Is Customer Lifetime Value (CLV) Part of Your Digital Marketing Strategy?
If you’re responsible for marketing your brand online, there’s a good chance the ROI question occupies a lot of your day (and, probably, a fair amount of your evenings). How do you best measure return on investment in paid media, content marketing, SEO and social media?
The answer: implement customer lifetime value marketing into your marketing strategy.
What Is Customer Lifetime Value?
Customer Lifetime Value (CLV) is a forecast of the total net profit attributed to the entire current and future relationship with any given customer. Incorporating CLV into your marketing strategy means you’re always informed about what your customers actually want and how you can best provide solutions to their every need.
So, What’s Next?
Every brand and situation is different, so there’s no easy answer. You can, however, save yourself a lot of time and calcium chews by asking yourself this simple question: Are we even considering customer lifetime value (CLV) in planning and measuring our online marketing strategy?
If your answer is yes, congratulations. You’re ahead of the curve. Stop reading and go watch a cat video.
If you said no, or you’re not really sure, don’t worry and keep reading. Your job is about to get easier.
Why Consider Customer Lifetime Value in Online Marketing Decisions?
There are a lot of different ways to calculate CLV. There are even more ways to apply it to your digital marketing strategy. The important thing is this:
Customer lifetime value (CLV) provides insight into long-term success. This gives you and your brand a more holistic perspective and, ultimately, stronger return on your marketing investment. Among many other things, understanding CLV means better:
The advent of data-driven marketing means brands and agencies alike can parse, distill and apply data to everyday decision-making. Leveraging advanced tactics like CRM retargeting and “lookalike” audience targeting, brands can focus media spend on high-value customer segments.
But success in applying big data is all about perspective. Standard customer valuation metrics, like conversion rate and average order value (AOV), are tremendously important in short-term decision-making but long-term success requires a more holistic assessment of your customer segments.
By calculating and comparing customer lifetime value among different customer segments, you can improve cost efficiency, increase long-term revenue and maximize ROI.
Advanced targeting and prospecting technologies make digital channels ideally positioned for new customer acquisition. Despite this, even accounting for popular retargeting, many brands lose sight of other important, long-term objectives like customer retention and frequency. The most successful brands will be those who forge meaningful, lasting relationships with their customers.
Including lifetime value in your digital marketing strategy will help ensure that the objective stays front and center.
Media & Budget Planning
We’ve come a long way, but brands still get itchy trigger fingers in their quest for more engagement. Who can blame them? Under the right circumstances, channels like paid search can drive short-term revenue faster than any other. But far too many brands put all their eggs in one basket without a strategy, and many brands fail to take a long-term view in media and budget planning.
It takes patience, but including customer lifetime value in your projections and planning process can greatly increase long-term ROI on your digital marketing investment. Considering CLV can help brands ditch traditional and increasingly ineffective “blast” campaigns, focusing instead on nurturing relationships and growing residual revenue.
BONUS: With CEOs and CMOs struggling to make sense of a deluge of analytics data, CLV can also make justifying marketing investment to your boss a lot easier, too. This combines short- and long-term revenue projections.
Are you accounting for customer lifetime value in your marketing strategy? Is your agency? Give us a call if you’d like to talk about a holistic marketing strategy for your business.