The benefits of Predictive Lifetime Value™ center on finding and remarketing to your most valuable customers.
Find, Engage & Invest in Your Most Valuable Customers
As a marketer, would you be willing to pay 20% more for a customer that generates 400% more in purchase revenue? Any goal-oriented marketer would say, “absolutely!” However, if your media buying is focused on low cost strategies, such as a blanket or target CPA, the reality is your answer is “no.”
The data exists. High value audiences typically cost more to acquire, and proxy metrics are not predictive of ROI. So why do marketers buy media opportunistically, focusing on higher funnel metrics and the cost side of the ROI equation?
The answer is simple: predicting future revenues (the other side of the ROI equation) is incredibly challenging.
This is the challenge we’re focused on solving here at Nanigans with some of the smartest data scientists in the industry and hands-on technical advisors from Harvard. We’ve dedicated more than 3 years of R&D into customizable, programmatic machine learning algorithms that predict the future value of various audiences to inform more intelligent media buying.
The Marketing Multiple Effect
And there’s more. The benefits of investing in valuable customers pay dividends far beyond incremental sales and the return you see in your media buying efforts. They have a multiple effect on all of your marketing initiatives.
Let’s take your email marketing program as a starting point. If you acquire a customer outside your target profile through paid media efforts, will that customer open your email marketing initiatives? Unlikely. So in fact, acquiring a poor customer diminishes the investments you’ve made so tirelessly to develop and scale your email marketing efforts into a science.
Social engagement and content marketing is another example. We saw this happen in the early days of Facebook when marketers focused solely on the race to acquire Likes, without an emphasis on the quality of people behind these Likes.
Luxury brands are a great example. The brand would say to their advertising partner, “I have a $1 million budget to acquire 1 million Likes.” Many advertising partners would move forward to acquire Likes as cheaply as possible, say for $0.20 – pocketing the remaining $0.80 as profit. And as the example goes, the brand’s marketing team moves to invest $1 million more into content and engagement marketing to these Fans – the majority of which, as it turns out, simply do not have the purchasing power to ever convert into buyers.
The cost to acquire and support a customer who falls outside your target customer profile can actually be quite expensive.
This marketing multiple effect is in part why the world’s savviest CMOs are so focused on lifetime value – they understand their media buying strategies have an incredible impact on their entire marketing funnel and customer success.
Learn more about the benefits of Predictive Lifetime Value and pitfalls of media buying that only takes into consideration the cost side of the ROI equation: