Growth October 30, 2020

Tip: Increase LTV by selling the right plan instead of the priciest plan

Growth Bites @growthbites

It's easy to get caught up in directing prospects toward your more expensive plans, but that might be short-sighted. Increase lifetime value by shifting your focus from the highest price to the best fit.

A customer's value goes well beyond the immediate price tag. It's also about how long they stick around. So instead of using all the tricks up your sleeve to cajole people into purchasing a pricey plan, focus on getting them on the right plan. As @iammarcthomas of Doopoll points out, selling customers on features they won't use will only make them question the usefulness of your product. Why give them one more reason to cancel when acquiring a new customer is so much (~5x) harder than retaining one? Start by shifting your focus from the highest price to the best fit — that in itself will create ripples throughout your sales and marketing efforts. Then edit your pricing page, promotional content, etc. Be clear about the pros and cons of each plan. Accurately represent which type of customer will benefit most from what plan. And avoid tactics designed to do anything other than get people what they really need.

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  1. 2

    This reminds me of one of my earliest experiences in sales, working at Staples selling computers. This was in the late 90's and very early 2000s when many people were still buying their first home computer, or in some cases sending a kid to college with a computer for the first time.

    My coworkers would focus on trying to sell the most expensive computer the customer would try to buy, but I'd spend time upfront trying to get a sense of what the customer wanted to do with the computer. Was it for making documents? Email and internet? Playing games? Graphic design? Personal accounting or small business stuff? Something else?

    Based on their answers, I'd guide them to the best value, and sometimes actively talk them out of buying things they didn't need. I was earning the sale, but I was also earning trust, which meant that every time the customer needed an accessory or upgrade, or even just computer advice, they'd come back to Staples and they'd specifically ask for me.

    I was taking a customer lifetime value approach instead of maxing out the upfront sales. I earned more commissions this way, too!

    1. 1

      Dang, your LTV game was strong before you even had your own business! 💪

  2. 2

    Love it. Thanks for featuring this. In the end I published this in depth comparison page discussing the pricing in great detail.

    1. 2

      That's awesome 🙌 Love this approach!

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