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Customer Lifetime Value

Tools to improve your customer lifetime value CLTV

Marketers often don’t know the cost of acquisition for each customer or each order. Marketing spend is generally analysed at an aggregate, overview level: the amount you spend versus the amount of revenue generated.

The impact of aggregate comparisons is that marketing decisions are made by channel, which involves scaling up or down investment in a particular touchpoint. However, marketers should instead build a user-level strategy which precisely targets customers with the highest ROI – those who generate the most revenue relative to the marketing cost of acquiring them.

3 great hacks to drive revenue when you know your customer ROI:

1) Paid Social: Identify high-value customers, and find even more of them
Best Tool: Facebook

Firstly, marketers should rank existing customers according to their ROI. After doing that, they should create a Facebook lookalike audience consisting of the email addresses of users who Facebook deem to be similar to existing high-ROI customers, i.e. users who also like their company’s Facebook posts or share the same interests. This will give marketers a specific set of potentially high-value customers to target.

2) Paid Search: Bid adjustments to target high-value customers and exclude costly targets
Best Tool: Google Adwords

Once marketers have identified certain trends from high-ROI customers they can then target users who display the same trends with bid adjustments. Marketers use bid adjustments to decide where to show their ads according to a number of variables, such as anyone who clicks on a website from a smartphone, at a certain time of day, or from a set location. Companies can even exclude certain IP addresses with the Bid Management tool to avoid customers who might have a negative ROI, meaning they’ll be spending their money more wisely.

3) Email: Target different cost groups with relevant emails
Best Tool: Marketo

Targeting customers with the highest cost per order via email is a good strategy to try and prevent these customers from returning to via paid channels. Acquiring them through email instead will significantly reduce cost per acquisition. Marketers can also segment customers to increase the probability that they’ll re-purchase via email as opposed to paid channels.

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