Align Marketing Attribution to Customer Lifetime Value
In this episode, we're talking about marketing attribution and how proper consideration for customer lifetime value (CLV) can drive exponential results. Many marketers concentrate on various attribution types while running their marketing campaigns. However, when the selected attribution is not aligned with your established CLV, you could be focusing your efforts on the wrong channels, resulting in short-term return on ad spend at the expense of choosing the best channels for building value over time.
Who is Neil Hoyne?
Joining us is Neil Hoyne, Chief Analytics Evangelist and Head of Customer Analytics at Google. Neil explains the substantial value organizations can achieve by incorporating the right attribution with marketing to integrate with CLV and customer relationship building. Neil explains that the enormous challenge is not about understanding calculations or modeling but rather about convincing organizations to move from measuring transactions and ad clicks to a more long-term sustainable value – CLV.Google continues to solve lifetime value for advertising but is heavily involved with helping their customers embrace those techniques for the organizations they support. We like to help our advertisers understand the customers' value and then understand how to provide better experiences. Neil digs deep into the importance of studying and taking care of the customer's experience as he challenges the question. "What are you doing today that makes those customers on the top (higher ad spenders) feel any different from those on the bottom (lower ad spenders)? "Suppose you're running an AB test to look at your website's content with the right messaging. Are you looking at the participants on a test as equal or customizing your content to your entire customer population? Could it be more effective to creatively build content, website experiences, and mobile applications that really appeal to the customers who will be spending the most amount of money with your firm? Neil explains you really want to start forecasting what's happening going forward and your value as it gives you a much better perspective. You want to make better decisions than your competitors. The type of segmentations like adding something to a shopping cart is part of the status quo today. What and how can you differentiate your business decisions where you will see long-term sustainability within your organization? Many of the people that Neil and his team work with, many companies and brilliant people, it's difficult for them to invest in areas and programs where they can't see immediate ROI. However, CFOs are starting to say lifetime value makes a lot more sense. Not only because it captures the immediate transaction value, but it also gives them insight as to the incrementality of people who are going to click and continue to buy - even if maybe we don't advertise to them.
Learning the power of relationship-building to support CLV.
The idea to "surprise and delight" through customization will strengthen the relationship between the customer and the company. How do you drive that relationship a little bit farther forward, so they recognize that you, a valuable customer, get a lifetime value calculation? Neil suggests concentrating on these personalized customizations:
Through customized recommendations.
Through signal retention methods such as "we haven't seen you in a while," notices.
Offers that result in immediate transactions to mitigate fears of possible competitive actions that have taken place.
Neil challenges organizations to think about "what reliable signals do you have that says either this customer is leaving or, more importantly, do you have any? What about the customer whose relationship is not as strong today as it was with you from a year ago?"For any advertisers who are looking to be the change your organization needs, having leveraged knowledge from the talent of Google's very own Chief Analytics Evangelist and Head of Customer Analytics, then this episode is for you. Listen to the Full Episode