In today’s results-driven world, the efforts of marketers are likely heavily focused on hitting acquisition target numbers. The company’s entire growth strategy often hinges on bringing in as many new customers as possible. Increasingly, it’s the job of the marketing department to make that growth happen.

But there’s a problem: How do you know that all those new customers are actually worth the cost to obtain them?

What if your marketing dollars went towards acquiring customers who ultimately didn’t spend very much or stick around very long?

Viewed through the lens of predictive Customer Lifetime Value (CLV), it simply doesn’t make sense to spend your marketing dollars on acquiring these low and negative-margin customers.

Lookalike Modeling using CLV: Using your existing transaction history, you can analyze the distribution of your existing customer base. You’ll likely find a model that looks something like this:

Distribution of CLV Graph

Once your highest value customers are identified, you can find more like them and channel your acquisition efforts accordingly.

Employ Machine Learning: Machine learning identifies patterns of behavior that a human would likely not see. Once you use CLV measurements to find your high-value customers, machine-learning techniques can help you find prospects who share their behavioral and demographic characteristics. These could include age, gender, and income level, as well as click behavior, mobile app download, loyalty program sign-up, as well as other data points.

Get a Deeper Understanding of Customer Acquisition Channels

Not all channels are capable of delivering high-value customers. Some may deliver a horde of cheap-to-acquire customers that have relatively low lifetime value, helping you hit your target acquisition numbers while resulting in a negative margin over the long term. Others may seem to underperform in terms of acquisition volume, even though the customers they do provide are exceptionally high margin. Without CLV analysis, there is no way to meaningfully gauge the return on your investment by channel.

Want to learn more about using customer lifetime value and behavioral prediction to improve acquisition? Download our marketing brief: Transforming Customer Acquisition by Predicting Customer Behavior.

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