Customer Value Optimization with Valentin Radu

You're listening to the no Hacks Marketing Podcast. Each week we take a deep dive into online marketing topics, covering search content, CRO social and performance optimization to help you level up your marketing. No hacks, no shortcuts, only long term success. Here are your hosts, Slobot and Manich and Catherine Kambao.

Welcome to a brand new episode of no Hacks marketing podcast, episode 80. Would you believe that? So today we are covering a topic that is both very relevant to today's economic climate and about as evergreen as anything, especially in the world of e commerce. Customer retention is something that any brand looking for continuous success should invest in. And there's probably no better person to talk about that than my guest Today, Valentin Rado, CEO and founder, I believe, of OmniConvert. Valentin, welcome to the podcast. It's a pleasure to finally get to talk to you.

Hi, man. It's a pleasure also on my end. Thanks a lot for having me. And thanks everyone for listening to this.

Absolutely, absolutely. So before we get into customer retention, which, like I said, it's about as important as anything, especially in e commerce, it will let you survive the toughest of times. It will let you thrive in the best of times. I have an unrelated question. So your LinkedIn bio reads like a movie script, basically. And you know what I mean. One of the things that caught my eye was that you were a butcher for two hours. So I want to ask, why wasn't there our number three?

Wow. It was. I was like 16. My mother pushed me into this job because you need to have a life and to learn how it is to earn your own money. And frankly speaking, the guys that were supervising me went to smoke a cigarette and that was my moment to run because otherwise it wouldn't be our number two.

Okay, so you gotta wait. That's basically the thing. And how good that you did, because everything you've done after that, especially with OmniConvert, we wouldn't get any of that, I guess. So the main topic today, customer retention. Let's start by defining what exactly it is. Like, what is your definition of customer retention?

Yeah, so the customer retention is the ratio of the customers that stick the sticker and stuck around after a period of time continuing to buy from a company. Right. So there are these two definitions. On one hand we have the repeat purchase rate, and on the other hand we have the customer retention. Those two are different. So the difference between them is that the repeat purchase rate shows how many customers place the second order throughout the entire lifespan of the business, while the customer retention shows how many of the customers that were already buying at the beginning of the period continued to buy at the end of that period. So that's the difference between two. Of course it's a vital metric, especially for companies which require a purchase frequency. Right. So if you are selling either wedding rings and divorce rate is not fantastic.

What'S a fantastic divorce rate in 2023? By the.

So if you don't sell these type of products, then customer retention matters and you have to monitor and improve it.

So pretty much for almost any business, customer retention is something they should invest in. One thing I heard you talk about or say in an interview you did last year is use ears, not mouth when you're trying to improve customer retention. I want to hear what you mean by that.

Yeah, so what I mean by that is that as marketers mostly we are action oriented and we try to fix things and we don't listen to what's going on in the heads of our customers enough. And the first thing that you need to do when you want to improve customer retention is to pay attention to the signals and to see what customers are actually saying. Because there are many companies which are bombarding their customers with a lot of product discounts, promotions, follow ups, remarketing, you name it, without ever considering if the customers are actually happy and what's their feedback towards their customer journey, their products and so on. So that's what I mean, right?

And let's say you have a brand that wants to work with you, but they're not, they're on the fence with customer attention. Investing in customer attention. How would you convince them that basically an elevator pitch for customer retention. What would you tell them?

It's all about the money, right? What we usually do is we are using a thing called the E Commerce growth formula which is showing what's the economic value of, I don't know, 5% more customer retention. And once they see that they are already sold. Because any business is leaving money on the table. And gone are the days when you need to tweak the cpc, the ctr, the Facebook ads, the whatever. I mean many companies are waking up to this new reality and understanding that these are the unit economics, right? So it's not only about the traffic, it's not only about the average order value, it's also about the conversion rate, the customer retention, the customer lifetime value. Those things are also important because as there are many, as the competition is so dramatic nowadays is the customer acquisition cost is too high, then you need to extract more value from the customers you already have. And when they look at the data and when they realize how much they're leaving on the table and where they stay against the benchmark in the industry, because we have also the luxury of having data from 3,000 companies worldwide and in a particular vertical, depending on what you're selling, you should be here. And when they say that, when they see that they are below the average, then they are already solved.

