Are you a marketer who’s new to affiliate, looking to drive more quality leads to your brand? Or maybe you’re a marketer who’s experienced within the affiliate channel but have hit a plateau within your lead gen campaign? For either scenario, the affiliate model is the right place to drive lead generation – but to generate quality leads, some strategic planning is required. There are many factors and KPIs that play into lead generation via cost per acquisition (CPA) marketing, however, customer lifetime value (CLV) is the one metric that many marketers fail to track, and is arguably one of the most important. CLV measures the aggregate of the consumer’s behavior following their initial interaction with a marketer’s campaign, and it can gain marketers access to a variety of valuable consumer insights that may currently be hidden.
By driving quality leads with high customer lifetime value, marketers can drive higher overall sales, average order value, and increase their knowledge of their ideal customer. Read on for Perform[cb]’s best practices for marketers to implement in order to maximize CLV and get the most out of their lead generation efforts.
What is Customer Lifetime Value (CLV)?
The first step in utilizing CLV properly is to understand what this metric measures. Customer lifetime value essentially tracks the dollar amount attached to any individual consumer throughout the “lifetime” or span of time they’ve spent interacting with a marketer’s brand, product, or service. It is up to marketers to define what a healthy CLV looks like; this can be achieved by analyzing data such as the number of repeat purchases a customer made or the amount of time a consumer remained receptive to a brand’s offerings. Below are a few examples of CLV calculations commonly used by marketers:
In gathering analytics such as these, marketers enable themselves to derive the average lifetime value of their ideal customer.
Defining a Target Audience
Once marketers define what an ideal CLV is for their customers, the next consideration is to determine a target audience. Within every form of digital marketing, including performance marketing in which marketers only pay for real conversions using a CPA pricing model, the more defined your audience the more effective your program or campaign will be. Asking questions such as what the target consumer does for a living, what their average household income is, and what their hobbies are can help to construct a target demographic, and, on a larger scale, the target audience. By outlining what the target audience looks like, marketers can better understand which type of partners should be recruited to run the campaign. Additionally, the target audience can help marketers structure creative according to the user, as well as providing affiliate partners with the creative assets that are most likely to resonate with your desired consumers.
Onboarding Partners & Tracking Integration
Although it can be tempting to approve any and all affiliate partners that apply to join the campaign, it is in the best interest of the marketer to remain selective. Partners need to demonstrate that they’re capable of driving traffic that results in quality leads, not just volume. A handful of partners that are consistently driving qualified leads to your campaign is better than dozens of partners who are driving irrelevant traffic, as this can lower your overall conversion rate and lower CLV considerably. Additionally, by employing the help of an experienced Network or Agency, marketers can ensure only the top-performing partners will be recruited to join their campaigns.
Marketers who are integrated with multiple third-party tracking platforms have the opportunity to utilize CLV to compare performance across each platform. There is value in knowing the amount of traffic being driven by each affiliate platform, but it’s arguably more important to know the quality of that traffic and how profitable that platform has been over time.
Applying Machine Learning to CLV
Advancements in performance marketing have led to CLV playing a major part in consumer purchases and machine learning algorithms. By utilizing accumulated data from consumers’ past purchases and previous buying behaviors, marketers are able to identify related products or services that any given consumer, or group of consumers, is more likely to buy. This method of retargeting is called association analysis and provides marketers with insight into which types of products to market together or sequentially, ultimately leading to increased sales, greater qualified leads, and higher average order value (AOV) across the board.
Over time, CLV can be an extremely powerful tool for marketers to wield. Defining the ideal target audience and CLV allows marketers and affiliate managers to see the true value of the affiliate channel and to scale with partners that are driving loyal and valuable leads. Marrying machine learning with CLV can ultimately drive increased sales and AOV by understanding consumers’ buying habits and purchase history. By including customer lifetime value as a primary KPI, marketers can help ensure their affiliate marketing lead gen campaigns can achieve long-term success.
Interested in learning about how Perform[cb] can drive quality lead generation for your brand? Reach out now!