Return on Ad Spend + Lifetime Value

August 12, 2019

Corey Talking to a Camera About Return on Ad Spend + Lifetime Value
Featuring Corey Pierson, CEO and Cofounder of Custora

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When you layer the customer into the mix, when you layer customer lifetime value into the mix, a few things change. First and foremost, we know that the goal is acquiring customers who are going to spend a lot with our brand over time. That's not going to be reflected in the immediate ROAS (return on ad spend). So you acquire two great customers that buy $100 pair of jeans today. One of them is going to repeat 10 times. One of them isn't. The ROAS today is the same in both of them.

One of the key things that we help these organizations transform into is just, how do I layer the lifetime value metric on top of my ROAS metrics to understand, because ROAS is simply not enough. It's just too simple. That's step one. Then, there's more that you'd start doing in a spirit of how do I actually get more of those good customers? 

There's this awesome thing that's happened in the industry now where every single vehicle, whether you're talking about Google search, or Facebook, or Instagram, or Twitter, et cetera, has the ability for you to upload your own audiences into their tools. First-party data, they call it. 

What that means is, look I've got a list. What we can do with Custora is: I have a list of great All-Star customers; I'm going to upload that into Facebook and we say, "Hey, Facebook, go find more customers like these." I'm going to get a little more nuanced than that. In that top 10%, I can discover that I've got three or four subsegments that are prominent that buy different types of things. Now, I can seed three or four different look-alike audiences, each tailored on that merchandise that would appeal to those four distinct segments.

Now I'm running a multi-prong approach on Facebook of leveraging the fact that I know who my good customers are because they're buying a lot of stuff in my store. I can have those partners work to find more people like them. You do that in Facebook and Google, and in display and in all these other things, and you start seeing a boost and then a good number of high-quality customers that you bring in.

I think the name of the game is just better measurement, better optimization.

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