Online ad targeting has become pervasive over the past few years. It started with basic behavioral targeting, and it has moved to other forms of audience targeting, including business demographics, site retargeting, social graph targeting, and even CRM retargeting.
All of these forms of targeting have helped marketers efficiently move spend to increasingly more valuable audiences, but ultimately the goal of all such capabilities is to drive greater awareness and then close the most valuable customers.
But as any business leader knows, all customers are not created equal. Enter the next opportunity in the targeting sphere: lifetime value, or LTV, targeting.
Let's start off with the basics. Cambridge defines lifetime value as the "calculation of how much profit a business could make from one customer over the whole period that they remain a customer."
Seems simple enough, right?
But, according to an article in Entrepreneur, Lifetime value "is one of the most overlooked and least understood metrics in business—even though it's one of the easiest to figure out."
As business professionals, we need to understand how much we should invest in customer acquisition and retention. Naturally, we want to focus our efforts on the customers that will generate the most value over the long term. So how can we target our marketing programs based on this important metric?
LTV targeting starts with a deep understanding of your current customer base so you can develop high-LTV and low-LTV customer segments. Doing so will enable you to create a profile of the "personas" that will have the most longevity and spend the most on your products.
Take the first step (it's free).
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