That is the best way to sell anything. I mean, I have been last few years I've been doing performance optimization and I talk about that on the podcast a lot. When you show them Your competitors are 30% faster than you are, that's when they really started to think, okay, we need this. So the fact that you have these benchmarks and obviously you have this through OmniConvert and all the companies you had over there years, you've been in this game for more than a decade. Right. So you know what you're talking about. So one, one related question to, to customer retention that I want to hear what you think about this. How did session based tools, primarily universal analytics and you know, as I said in a previous episode, it's Q1 2023, it's mandatory to mention Google Analytics in any podcast that's being recorded on any LinkedIn post because of what's happening. So how did the tool like universal analytics, where everything is session based, so there's no such thing. I mean there is returning customers, but no one goes to that report. Basically, how did that influence how people see retention? Was it in a positive, negative way or not at all?

Yeah. To be frank, what's important is happening post purchase. So while Google Analytics is showing you the visitor behavior, it's also important to look at the customer behavior. Now if you have logged in users. Yeah. And you know their purchase history, then that's it. I mean you can personalize their experience, you can trigger different messaging and so on. While the session based perspective from Google Analytics is not helping you too much to see what's going on. So the journey of any online retailer, online company over here is like this. You have unknown visitors, unknown strangers, and you have known users, then you have known customers, then you have returning customers, then you have ambassadors and super loyal fans and so on. So that's the journey. So unless you have known customers on your website, then you can't do pretty much anything about tweaking the website experience. But you can use other channels to reignite the fire with that.

Right. And so when you say loyal customers, brand ambassadors, you're saying it's good to personalize the copy and the content of the website for those people. And not just the website, but I would guess email messaging, any touch point they have. So the question is really where exactly or what are all the places where customer retention happens or where you can influence customer attention?

Yeah, I would start. So what I would do, what's the touch point? The most important touch point is the first purchase. That's dramatically important because it's like in real life, the first impression matters a lot. So you know where you can find the same freaking product to other 20 companies. Then you should be paying attention to every little step within the customer journey. And that means at the first purchase it's dramatically important to over deliver. Right. So your thing to go smoothly with your, with your, with that order. Once you do this and once you onboard the customers properly, then that's it, you've done it. So the first touch point is important. What kind of expectations you set on the thank you page? Those are the seeds for the retention. Right. If you're selling a product and you do a promise, you need to fulfill that promise. And then once you deliver that product, another important thing is to act like a company that actually cares. If you don't give a damn about what happened with the product and all you do is ask for more money because here's a voucher that expires tomorrow. That's not going to work. Right.

Great points. But a lot of it happens offline as well, I guess with the product packaging with a thank you note in the product. I'm guessing that can be equally important to everything that happens on the site.

Spot on, of course. So once you understand that the campaign with 100% operate is the unboxing, you can use that campaign properly because that's where you put your product and you can put anything else around your product so you can get creative on these things. The bad news is that nobody's doing this thoroughly. Yeah. And the good news is that nobody's doing this. That's the opportunity for companies and for brands which are listening, it's all about acting more like a movie director. Yeah. And to understand how can I give some spikes of dopamine to my customers because if they don't remember about the type of experience that I've provided to them, they will not come again, they will not buy again, they will not talk about this fantastic experience to their peers. So that's how it goes.

I think that the 100% open rate for unboxing that, that's that's the episode teaser that I'm going to put on because that, that is just brilliant. That is the best quote you could have given me. So basically a brand should not only show them that they care, but they should, number one, start caring, actually caring about the customer and then make sure it's noticed. So the motivation is different. It's really about making the customer happy. And if you do and if they notice, they will come back. Like you don't need a voucher, like you said, you don't need a voucher that expires tomorrow. That's just a hack that does no good. Yeah. How about email campaigns? I believe those, I would imagine those are huge in customer retention. But when is it too much? How do you know when not to go overboard.

