How Design Thinking Can Lower Customer Acquisition Cost & Increase CLV

Andreea Encuțescu

Brand Experience Designer

28 sept, 2020

In 2018 a study conducted by McKinsey consulting firm showed that design-led companies have 32% more revenue than other companies. After they analyzed 300 public companies over five years, McKinsey found that:

“Those with the strongest commitment to design and the most adept execution of design principles had 32% more revenue and 56% more total returns to shareholders,’’ according to McKinsey’s study.

They sustained that design is the key to differentiation, more than that, the way for the companies to succeed and for a better understanding of the customers’ needs.

On the other hand, they agreed with appointing designers in decision making roles inside a company and also suggested that the top management should pay more attention to the design ideas and embrace the design during the process.

What can you learn from McKinsey’s study?

All you should know is that design thinking has the ability to build strong emotional connections.

Design-led companies are aware that design thinking it’s about iteration and failure, otherwise you can’t get closer to your customers. These types of businesses focus on a customer-centered approach in order to build everything around their customers’ needs.

You don’t need to spend 10.000$ every month for aggressive marketing campaigns, this is what you should do instead:

I. Firstly, lower customer acquisition cost

1. Embrace user testing early

User tests take part in the learning process, so the more you know about your customers, the better, especially in the beginning. Companies should ideate, learn, build, and, at the end of the process, to launch the product, not the other way around. Think about the time and money you save by doing this.

  • Stop overspending - find out who’s your customer before you create the design, not iterate and change messaging each time you learn more about the customers.
  • Create an MVP - in the beginning, when you just have the idea, create something simple, and see if customers are interested. When you find out who’s the customer you should focus on, talk to them, and try to keep those eager to try your idea out closer.
  • Use prototypes - find what you want to test and focus on that, no need for a full blown-website. Do you want to focus on the navigation? Then don’t create interactions or crazy visual elements that can distract the user from what you want to test.
  • Hire design sprint, brand sprint, and agile software development agencies - these are the agencies that see user testing as the core feature in their process.
2. Use Webflow for website development

You don’t need to hire a developer to write code, spend months on it just to build a website. Hire a visual developer who can do this faster for you, allowing your team to update the website easily without needing to pay a developer on a continuous basis.

  • Post articles easily — Webflow has a great CMS system with an easy to understand interface that everyone can use, including your team. No need for external help or extra costs.
  • No need to worry about additional costs — Many amazing websites are built on Webflow, all without needing plugins or templates. So, you don’t have to worry something could break because of a plugin. Also, servers scale with the number of views you get. No need to call the developer again when something goes wrong.
  • Great SEO — Webflow helps you ‘write’ clean code, so you don’t have to worry about something affecting the SEO. Also, tweaking the SEO is relatively easy and can be done by anyone.
  • Update the website very fast — Have you done more user testing and research, or just need to update the website visually? It can be changed quicker than changing the code so you can launch the new changes soon.
3. Create a community

You’re not just a company, you are building a community. This is also how you increase customer lifetime value and lower acquisition costs.

  • Word of mouth > advertising - Think about your customers as a community. Interact with them, and create a space for them to talk about your product (social media, Reddit, or create your own forum). Sounds great? Now, you have free advertising with the potential for them to bring even more friends to your product. Why does this work? Because it isn’t just another product or brand anymore, but a place for them to interact with other people like themselves who love your product.
  • Personify your brand - Think of your brand as a person. How would you imagine it to look like? How would you like it to act? How would you like it to speak, and whose problems to solve? Now, try to express it in everything your company does. I can’t find a better example than Discord for this. Their main focus is on gamers, and you can see that from the way they look (many illustrations on their website, looks just like a game), and how they act and speak (makes a lot of jokes about video games on Twitter, while keeping a friendly tone just like the way gamers talk to their friends).
  • Create inside jokes - People love jokes and funny people. Your brand isn’t any different. Take Tesla as an example who didn’t spend a penny on their advertising, and customers did the advertising for them for free. How? They made their cars make ‘fart’ noises, their CEO makes memes, and blasts a Tesla into orbit.
4. Use social media at your advantage

Everyone is on social media. Find out where your audience spends their time the most and be there.

