What is Your LCV?:The Starting Point Of Any Successful Online Marketing Campaign

If You Don’t Know You MUST Find Out

It’s probably the ultimate question that allows businesses to grow.

The number that any marketing decision maker must have a handle on.

Of course unless you spend your whole time creating,monitoring and analysing a water tight plan to always know the exact number, it will be an educated guess but Understanding the Liftetime Customer Value of your business is the pivot point that enables your marketing strategy to be successful.

You see knowing this number allows you to know how much you can invest to get a new customer and how much you should invest to keep your current customers.

Drayton Bird(one of the great Direct marketing copywriters) once said “marketing is rather like teenage sex,a lot of people talk about it,many people claim to be doing it,most aren’t and those that are, are doing it badly”.

Drayton’s views on marketing are simple and powerful. He has managed campaigns for some of the biggest brands in the world as well as been responsible for creating huge brands from small ones. He recently recounted the story of what Yves Rocher Skincare discovered about their customers that revealed an enormous business opportunity. Yves Rocher analysed their customer database to find the following:

Women 35-45 had more than double the lifetime value of those aged 21-27

Married Women had 25% more Lifetime Value than single women

Mens average Lifetime Value was over 4 times more than women’s due to the transvestite market!

People promised better skincare cost 50% more to acquire than those responding to heavy incentives however they had 3.2 times more lifetime value.

Now it would be crazy to suggest that all companies bury this deeply to understand their customers. Discovering these stats would have a sizeable price tag attached to it, but I am sure you can see it reveals a range of marketing strategies that could never have been found without this level of analysis.

Simply understanding your average customer lifetime value is a great start to be able to budget your marketing correctly. Of course everybody wants to acquire a gazillion new customers and still have change from a 5 dollar bill but those that have been in business long enough know that being realistic is fundamental to finding marketing success. So knowing what you can afford to pay to attract new customers allows the freedom to test and campaign. As online marketing is so trackable and benchmarks easily set, starting with that cost per customer acquisition budget creates accountability and allows easy analysis of what is working and what isn’t.

Of course it goes without saying that business startups don’t have that data but need to acquire it as soon as possible so that they can make qualified decisions moving forward.

So work out your Average Lifetime Customer Value and start applying it to 2012’s online marketing strategy.