My goal is to leverage performance marketing tactics to maximize customer lifetime value at minimum cost in order to ultimately amplify total business valuation and drive company/shareholder value – both through the acquisition of new customers and reactivation of previous purchasers.

There are two main sources of lifetime value for a business – driving new customers, and driving repeat purchases from those new customers:

1. New Customer Activation: One can’t maximize customer lifetime value without worrying about acquiring new customers (that’s pretty straight forward) – but how do you measure performance in acquiring those new customers? What’s more important – amassing new orders, or maximizing new customer revenue (or simply put, is driving initial return on ad spend or cost per acquisition more important)?

This question can be simplified even further as ‘do you care about LTV per customer or not’? Ultimately it depends on the business – for businesses with a relatively static/consistent purchase behavior per customer (think Netflix), simply acquiring the customer is ‘mission accomplished’ – and thus new customer acquisition should be goaled on a CPA (cost per new customer acquisition) basis. For businesses with significant swings in customer lifetime value (think Amazon), acquiring the right type of customer who will spend more both in the long and short term is more important than acquiring any customer – and thus new customer acquisition should ultimately be judged on a life time value (or revenue) per dollar spent (ROAS – return on ad spend).

This all ultimately depends on the business though as there are many cases that might point in different directions. Gyms for example are looking to sign up members who will keep their membership active long term, but not actually go to the gym and take up space – a tricky balance. Further, many well-funded startups are held accountable to arbitrary investor goals (GMV targets, new customer goals, etc.) that may not necessarily align with long term business health but still must be adhered to in order to secure additional rounds of funding.

Measuring new customer acquisition all comes down to understanding the unique goals of a business and developing a marketing plan that adheres to those individual goals.

Prospecting, unlike retention marketing, has almost unlimited options for targeting/messaging. The core channels for an ecommerce business will almost always be Paid Search and Paid Social, however prospecting can be accomplished via programmatic TV/Radio, various out-of-home channel (OOH), programmatic display, direct ad buys, print/direct mail, content marketing, and so much more.

Understanding which mix of marketing channels make sense for a business must be based on 1) an understanding of the customer base and where they’re likely to interact with advertising and 2) careful yet frequent testing across new areas of opportunity.

2. Customer Retention/Reactivation: Acquiring new customers is only the starting point – the only two sources of lifetime value are of course driving new customers and return orders.

Among the main differences between my approach to marketing for new customer acquisitions and customer retention are A) the approach to conversion attribution/incrementality and B) the vehicles for messaging.

A. Approach to conversion attribution: Measuring conversion activity for retention campaigns must be done carefully. It must always be understood that these are your best customers – their likelihood of purchasing a second time and beyond regardless of advertising is inherently more likely than a prospect who hasn’t heard of your brand. Picture a scenario where you use a one-day post-view attribution on Facebook and message your entire retention audience every single day, once per day. Every single repeat conversion will then be attributed to Facebook when it’s likely that Facebook had little to do with those conversions.

Retention and Remarketing campaigns will always look better than Prospecting campaigns. This doesn’t mean that they should be measured on equal footing. When the option is available, we must pursue an understanding of the incremental rate at which ads of a given audience are making that audience more likely to convert (either by using hold out groups or via path to conversion or multi touch attribution modeling).

This is something I’ll dive deeper on in another post, but it’s important as a marketer to place oneself in the shoes of the consumer. If a shopper loads up their shopping cart, heads to ESPN to check a score, is served an ad, and goes back to finish their purchase – did that ESPN ad really do anything? If I serve up a Facebook prospecting ad, bring someone to the site, then in the same day they receive a retargeting ad prior to purchasing – which ad really deserves credit for that conversion? Retention (and remarketing) conversions should always be taken with a grain of salt – and it’s important to monitor engagement metrics like CTR, CPC, and ad frequency to ensure you aren’t just loading unnecessary budget towards audiences that are already maxed out, just because the return looks better.

B. Vehicles for Messaging: Retention marketing leverages first party audience data – thus the only way to actively target previous purchasers (who are all part of your first party data set) is to rely on channels leverage first party data targeting/messaging. E-mail is the most straight forward – it’s low cost (limited to the cost of an ESP, and various creative needs) and the experience can be fully owned by the brand. Display Remarketing is also crucial and can be accomplished through various platforms (through simple self-serve options like the GDN, Criteo, and other players) and more complex and costly platforms (DSPs). Facebook/Instagram is even more cost efficient and effective than the display platforms mentioned previously – the reach and experience are much easier to control as Facebook’s data set offers a much less erratic user experience due to its lower reliance on cookie data (thanks to the logged in state). Paid Search also offers retention targeting – however scale is limited by the keyword lists chosen so there isn’t typically much incremental scale to be found (unless your customer base is enormous). Direct Mail is the last touchpoint – expensive, but very easy to leverage hold out groups in order to understand true incremental success.

It should be noted that that many other channels – OOH, podcasts, TV, etc. will also inevitably hit previous purchasers – it is simply much more challenging to accurately target previous purchasers while excluding all others. Further, programmatic TV, radio, and many other nascent channels offer some first party data targeting but the impact isn’t sufficient enough to mention here yet – particularly for smaller businesses.