It's pretty simple. The data will reveal that and that's why we built a tool for it. Because what's happening is that we have the average days between the transactions, right? But these are varying according to what you're selling. If what you're saying it's a single sku, then it's pretty simple, right? You see the average time between the transactions. Now if you sell different categories, let's say you have a company that has 100 SKUs or 1,000 or 10,000, then the purchase frequency and the days between transactions are different. So what is important is to understand how to do the follow up and to make sure that the customers are extracting value from the products that you've sold them first time. And that means if you craft the email campaigns, the onboarding campaigns around the progress that they are trying to make with those products, that's jackpot, right? You will always pay attention to a company that truly invests in you extracting the value from what you've just paid. But if that company is not paying attention and all they are doing is bombarding you with emails at the cadence where you simply can't buy again. Right. So it was a company, I was buying this type of yoga tea, whatever I was in a healthy swing towards, yeah, I'm gonna drink all this green stuff. And then I become immort and they started to Walmart me without basically consuming their product. So I had this can and they said buy again man. I just bought it. It's like, it's not like I'm drinking this instead of water. Yeah. So you need to know when to do this type of follow up email campaigns. And data is revealing you because you look at the cadence of the purchases.

This of course is available of Course it's available in OmniConvert and we'll talk about the specifics and what OmniConvert can do for your. But I think a big problem there is the disconnect between the product team and the marketing team. And marketing just wants to push as many messages as possible. They don't even check. Is this something you would drink every day like you said? I mean, obviously not. It wouldn't make sense. So let's say, I want to say one more thing about retention, a subset of retention and that is offering products as auto subscription, auto replenishment. Is that a big thing in retention? Is that something a lot of brands should consider or do or does it depend on the vertical?

Yeah, of course, depends a lot on the product, but it's a great thing. So if you have products that are replenishable and you know the cadence where you can do, do, do this type of thing so that customers truly want the next product. Yeah. Because they need it. Right. Then that's, that, that's a great thing. Replenishment though, it's, it's a hard to, to get animal when you have multiple SKUs. Yeah. If you have a single sku. Let's say there are the, there is a company here which is sending a toy box every month. Yeah, that's pretty straightforward. You want that toy box, you play with your kid, they are happy about it, they are anxious to see the next one. And that's it, that's, that's working. But if you have 2,000 SKUs, how you do, how do you do replenishment? You know, because you have, you buy tea and bananas and shampoo.

All right. Then it's a nightmare. It's not possible. Of course it's not possible. But. Yeah, but I think one really cool thing I saw it was I think American or British skincare brand where they ask you, you want to auto replenish, commit to three cycles and get 20% off on each one. Which I think is a mistake to say you want to commit to three cycles, especially if you're buying for the first time. So basically some skincare products, but when you, when you change to auto replenish, the button changes to set up auto replenish instead of add to cart and then you get a pop up that says do you use two pumps of skincare lotion or one pump morning and evening or only morning? Only evening. And then they tell you we recommend to do it every three months and that's how you set it up. Which I think is great. But But I think with an option like Auto replenish, having a three cycle or a four cycle commitment is just a disaster, especially for first time buyers, which maybe it's better to follow up and ask them to switch to autorespondation a month later or whenever it is. So before we go on to OmniConvert and I really want to hear about the tool because everything you told me sounds incredible. Where do you start? Let's say you have an E commerce brand that just pays Zuckerberg a lot of money to get ads. Let's say the conversions on site are not horrible, the website is not broken in any way, but the retention rate is not great. So where do you start? Like what is the first thing you do with a brand when they want to start with retention?

