If you’re looking for a way to boost your business’s success, understanding your customer lifetime value (CLV) can be a game-changer. In this blog post, we’ll be breaking down how analysing your CLV can help you advertise better so you can prioritise your advertising efforts, tailor your messaging to your customers, and allocate your advertising budget more effectively.
What is Customer Lifetime Value?
We’ve chatted about this before, but before we dive in, here’s a quick recap. CLV predicts the net profit attributed to a customer’s future relationship. In layman’s terms, it estimates how much money a customer will spend on your products or services throughout their lifetime.
How Does Knowing Your Customers’ CLV Help You Advertise Better?
There are three key ways in which understanding your customers’ CLV can help you advertise better.
Identifying Your Most Valuable Customers
By analysing your customers’ spending habits and purchasing behaviour, you can segment your customer base and prioritise your advertising efforts to customers who are most likely to have a higher CLV.
For example, should you notice that customers with a higher CLV tend to buy certain products that lead them to make repeat purchases, this can be used to increase the CLV of others. Similarly, focusing your marketing efforts on customers with higher CLV by encouraging them to sign up for rewards programs, referring friends, and signing up for subscriptions will further increase their CLV.
Tailoring Your Advertising Messages to Your Customers
CLV is an incredible way to understand precisely where your customers are in their customer journey. Once you’ve identified your most valuable customers, you can create targeted ads that speak directly to their needs and interests.
Upselling and cross-selling based on the most popular products for customers in their part of the customer journey is just one way of doing this. You also wouldn’t use the same marketing language with customers that love you as you would with customers that aren’t so happy with you — it’s essential to ensure your messaging is appropriate based on the customer’s relationship with your brand.
Allocating Your Advertising Budget More Effectively
By knowing which customers are most valuable to your business, you can determine which advertising channels and strategies are most effective in reaching those customers and which channels and strategies would work best for those with a lower CLV.
This way, you won’t waste money or end up in the spam folder.
Blend & Advertising Better
At Blend, we’re all about making things simple for eCommerce leaders — like you. From web design to email marketing, it’s all numbers. And data doesn’t lie. If you want to calculate or increase your CLV, get in touch with us today.
