Why a user and not a customer?
  • 20 Mar 2023
  • 2 Minutes to read
  • Contributors
  • Dark

Why a user and not a customer?

  • Dark

Article Summary

Why a user and not a customer?

Because it's not about one sale, it's about follow-up sales. Not profit, but lifetime value. There’s a new perspective on how you make money as a company – a way that's more consistent, deep, and prolonged. This is the model the new generation of companies are looking to.

The difference is this: a customer walks into your store, buys something, and leaves, but a user keeps coming back for more.

Think about opening a bar. If you want to grow your business, you can't rely on random people bumping into your front door and grabbing a beer. Instead, you need to get people to become regulars.

The new age of connected consumer electronics offers huge opportunities for this kind of approach – where gaining a loyal user is much more powerful than a one-time customer.

How engaged users grow your lifetime value (LTV)

LTV is the total amount a user or their household is worth throughout their experience with your brand. 

Instead of calculating the price of a lightbulb, work out the total cost of all the devices that were bought for that household. This will give you their LTV.

With every new customer that comes your way, there are opportunities for selling more complimentary devices, accessories, and replenishment products. But these rely on the customer being motivated to return to your store.

When you treat those customers like users and create meaningful relationships with them, you can create that motivation and catch them at the perfect moment for their next purchase.

Increasing your bottom line goes beyond sales

It’s not only direct sales that lead to your bottom line. From customer support cases to returns and replacements, there are plenty of other factors having an impact.

Let's say, for example, that you sell $100K of devices in one month but have a lousy 30% return rate. You're losing a big chunk of revenue from those returns, plus all the duplicate logistical costs for shipment and handling.

Now imagine that you invest a little time and effort into your device's onboarding experience and manage to boost the success rate by 20%. Suddenly, you're looking at $6,000 added to your bottom line.

Build a brand, not just products

Ratings, referrals, and recognition can have a massive impact on your sales performance.

Studies have shown that an increase of just 0.1 stars in Amazon ratings can lead to a 50% sales boost.

And in this new world of sales, you should see retention as another weapon in your arsenal. Retention as a user, retention as a recurring customer, retention in replenishment, and subscription purchases.

Creating real and meaningful relationships with your users can drive sustainable growth for your brand. And by improving the user experience, review scores, and LTV, you'll make a serious impact on your company's bottom line.