Yeah, the first thing that I do with the brand is RFM segmentation. So RFM stands for recency, frequency and monetary value. With that you identify the best customers, the golden goose which is giving you the golden eggs, you know which are the best customers. Then you look at what they are buying, what are the product anomalies and you, you see what's producing the stickiness, what's producing the kind of consumer behavior that you're after. Then you do interviews depending on how many SKUs you sell. If you have a marketplace with multiple SKUs, you can't do jobs to be done. If you have a direct to consumer selling few skus, then you can do jobs to be done interviews. Because with this type of interviews you understand what's causing the customers to buy, what is the purchase behavior of your best customers and then you improve the acquisition. Because if you acquire the right customers with the right products, then your homework is done in terms of customer retention. Then improving this acquisition. The next step is to do onboarding differently towards allowing customers to get more value from your products. Like it can be instructing them on how to use the product, giving them nudges like, hey, you need to buy this every, you need to take these pills every day, you need to, I don't know, drinking yoga, tea, whatever. That company, they were smart. If they would be convincing me to get into the habit of consuming the product, I would be buying it again. So there's no retention without consumption. So the job is to make them consume the, the product. So basically RFM segmentation, the jobs to be done, interviews, then ongoing feedback. Yeah, Getting feedback from the customers, putting the NPS on autopilot. Yeah, Seeing what kind of things are harming the NPS. Because every new, every point extra NPS equals between 1 to 3% more customer lifetime value. So basically if you know these type of things, you have to be customer centric, you have to monitor customer experience and after that it's all a matter of ongoing optimization. It's pretty much like SEO or CRO. It's you look at the funnel is the customer journey. Yeah. And you identify which are the best moments, the best parts of the customer journey to improve and to optimize. And then you launch all sorts of experiments and you see how these are affecting positively or negatively the customer retention and lifetime value.

Right. So the setup really is the big project set up basically an autopilot for customer attention. And when you say monitor customer voice, I guess that includes actively asking the customers, like going directly, not by a here's a survey, but maybe even talking directly to your most valuable customers, calling them or sending them an email. Does that make sense?

Exactly. So that's all a matter of having enough sample size so that you understand what's going on from your real customers. And that's ending the loop, closing the gap between you and your customers. So depending on your on the scale of your business, you can pick up the phone and call them or you can automate this type of surveys. Sms. There are companies which are having automatically some Facebook remarketing campaigns to gather more responses for their from their first time buyers because they know that it's important and it shows them that they truly care. I don't know, we've sent you some shoes, do they fit you or not? So that's also a sign that the company is customer centric and you cannot.

Be a customer with good retention if you're not customer centric. I guess that is the bottom line. You may get lucky with it but you cannot be really, really successful. Now let's get on to OmniConvert. Tell me, how long has the company been around? What's the story of OmniConvert?

Yeah, the story is like this. I was pissed off and frustrated because you were spending too much money on Google Ads and I've seen started to dive into the data. I was wasting my life in Google Analytics.

When was that? When was that?

2009, 2010 and 11. Until I realized the truth is not in Google Analytics. Let's ask the customers. After asking them we had a lot of ideas and we've started to tweak the website. And then the programmers were pissed off because we were asking too many changes. And then I said let's build a tool to allow me to change the website and eventually we've built the ancestor of what is now OmniConvert, which was an A B testing tool. After that I realized that after this impact that I had 60% uplift in our own conversion rate. And after realizing how ecommerce can grow, I've decided to go full throttle on building a software as a service company. After that, building the company, it was a lot of work, of course, very hard days. But eventually things started to catch up and we managed to have hundreds of customers, thousands, thousands of users and a lot of feedback. Tweaked the website, tweaked the product, and eventually, three years ago, we realized that, you know what? A B testing and conversion rate optimization is not enough. We should be optimizing for retention and customer lifetime. And that's why we've built OmniConvert Review. And now we have two products. One is Explore, which is an A B testing and CRO platform. And the other one is Reveal, which is a customer segmentation and customer value optimization tool. That's the backstory. The beauty is that I have access to all these. For a data git line me to have access to all this data allows me to identify the patterns and to constantly improve the technology and also the methodology. Because I'm also teaching these things. We have a CVO Academy where we have 14 hours of content where we teach people around how to improve lifetime value and retention. I teamed up with a lot of cool people, experts in email, in customer experience and so on. And basically that's, that's where we are, that's what we do.

That is an impressive story. I want to hear more about Reveal, but before I do, you, you've been in this for like almost 15 years now. To hear someone speak with so much enthusiasm still is just refreshing. Let me say that because it is just a pleasure to hear you talk about this. So Reveal, what does it do exactly? Since that's the topic of the episode today.

