How to Use Lifetime Value to Create a Facebook Audience That Actually Converts

How to Use Lifetime Value to Create a Facebook Audience That Actually Converts

If you don’t want to waste money on ads that don’t reach your target audience, you need start focusing on the customer lifetime value (CLV). I’ll show you how to create Facebook audiences that convert by leveraging lifetime value. This seems like a good strategy since the average cost per click for the retail industry is only $1.35. Create a custom Facebook audience with CLV/LTV Now that you understand what a customer lifetime value is, why it’s important, and how to calculate it, it’s time to use this data to improve your Facebook ads. Step #3: Select “audiences” from your Facebook Ads Manager dashboard Now that all your customer information and lifetime value data is organized and formatted, you can continue. Step #4: Choose the “customer file” option from the list of audience types As you can see from the menu above, there are several different ways for you to create a custom audience. Step #5: Upload your lifetime value customer data Now you have to decide which type of customer file you’ll use to create a custom audience. Simply upload the spreadsheet, and Facebook will use the data, including the customer lifetime values, to create a custom audience. Step #6: Run an ad with your new custom audience Once your custom audience has been uploaded, all you have to do is run a Facebook ad the same way you normally would. How is your company creating custom audiences on Facebook to drive conversions?

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To survive and stay relevant in the modern era, your business needs to have an active presence on social media.

When it comes to social networks, Facebook is king. As of June 2018, the platform had more than 1.47 billion daily active users and 2.23 billion monthly active users.

Over 60 million businesses have Facebook profiles.

Those companies are doing much more than just posting content to their timelines. The vast majority of these businesses are paying for ads.

In fact, 93% of marketers take advantage of Facebook advertising on a regular basis.

If you’re active on Facebook but not running ads, you might fall behind the competition.

In a perfect world, you’d be converting your social media followers into customers. That’s the reason you’re in business, right?

But some of you may have struggled with this. If you ran Facebook ads in the past and didn’t get the results you were looking for, it could be the reason why you’ve been avoiding this marketing strategy.

Don’t worry, you’re not alone: 62% of small business owners feel their paid Facebook advertisements aren’t reaching their targets.

The success of your Facebook campaigns is completely dependent on how you set up your audiences.

If you don’t want to waste money on ads that don’t reach your target audience, you need start focusing on the customer lifetime value (CLV).

lifetime value over time
If you don’t know what this is or how to get started, I’ll help you out.

I’ve been in your shoes before and wasted valuable marketing dollars on ads that didn’t convert. But after taking advantage of customer lifetime value lists, I saw different results.

I’ll show you how to create Facebook audiences that convert by leveraging lifetime value.

Learn how to calculate your CLV

Before we go any further, it’s important for you to understand the basic concepts of customer lifetime value and why it matters for your Facebook ads.

What is lifetime value?

In short, it’s a number reflecting the amount of money a customer spends at your business before they leave it.

The longer a customer stays with your business over time, the more profitable they become for the business.

If you’re not using this metric to help you make decisions, it could be an extremely costly mistake. Let me give you an example.

Let’s say your business sells watches through your ecommerce platform at bargain prices. The average retail price of your products is $30.

To drive more traffic to your website and generate leads, you start running PPC campaigns through Google AdWords.

This seems like a good strategy since the average cost per click for the retail industry is only $1.35. That’s significantly lower than for other industries.

However, the average conversion rate for retail ads is an abysmal 3.86%.

At that rate, you would need roughly 25 clicks just to get one conversion. At $1.35 per click, this single transaction would cost you $33.75.

But the average price of a watch on your website is only $30.

This is not a profitable marketing strategy, right? The truth is, you don’t know the answer to this question unless you know your CLV metrics.

That’s why you need to calculate your customer lifetime value before you begin any marketing campaign.

calculate
Let’s continue using the same watches sale example.

If the average transaction is $30 and the customer buys four times per year for the next five years, you can expect to make $600 from that customer.

That’s nearly 18 times the amount of your initial acquisition cost.

When it comes to your marketing strategy, it’s important to use customer acquisition tactics that won’t break the bank and yield a high ROI.

Once you’re able to determine your CLV, it will be easier for you to launch new campaigns while having a better understanding of how those costs will pay off over time.

Plus, if you’re able to increase revenue without acquiring new customers, you can ultimately boost your customer lifetime value.

I know what some of you are thinking. Sure, this sounds great, but how is this relevant to Facebook advertising? Allow me to explain.

Create a custom Facebook audience with CLV/LTV

Now that you understand what a customer lifetime value is, why it’s important, and how to calculate it, it’s time to use this data to improve your Facebook ads. Facebook uses the abbreviation LTV to refer to lifetime value of a customer.

As I said earlier, if you ran Facebook ads in the past but weren’t satisfied with the results, it’s probably because you weren’t able to target the right audience. You won’t get conversions if the wrong people are exposed to your ads, even if the promotion is great.

I’ll show you how to generate leads with Facebook ads by targeting an audience that actually converts.

Here’s a simple…

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