Using Lifetime Value to Optimize Your Digital Marketing Investments

How to use data to uncover the lifetime value of your customers and optimize your marketing for the best ROI on your marketing spend

Ben Legg, CEO Adknowledge

Using Lifetime Value to Optimize Your Digital Marketing Investments!

@bglegg

@adknowledge

2 Customer Lifetime Value: Combine Data and Insights to Optimize your ROI!

Data Source - Gartner

The Digital Marketing Landscape is Overwhelming…!


Which Adtype Should I Use?


Where Should I Show My Ads?


How Can I Track and Analyze Users?


What Should I be Measuring?


Who can help me?


5 x 1028 Potential Ad Permutations


ROI: Customer Lifetime Value!


‘Two-Thirds of CMOs believe ROI is the primary measure of effectiveness. But half of all CMOs feel insufficiently prepared to provide hard numbers.’!!- IBM CMO Study !


Cost to Acquire a Customer Will Keep Increasing...

Source: Fiksu

$0.88

$1.27

$1.05

$1.22

July 2013 July 2014

Android iOS


Lifetime Value (LTV) – The Core Metric for Marketing


Spend per order! $ 15 !

Cost per order! $ 8 !

Profit Per Order!!

$ 7!!

Traditional Measurement of ROI

Transactional View!


We Eat Pizza More Than Once...!The LTV is the amount of profit you make from a typical customer over the entire lifetime of your relationship

Spend per order! $ 15 !Cost per order! $ 8!

Profit per order!!

$ 7!!

Number of Purchases per Year! 12!Average Lifespan of Customer! 5!

Cumulative Profit! $420!

Customer Lifetime View!


If you were Dominos, what would you rather spend to acquire new customers?!

Question:!

A B C$ 50! $ 150! $ 300!


* Churn plays a huge factor as well. !

Average Order!Cost Per Order!

Profit Per Order!!

Purchases Per Year !Lifespan of Customer!

!Lifetime Profit!

Acquisition Costs!

Profit Per Consumer! ! ! !

$ 22.50!$ 12.50!

$ 10!!

26!10!!

$ 2,600!$ 300!

$ 2,300! !

$ 15!$ 8!$ 7!!

12!5!!

$ 420!$ 150!

$ 270! !

$ 12!$ 7!$ 5!!3!1!!

$ 15!$ 50!

$ -35! !

MR. BEST! MR. AVERAGE! MR.NEGATIVE!EXAMPLE!

All Consumers Are Not Created Equal!


LTV – for Loyal Customers of Key Brands!

Sources: Service Profit Chain, KISSMetrics

LTV helps marketers understand:!

How much their customers spend

How often they spend it

What campaigns motivate buyers to become customers for life.

The LTV metric shines light into marketing’s biggest blind spot—the junction where long-term value begins to outpace short-term gain!

$ 8,000! $ 11,535! $ 332,000!


What are the Barriers to LTV?!

If LTV is critical why aren’t more marketers doing it?!

Lack of Awareness

Higher barrier to entry

Difficult to calculate

Time pressures to show results quickly


•  Data Inventory •  Data Collection •  Data Hygiene •  CRM Database

•  Segment •  Understand •  Message •  Optimize

•  When you find something that works - uncap your budgets!

Think Big. Start Now. Scale Fast.


Plan: Your CRM Database is Critical to Success


Bringing it all Together!

TARGET REGION, AGE 18+!

API INTEGRATION!

ZIP! CONDITIONS! CREATIVE! CTR! CVR! IMP!

10001 Hurricane Ad 1 1.30 25% 1,000,000

10002 Thunder Storms Ad 2 0.93 13% 1,000,000

10003 Rain Ad 3 1.01 20% 1,000,000

Utilize Real-Time Data to Deliver Your Message in a Way that Increases the Lifetime Value!


Test, Test, Test… !

1 Segment!2 Understand!3 Message!4 Optimize!


Scale Fast!“Houston, we have

uncapped the budgets!”!


Marketing is all about Creating Value!

LTV provides the means to create shareholder value!

SHAREHOLDER VALUE!

High Value!

Mid Value!

Low!Value!

AVERAGE!

NUMBER OF CUSTOMERS!

LTV!

SOURCES OF VALUE CREATION!


!Questions?!

www.adknowledge.com

1.816.931.1771

@adknowledge

Using Lifetime Value to Optimize Your Digital Marketing Investments

Marketing

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