisition and retention.
If you need help understanding your customer journey speak with an expert like the specialists here at MOJO. An expert will help you to understand how to develop a customer journey, what tools are needed and the strategy to turn insights into action.