How to Increase Customer Lifetime Value (LTV) with Targeted Ads

Customer lifetime value is the most important metric for your e-commerce business

In e-commerce, customer lifetime value (CTV) or lifetime value (LTV) is the average revenue that a customer will generate in your business throughout their entire lifespan as a customer. Essentially, it is the amount of money they will spend on your products and services after the expenses of acquiring them as a customer. 

Why is it crucial for you now?

Nowadays, advertising costs are continuously rising due to increased competition. In addition, because of privacy concerns, advertising platforms (e.g., Facebook) are limiting the ability to segment audiences based on sensitive data. All these factors make it more difficult for e-commerce businesses to make profits out of the first orders made by customers.

What can you do to cope with this challenge?

Focus on customer lifetime value, one of the most important e-commerce metrics. A high lifetime value (LTV) means brand loyalty and recurring revenue from your existing customers, and the likelihood of maximizing your profits.

Build high LTV customer groups with Clerk’s Audience Segmentation

The key to business success is to build customer groups that can ensure profitability in the long term. And one of the easiest ways to achieve this is to analyze predicted lifetime value for customer groups, particularly when you are deciding what products to advertise for your next campaign.

Imagine this: You’re spending $10k on ads for shoes and another $10k on ads for pants. It costs the same no matter whether your targeted customers have high lifetime value or low lifetime value. But think about it: People who regularly purchase shoes will buy 10% more in their lifetime as a customer. So if you target more footwear consumers, you'll make more profits!

Clerk's AI-enabled Audience Segmentation tool can provide all the data you need for hyper-targeted campaigns, with just a few clicks!

Pro tip: Once you have identified the customer groups with the highest LTV, it is vital to make the most out of them. The best approach is to adjust and customize your marketing content for each customer group according to their distinctive characteristics. For instance, the main focus of your communication with VIP customers should be on nurturing them, such as giving them access to special discounts and offers. But for one-time buyers, the main focus should be on increasing their brand stickiness and loyalty.

A simple start: Segment customers by interests

As a simple start, you can segment your customers based on their interests. This approach is simple but super effective! It will significantly improve the conversion rate of your ads. Because now with Clerk, you can target recipients who are actually interested in specific products and content on your e-commerce website.

Our Interested In parameter is the most advanced and unique feature in our Audience tool that will allow you to find potential buyers for your products.

Clerk tracks every action of your customers, from click paths and page views while they browse, to search history and order history. Then, Clerk’s Audience Segmentation combines all this information into a data model that can identify what your customers will most likely be interested in buying, even if they have not bought anything like it yet.

In the example below, we are creating an Audience of customers that have shown an interest in shoes. Of course, you can always combine it with many more parameters available in the Audience tool to create even more advanced segmentation. The number of customers belonging to the Audience is updated in real-time while you add more parameters:

Clerk’s Audience: Interested in Parameter

Step two: Find the Audience with the highest lifetime value

Once you have identified customers interested in your product, it is time to further refine your selection by identifying customers with the highest lifetime value. They can be identified by working with the Clerk Audience's parameters related to Loyalty, Buying Frequency, and Pricing Sensitivity.

As an example, you can find your VIP buyers by selecting the Importance of your customers.

Clerk’s Audience Segmentation: Importance Parameter

Your VIP customers are your best and most affectionate customers that can deliver alone as much as 20% of all revenue.

In Clerk’s Customer Analytics, you will be able to visualize: 1) the exact lifetime value of the Audience you have created and 2) how it compares to the average lifetime value of your customers.

Clerk’s Audience: Customer Analytics

Pro tip: Integrate Clerk’s Audience Segmentation with Ads platforms

Create ads based on the most popular products for your Audience

By using Clerk’s Audience in combination with Google and Facebook, you can (finally) create ads focusing on the best sellers products for your specific Audience. For instance, you can advertise your best-selling shoes and then target customers interested in that specific product category.

Clerk's Audience Segmentation offers you unlimited possibilities for trying different advertising strategies. By applying different recommendation logics, you can show trending products, new products, best-selling products, and many more!

Furthermore, by targeting a customer segment specifically interested in your products, you can significantly reduce advertising costs and, at the same time, achieve higher ROI (return on investment).

Last but not least, after activating your ads, it is also critical to closely monitor their performance. For example, you can continuously optimize your ads by adjusting the title and copy, how long the ads should be active, and the products promoted.

Google Ads: Setting up ads to promote best-selling shoes

Synchronize Clerk’s Audience with Google and Facebook

Integrating Clerk’s Audience with Google and Facebook is quick and intuitive. Our integration guide will show the process step by step.

Clerk x Google integration guide

Once the integration is done, you will be able to automatically and continuously synchronize all the Audiences that you have created from Clerk to Google and Facebook. For example, n Google Ads, you can find your Clerk’s Audience segments in Audience Manager > Your Data Segments.

Don't worry - your audiences will be automatically updated by including new customers or potentially excluding others. So you only need to set them once in Clerk Audience.

Create Lookalike Audiences

You will see a unique double AI magic after using Clerk Audience in combination with paid advertising platforms.

With Audience, you can first create segments of targeted customers that have already been shopped on your webshop. And then, by sending the data of these customer segments to Facebook or Google, you will be able to use the information to find similar users that have not necessarily been on your webshop yet. This means creating a bigger group of targeted audiences interested in your products. Doing so will definitely ensure an outstanding ROAS (return on advertising spend).

In addition, Clerk Audience enables you with strong regulatory compliance. With the advent of GDPR, you can use Clerk Audience to create Lookalike Audiences, reaching potential customers without the need for explicit consent to marketing. Why so? Because you are not directly targeting specific recipients but using generic data for analytical purposes.

Clerk x Facebook: Create a Lookalike Audience feature

Curious about how Clerk Audience can help your business increase customer lifetime value? Book a free consultation with one of our e-commerce experts today!