Conversion rate optimisation (CRO) has played a vital role in the digital marketing space for many years. It has been invaluable in improving acquisition conversion rates. But are marketers aware there is a much bigger opportunity for long term revenue generation through digital experience optimisation (DxO)? It involves not just optimising the important acquisition journey, but optimising the full digital experience across the whole customer lifecycle to also drive retention.
DxO’s origins begin with CRO. Historically, CRO involves A/B testing on ecommerce and subscription acquisition flows to increase the percentage of website visitors who convert from prospects into customers, but this does not encourage them to go on to become delighted repetitive customers. DxO is the next evolutionary step. It is the systematic process of unifying and optimising the digital experience across the entire digital customer journey, and channels, to increase acquisition conversion rate, retention and brand loyalty to maximise Customer Lifetime Value (CLTV).
An important aspect of DxO is experimentation, which is undertaken throughout the whole customer journey to drive acquisition, retention and all important ongoing recurring revenue. As well as experimentation being used to support, refute, or validate an insight-driven hypothesis, allowing you to iteratively improve the digital customer experience, it is also an organisational methodology and mindset used to answer questions and guide decisions.
Why move from CRO to DxO?
Acquisition can be a costly business. To repeat the often quoted statistic, it costs five times as much to acquire a new customer as it does to keep an existing one. Therefore, it’s much better to not simply focus narrowly on acquisition, but more broadly at wider retention efforts to drive long term sustainable growth.
This means converting more visitors into happy repetitive customers who spend increasing amounts of money over time – something DxO can deliver. This is important as research by Harvard Business School reveals that by increasing customer retention by five per cent it’s possible to grow profits by 25 per cent – 95 per cent.
Furthermore, in a competitive world, it’s the customer journey that provides brands with the opportunity to stand out. Research reveals that customers who have had a very good experience are three and a half times more likely to repurchase and five times more likely to recommend a business to friends and family than if they have had a poor experience
The ability to deliver value throughout the journey relies on the ability of brands to enable some form of DxO, which allows them to design and continuously optimise key customer journeys across all digital channels. The result is an increase in the acquisition conversion rate, retention and brand loyalty that maximises CLTV, and delivers greater value to both customers and the brand.
To highlight the strength of DxO and its vital role in driving recurring revenue see the graph below.
Finally, brands that focus on retention maximise return on investment (ROI) from all marketing activity across the customer journey.
How can brands move from CRO to DxO?
Moving from CRO to DxO won’t happen overnight. Good starting points include:
- Having CLTV as a key objective, not just acquisition KPIs.
- The entire business must understand and buy into the wide-ranging benefits and value that maximising CLTV, via DxO, can bring in terms of long term revenue growth.
- It’s essential that brands have a mindset to build a culture of experimentation and constantly look to deliver data-driven insights to discover what customers think and how they behave, and use this to optimise the customer journey.
- To follow through with effective DxO, brands should have good governance in the rigours of DxO methodology and processes, in particular the appropriate technology and good data in place.
- Have the right skills and expertise on DxO either in-house or via a third party. Only then is it possible to generate actionable insight, develop DxO strategies and create these through design and engineering.
In these turbulent times those who evolve from CRO to DxO will help their brands to drive customer acquisition, improve the customer experience – thereby reducing customer churn – and unleash long term revenue growth.