Yeah. So it gives clarity around what matters. Yeah. It allows companies to monitor lifetime value, NPS retention, average days between transactions and whatever, everything around around this. It's allowing E commerce and retailers to segment their customers. It allows them to monitor their nps, to send this type of surveys and research. And it's also allowing them to push different experiences to email, website, ad campaigns, sms, you name it. So basically it's a customer value optimization platform. That's. That's what we do. That's how we are positioning ourselves. Because it's not about only showing you the data, but putting these type of automations and scenarios on Autopilot based on what you know about your customer. That's, that's what we do.

And does it work with any e commerce platform? What do you support?

Yeah, we work with Shopify, with BigCommerce, we have worked with Magento, we have direct integration with VTEX or any other.

Got it. So basically you're importing the data via API and then you're analyzing it on your servers versus slowing down whatever server it is. Okay. Of course that's the best way to do it in my opinion. And do you want to share some. How can people sign up? What is the onboarding process like to get started?

Yeah, you go to omniconvert.com where you go to Shopify, look for Amiconvert reveal and then you'll be amazed about some aha that you've never seen because we have a one month trial also have our customer success which is coaching you down the line to extract these type of insights and to put them to work. What I must warn everyone is that the game, the e commerce game is getting so let's say complicated right now, sophisticated that you can't do the same things to have the same results. So and we, we are seeing that there is a need in the market and we are basically we are where we should be because we are seeing an influx of companies looking for advanced ways to level up their e commerce because this type of business model doesn't work as it used to. Yeah, right.

That's very interesting. So reading a two year old blog post about an e commerce hack like how to get successful in a month, it's not going to work anymore. That's basically what you're saying. So before we finish and I really urge everyone to just sign up for a trial for Omni Convert to reveal and you have a one month free trial and then you decide if you want to continue using it, what do you think is going to be the next big thing in the world of customer lifetime value, customer retention, Something that's going to just come out of the blue and surprise everyone.

Yeah, so that's something that we're also in the labs working at it. It's automatically treating the customers based on what they've bought. And I'm not talking here about product recommendations, I'm talking here about automatically tailoring the messaging, the offering and replenishment and the emails and the ads according to all that you know about your customers.

So that's the future, like ultimate personalization basically on every single level. I would guess AI would have to come in at some point, especially for large, large companies. When do you think that that is going to be reality?

I guess we're not so far from that moment. I guess my bet is that we are four or five years away from technologies that are completely automatic. Yeah. So basically they, they treat you according to all they know about your, your, your history. What, what are other products you looked at before buying this product? They look at how you've bought, when you've bought, what is the cadence of the products that you've bought so that they, they can, let's say, have this tailor made approach around who you are and what you bought.

Right. So goodbye privacy. Basically. That's kind of one way to look at it.

You know what, I was looking at some stats the other days and 78% of the customers want to be tracked. They want that, they want better offers and more relevant offers. And so basically it's all a matter of what you promise and how you bribe them or tease them or persuade them into sharing data with you.

Right. And we're talking about first party data only here, not 30 party. And data sharing and selling the data. Yeah, of course, of course.

We're talking about zero and first party data. Yes.

Okay, that is a completely different thing. That's fair in my opinion. Selling and sharing. I think people should draw the line there. So hopefully that's not what the 78% people meant. On that note, let's end the episode. I really want to thank you, Valentin. Like I said, to talk with someone as enthusiastic as you are about their job that they've been involved with for 15 years.

I'm writing a book about it. Man, I'm so obsessed.

When is it coming out? Why haven't we talked about that?

We launch it.

Okay.

Going to be the first book around customer value optimization. So all my 15 years of work in e commerce condensed into this book. I'm really excited about it.

You know what, when, when it's out or when it's ready, if you can send a copy, we can review it, we can talk about it on the podcast. It will be a pleasure to promote the book and we can have you on. You're going to have your book tour. Like when you write a book, you must have a book tour. So if you want to come back to the podcast in April, May, whenever it's out, it'll be a pleasure to have you back. And on that note, let's end the episode bouncing. Thank you to everyone who has listened to this episode. Please consider rating and reviewing at your podcast platform and I will talk to you next week.

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