4 Ways to Optimize for Lifetime Value Using Segmentation

Maria Breaux
July 3, 2014

In the previous post we discussed how to segment your customer base for lifetime value (CLV). In our fourth and final post of this lifetime value series, we’ll provide some recommendations for optimizing for CLV.

Once you have identified audience segments, you’ll want to investigate things like:

  • Where are these people? What marketing channels do they cross?
  • What messaging or value propositions are relevant to this segment?
  • What are different ways that you can reach a customer within a particular segment?

The idea of optimizing for CLV is to achieve increasing profits from your existing customer base, or find new high-value customers.

Be channel agnostic when looking for marketing opportunities

When asking these questions, it’s useful to take a channel agnostic approach to your thinking. Instead of relying on data from one specific channel, you’ll want to incorporate data signals across different marketing channels like search intent, behavioral data, and audience characteristics, in addition to your own data, in order to paint a detailed picture of your high value segments and develop strategies to increase your customer CLV.

Once you have a good understanding of your high-value customers, you can start developing strategies to drive higher CLV. A few potential scenarios follow below:

Scenario 1 – Find new high CLV customers

A financial company could improve its acquisition efforts by refocusing its spend towards an acquisition channel that has proven to attract high CLV customers. Alternatively, it could also expand its reach by leveraging 2nd and 3rd party data to create look-alike audiences for additional targeting opportunities.

Scenario 2 – Reduce customer churn

An insurance company creates an audience segment for current customers with contracts expiring within the next 30 days in order to run a search retargeting campaign that ensures the brand has top that the brand is well represented when the user conduct relevant searches.

Scenario 3 – Increase repurchase rates

An online clothing retailer rolling out a new seasonal line could remarket its product ads on Facebook to customers who haven’t bought from the company within the past 6 months.

Scenario 4 – Cross-promote or upsell to potential customers

A home improvement retailer could look for opportunities to cross-sell to potential customers who’ve recently shown interest in home loans. Alternatively, the retailer could promote upsell opportunities to sell kitchen upgrades to customers who’ve recently indicated interest in or purchased a new appliance.

The possibilities are numerous. By taking basic customer lifetime value information, developing useful segments, and connecting that information with the customer data that you’ve collected or have access to, you can open up a number of new, interesting ways to make smarter marketing decisions and increase profits.

Looking for additional posts in this series?
3 Reasons Why Segmentation is Necessary to Understand Customer Lifetime Value
Gathering Customer Lifetime Value Data – Start Small and Build
Using Lifetime Value to Create Audience Segments

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