7 Ways to Use Customer Lifetime Value Data to Refine Your Marketing Approach
Leveraging customer lifetime value (CLV) data can transform your marketing strategies, and to uncover the most effective techniques, we’ve gathered insights from seven marketing experts, including digital marketing managers and CEOs. From segmenting customers for targeted campaigns to implementing loyalty programs, these professionals reveal how to refine your marketing approach using CLV.
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Segment Customers for Targeted Campaigns
At Stratosphere, we specialize in digital marketing for insurance agents, agencies, and carriers. One effective technique we use to leverage customer lifetime value (CLV) data is segmentation for targeted marketing campaigns.
By analyzing CLV, we segment customers into high-, medium-, and low-value groups. Focusing on high-CLV customers, we create personalized marketing strategies to enhance engagement and loyalty. For example, offering exclusive content or premium support to high-value customers can significantly improve retention.
Conversely, for low-CLV segments, we implement cost-effective marketing tactics, such as automated email campaigns, to nurture these relationships without overspending. By refining our marketing approach based on CLV data, we ensure that our efforts are both cost-efficient and impactful, driving better results for our clients in the insurance industry.
![7 Ways to Use Customer Lifetime Value Data to Refine Your Marketing Approach 2 Vishal Kumar Featured 3 7 Ways to Use Customer Lifetime Value Data to Refine Your Marketing Approach](https://marketerinterview.com/wp-content/uploads/2024/06/Vishal-Kumar-Featured-3.png)
Vishal Kumar, Digital Marketing Manager, Stratosphere
Build Budgets Around CLV Insights
From a planning perspective, we use customer lifetime value (CLV) to help build program budgets and assess campaign results.
It can be difficult for a new business to know the average CLV for their market, as it often takes a few years to understand close rates, churn, and other factors that can affect this number. However, for established businesses, or new businesses with a solid understanding of their industry, the CLV helps to determine a reasonable acquisition cost for a new customer.
Once you understand how much a customer is worth to the business, you can run the math for what you’re willing to spend to acquire new customers. Budgeting something like cost-per-click can seem shocking to some clients, but when they learn the math behind it, such as conversion rates from ad campaigns, close rates with their sales process, etc., it is much clearer that spending money to bring in a highly qualified lead is well worth the expense.
On the assessment side, knowing the CLV helps us evaluate those conversion and close rates to know what messages, campaigns, and creative provide the most qualified leads that will yield the best overall results for a business.
![7 Ways to Use Customer Lifetime Value Data to Refine Your Marketing Approach 3 MaryAnn Pfeiffer Featured 7 Ways to Use Customer Lifetime Value Data to Refine Your Marketing Approach](https://marketerinterview.com/wp-content/uploads/2024/06/MaryAnn-Pfeiffer-Featured.png)
MaryAnn Pfeiffer, Principal & Founder, 108 Degrees Digital Marketing
Adjust Discount Rates Using CLV
In our agency, we’ve actually used customer lifetime value (CLV) to tweak our discount rates. The discount rate, essentially the interest rate at which you borrow money in your business, is critical for understanding the true value of your customer’s future cash flows. This is rooted in the time-value-of-money concept, which posits that a dollar today is worth more than a dollar tomorrow.
If the lifetime value of a customer is relatively short, the calculation of CLV, while methodologically sound, might not be significant. However, if you’re looking at a long time horizon, the time value of money becomes a crucial factor. To put it simply, would you prefer receiving $100 from a customer today or twenty years from now? Obviously, the immediate $100 is more valuable; who knows, twenty years down the line, $100 might barely cover the cost of a ream of paper—if we are even using paper in copiers by then!
For quick, informal calculations—our “back-of-the-napkin” moments—you might feel safe to overlook the discount rate when calculating CLV. But it’s vital to recognize that the longer you project the lifetime of a customer, the more critical the discount rate becomes. Ignoring it can lead to inaccuracies in your model.
![7 Ways to Use Customer Lifetime Value Data to Refine Your Marketing Approach 4 Patrick Beltran Featured 1 7 Ways to Use Customer Lifetime Value Data to Refine Your Marketing Approach](https://marketerinterview.com/wp-content/uploads/2024/06/Patrick-Beltran-Featured-1.png)
Patrick Beltran, Marketing Director, Ardoz Digital
Allocate Budgets Based on CLV
I like to use CLV data to figure out where we should spend our advertising budget. By pinpointing which customer segments have the highest lifetime value, we can focus more resources on reaching similar prospects. For example, I had a client who discovered their email campaigns were driving much higher CLV than their social media ads. So, we shifted some of their budget from social media to email marketing, and the return on investment shot up. It’s really about making sure your money is working hardest where it counts the most.
![7 Ways to Use Customer Lifetime Value Data to Refine Your Marketing Approach 5 Marco Genaro Palma Featured 1 1 7 Ways to Use Customer Lifetime Value Data to Refine Your Marketing Approach](https://marketerinterview.com/wp-content/uploads/2024/06/Marco-Genaro-Palma-Featured-1-1.png)
Marco Genaro Palma, Freelance CMO and SEO Consultant, GenaroPalma.com
Create Tailored Campaigns for Valuable Segments
By analyzing customer lifetime value, you can segment your data and identify your most valuable customer segments. This then allows you to refine your marketing strategy for these high-value customers by creating tailored campaigns that speak to their specific needs and behaviors.
This could be in the form of personalized offers, targeted content, or loyalty programs that you design with the aim of increasing engagement and retention rates of your most desirable customers. By concentrating your resources more on customers with the highest potential lifetime value, you can maximize your ROI as well as develop more profitable long-term customer relationships.
![7 Ways to Use Customer Lifetime Value Data to Refine Your Marketing Approach 6 Luke Glassford Featured 7 Ways to Use Customer Lifetime Value Data to Refine Your Marketing Approach](https://marketerinterview.com/wp-content/uploads/2024/06/Luke-Glassford-Featured.png)
Luke Glassford, Marketing Director, Mode Insurance
Segment by Industry for Campaign Focus
There are a few different ways to calculate customer lifetime value. If you are in a B2B business, then the most common scenario is to simply sum up the total revenue from that customer or client. In this case, you should also consider the average deal value of each client.
We often recommend evaluating both the CLV as well as the average deal value, segmented by another criterion that is relevant to your business, such as industry or location. With this information in hand, you may be able to identify patterns in certain industries or locations.
Perhaps the highest-value clients are in the finance industry; then you may want to create a campaign that directly communicates to that target audience and speaks to their pain points. This campaign could include a landing page, blog posts, segmented emails, social media posts, and even paid ads to directly target that high-value audience.
Candice Deriso, Marketing Strategist, Beckmann Collaborative, LLC
Optimize Ad Spend Across Channels
One specific tip for using CLV data is to optimize your ad spend across different channels. By understanding which customer segments bring in the most lifetime value, you can allocate your marketing budget more efficiently. For example, if our analysis shows that customers acquired through Instagram ads have a higher CLV than those from other platforms, we’ll focus more of our resources on Instagram campaigns. This way, we ensure we’re investing in channels that yield the highest returns. It’s a smart way to make your marketing budget work harder for you.
![7 Ways to Use Customer Lifetime Value Data to Refine Your Marketing Approach 7 Amar Ghose Featured 7 Ways to Use Customer Lifetime Value Data to Refine Your Marketing Approach](https://marketerinterview.com/wp-content/uploads/2024/06/Amar-Ghose-Featured.png)
Amar Ghose, CEO, ZenMaid
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