Being able to balance customer acquisition costs (CAC) and lifetime value (LTV) has become a crucial factor for long-term success. While attracting new customers is essential, it is equally important to maximize the value derived from existing customers over their entire lifetime. By focusing on maximizing LTV, businesses can offset the expenses brought on by acquiring new customers and achieve sustainable growth.
In season four of Hit Subscribe, we chatted with Anna Simon, Director of Digital Marketing at Primal Kitchen, about strategies for optimizing the shopper journey and maximizing the value of customers. This blog post highlights the main lessons from the conversation, which was a summary of findings and recommendations from her panel on the same topic at ChargeX, our annual ecommerce conference.
Key takeaways
- Balancing customer acquisition costs (CAC) and lifetime value (LTV) is crucial for sustainable growth, and maximizing LTV can offset expenses associated with acquiring new customers.
- Primal Kitchen's success in increasing average order value (AOV) and LTV is attributed to strategies such as rewarding loyal customers, utilizing curated content, offering personalized bundles, and implementing effective cross-selling and upselling techniques.
- Providing free gifts with purchase can optimize the customer experience, build brand loyalty, and increase customer satisfaction.
- Personalizing the customer journey and prioritizing existing customers are essential for DTC brands to maximize LTV and navigate the challenges posed by rising CAC.
Primal Kitchen’s journey
Primal Kitchen is an industry-leading brand specializing in real food condiments, dressings, sauces, and pantry staples. Founded by food blogger Mark Sisson, Primal Kitchen aims to make clean eating easy and exciting.
Over the years, the brand has grown from a small startup to a disruptor in the industry. In 2019, Primal Kitchen was acquired by Kraft Heinz, providing them with a wider reach and more opportunities to serve consumers seeking high-quality products.
Creating a healthy balance between CAC & LTV
Anna participated in a panel discussion at Charge X alongside several other DTC merchants that focused on strategies for increasing average order value (AOV) and LTV throughout the shopper journey. They explored tactics such as rewarding loyal customers, implementing product bundles, and leveraging cross-selling and upselling.
This conversation was timely considering the rising CAC and just how important it is to maintain a healthy LTV:CAC ratio.
5 strategies for optimizing the customer experience
Below we’ll cover some of Primal Kitchen’s tried-and-true strategies for maximizing the value of the shopper journey, which in turn can help brands increase AOV and LTV.
- Drive loyalty & reward high-value customers
Anna emphasized the importance of rewarding loyal customers and nurturing strong relationships with them. Primal Kitchen has seen that loyalty program members place twice as many orders as non-members, and their average spend doubles in 12 months.
The brand offers a variety of rewards and incentives, going beyond discounts to provide value through personalized marketing campaigns, exceptional customer service, and exclusive offers.
- Curated content is key
The value of high-quality content has been consistent in engaging their target audience. They maintain blog posts on their main website and their founder’s blog, offering recipe inspiration and lifestyle content related to clean eating. By providing recipes with five ingredients or less, Primal Kitchen caters to busy individuals looking for quick and nutritious meal ideas. Content marketing remains a valuable tool for driving traffic and engaging consumers.
“I think there’s a lot of value from a search engine optimization standpoint to continuously create new content, especially dependent on where an individual is along their shopper journey.”
–Anna Simon, Director of Digital Marketing, Primal Kitchen
- Increase AOV with personalized bundles
Primal Kitchen offers pre-configured bundles based on seasonal themes or starter products, as well as the option for customers to build their own bundle. These bundles help increase AOV and encourage repeat purchases. Anna also highlighted the importance of curating bundles that align with seasonal trends and customer preferences in order to drive the most success in conversion.
- Find the right time to cross-sell & upsell
The panel discussed the effectiveness of cross-selling and upselling. According to Primal Kitchen’s data, cross-selling works best when suggested after a customer adds an item to their cart but before they check out. Primal Kitchen uses pop-ups to offer related products that complement customers’ purchases.
On the other hand, upselling is most effective during the consideration stage of the buyer journey. Offering higher-end versions of products or bundles can lead to larger purchases.
“By offering a higher-end version of a product or a bundle, it can help customers feel like they’re getting the best possible option that may result in a larger purchase.”
–Anna Simon, Director of Digital Marketing, Primal Kitchen
- Free gifts can optimize the customer experience
Lastly, Primal Kitchen has also experimented with free gift-with-purchase promotions. Instead of just offering free shipping after meeting a minimum threshold, the brand gifts a free full-size product, adding value and encouraging customers to try additional items. This strategy has proven successful in building brand loyalty and increasing customer satisfaction.
Learn from those who have walked the path before you
DTC brands can learn from Primal Kitchen and these five strategies that will help optimize the customer journey, leading to higher LTV so they can retain customers. As CAC continues to rise, it’s never been more important to personalize the customer journey and make the extra effort to show how much you value your current customers.
Check out the full interview with Anna, as well as conversations with other industry experts, on our Hit Subscribe podcast.
Sources
[1] Optimizing the shopper journey with Primal Kitchen (Podcast)
[2] The importance of LTV:CAC ratio for DTC ecommerce brands (Blog)
