Cost per order – The first step toward understanding customer lifetime value

The challenge facing marketers

In today’s world, the challenges facing marketers can seem overwhelming. More than ever, marketing is regarded by CEO’s as a revenue-driving function; one that should have a demonstrable, quantifiable effect in terms of boosting ROI. In fact, 70% of CEO’s in a recent study said that they expect CMOs to lead top-line revenue growth.

 

This widening of the marketing remit is taking place within the context of an explosion in the quantity (note, not the quality) of data. Each of the myriad of channels through which marketers are spending is feeding back its own fragmented, siloed, and often biased analytics reporting system. This reflects the increasingly complex customer journey in today’s marketplace; with some brands expecting customer acquisition to encompass 10+ touchpoints, both online and offline.

 

This digital disruption, in tandem with the aforementioned responsibility of marketers to drive revenue, creates something of a ‘perfect storm’ for those who are not equipped with the right data. This changing landscape can only be navigated through data-driven decision making; instinct alone will not yield optimum ROI.

 

 

Data-driven decisions turn challenges to opportunities

The ideal end state for any marketer in terms of information available to them would be to understand the precise customer lifetime value (CLTV) of each of their customers. This would enable them to work out which customers are worth their cost of acquisition, which aren’t, and exactly where to focus on when pursuing particular objectives and KPIs.

 

Fospha recently took the first step toward providing CLTV to one of its clients, in the form of developing a reliable Cost per Order/Cost per Customer insight for them.

 

Up to that point, the client had been struggling with fragmented marketing costs at aggregated level across their system, equating to a lack of visibility of actual marketing cost at either customer level or order level.

 

By stitching together click-level individual costs incurred within each customer journey to conversion, within a customizable 30 day timeframe, Fospha overcame this lack of visibility. This yielded a precise ‘marketing cost’ for each individual customer or order, incorporating each of the touchpoints they hit on their journey toward conversion. This was then compared against the revenue generated by each customer or order, so as to calculate the precise ROI for each. We were then able to operationalise our insights in a number of ways. Namely, through paid search bid adjustments that exclude those customers who generate negative ROI, email segmentation exclusively targeting customers with the highest cost per order, ranking of customers based on their ROI, and leveraging of Facebook targeting of ‘lookalikes’ to boost social ROI.

 

 

Next steps: Toward CLTV

The next step in this project will be to integrate any outstanding cost sources, alongside incorporating up to date CRM data. This, along with the gradual assimilation of additional variables into the platform, will eventually result in a huge step toward the ‘perfect world’ of true customer lifetime value visibility. This really illustrates how we partner with our clients on a journey, incrementally working toward complete visibility of CLTV and wider data, empowering step-by-step improvements to their marketing ROI along the way using our ‘better data, better decisions’ approach.

 

Data-driven decision making, incorporating insights like cost-per-order, allows marketers to turn the challenges of today’s marketing landscape into opportunities.

 

 

 

 

 

 

 

 

About Fospha

Fospha provides its clients with an accessible, centralised, and actionable data platform. Our solution can seamlessly integrate disparate performance data siloes and present clients with a comprehensive – and most importantly – accurate picture of their marketing performance. By combining MTA with an extensive list of different datasets, Fospha provides a single interface where clients can understand how buyers are interacting with their brand, understand where they’re getting the best return on investment, and optimise their marketing strategy accordingly.

 

James Scott is CCO at Fospha, If you’re interested in connecting with James or Fospha to compare ideas, please drop us a note at:

james.scott@fospha.com

 

 

 

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