  • It’s free - although you’ll need to spend money on a social media marketing strategy, you can hire junior designers to create the design for your posts, as you should have brand guidelines and style guides they can follow to make sure everything looks the same.
  • Copy your customers - study how your customers are using social media and apply the same things to your strategy. Do they use videos or a lot of gifs? Do the same.

II. Now, increase the customer lifetime value

1. Focus on branding first and invest in it a lot

You can’t have recurring customers without branding. You’ll have competitors that will try to beat you at your product’s features, but not at your brand. Those who would try to beat you at your brand will fail.

Your true customers will notice the ones who copied your brand and will distrust them. Branding is the bridge between your product and the customers.

  • Lowers your marketing expenses - Turn your company into the guide your customers are searching for to solve their problems (see Storybrand framework). Make it talk, act, and think like the best version of themselves, the version they will become when their problems are being solved by you. This way, they will recognize you as a trustworthy source very fast. No need for spending a lot just so they can see your ad as many times as possible, and maybe sometime they might be curious enough to click on it.
  • No need to spend a lot on the design of ALL brand touchpoints - Spend a lot on the most important ones in branding first: brand strategy, brand guidelines, design system, website, and logo. Junior and intermediate designers can do the other brand touchpoints at a lower cost, as they will follow the brand guidelines and design system created by some design experts that you paid a lot for at the beginning, saving you money down the road.
2. Measure the design’s impact

The companies with great results understand that design is a top-management issue, so they track their design performance the same way they do with their costs and revenues.

  • Track your conversion rate and views - Are views increasing or decreasing? Where would you like them to be and how much money does that mean for your business? Is your conversion rate lower (1%) or higher (10%)? Check this article for conversion rate benchmarks.
  • Observe how many people sign up before canceling - It could be an indicator that they are not satisfied with your product, or it can be something as simple as they didn’t understand the next steps. Ask for feedback and do user tests to solve this.
  • Time the page load speed on every device - People are getting more and more demanding and expect everything to work as well as possible. Anything higher than 3 seconds to load a website is too much.
  • Keep an eye on the awareness of your brand and how many people share it around the web. You can use tools for this.
  • Keep your customer satisfaction in check by asking for feedback and making it easier for them to submit feedback every time.
  • Check the time it takes to complete certain tasks on the product or website.
3. Give autonomy to designers

Creativity is problem-solving. Design is thinking made visual. It would be a shame to take these people’s creative freedom away by making them do boring tasks that don’t help them or you either. Let creatives help you solve your business problems as Spotify and Transferwise already do.

  • Put designers into decision making roles — Designers who can communicate how creativity and design thinking translates into quantitative business results can use their creativity to improve business outcomes that deliver long term strategic goals. Apple, PepsiCo, J&J, and Philips Electronics are already having a CDO (chief design officer).
  • Before taking new marketing decisions, see if design thinking can help you out first — when thinking of investing in new marketing strategies, firstly think about your already created touchpoints and see if a design thinking decision could help your company better instead.
4. Put the customers and their experience first

Your brand is never finished, continue to iterate.

  • Invest in user experience, customer experience and brand experience — Your brand, product, the customer support people, and everything that has to do with your company is an entire experience on its own for your customers. Focus on building and expending this experience, and those who aren’t yet your customers will be soon.
  • Ask for feedback — Ask customers to take short surveys often. It is extremely important to know your customers’ opinions. This is how you can create the experience they want and expect from you.
  • Continue to test new features — Test with users that don’t know you, but which can be a potential customer, and with a few current customers too. It’s important to have a mix of those who know you (2/5 users), and those who don’t know you (3/5 users). You don’t want to spend money on investing in something that customers don’t want, or in something that might alienate them.

Lastly,

Remember that design is more than aesthetics. It is the thinking behind it that helps you build an emotional connection with the customers through the experience you provide to them with the help of your brand touchpoints.

Focus on doing user testing and asking for feedback every time you want to implement something new, and the brand and customer experience will get better while making sure you don’t overspend in things that don’t help anyone, especially your customers.

+ Brandenstein's Brand Sprint Guide for you to rebrand in 3 hours

Thank you
for reading!

No audience?
Awaken your brand personality.

See all articles

Hello! Nice to meet you.

We are Brandenstein and we believe in the power of brand differentiation through its personality.

meet the team

Ready to start your project?

Contact us today and start your journey of giving your brand a personality!