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Facebook has been in the hot seat lately. You probably know this if you have seen the latest news.
It also doesn’t help that 62% of small businesses have reported that they are having a hard time finding success.
More specifically about not being able to meet their desired target.
Brands and businesses audience targeting strategies are not working and they can’t seem to reach the right users to sell their products and services.
But how could this be? Does this mean Facebook simply just doesn’t work? Nope...
With 2.20 billion active users on Facebook, I can assure you it's not a Facebook problem.
I also will tell you I'm 99% positive it is due to brands and businesses audience targeting campaigns.
Audience targeting is the bread and butter of Facebook.
Your entire campaign will depend on it.
The simplest mistakes in targeting will completely throw your audience off.
Thankfully, I've been there and have launched enough campaigns to know. I have lost a ton of money on Facebook Ads trying to reach the right audience.
But I also have found ways to absolutely capitalize off of every single penny spent on the right audience through Facebook. Which has generated so much more money than what I have lost.
One of these strategies is a lifetime value strategy and it brings serious results especially in the long-term.
Which is imperative if a brand or business wants to be around in 1 - 10 years from now.
First in order to understand why the strategy I'm going to go over with you even works you need to know what customer lifetime value is.
Customer lifetime value is perhaps the most important metric you can ever track.
Why is that? Well if you want your brand or business to be alive in the future your going to want to pay attention to (CLTVs).
Google defines it as the prediction of net profit attributed to the entire future relationship with a customer.
To put it simply.
Customer lifetime value is how much a customer will spend with your business over the course of a lifetime.
It’s that simple. But super important.
Lifetime value should guide just about every decision you make in business.
If you have an e-commerce store and you could either choose to get only 1 sale per person or get 1 person to purchase from you every month.
Which would you choose?
We'll obviously you are going to want to get a customer who purchases every month. That is why lifetime value customers are so valuable.
Now you probably don't have high customer return rates and that is okay because most businesses don't.
Now let me explain where most marketers, brands, and businesses go wrong.
So let's say you begin advertising with PPC to drive some traffic and hopefully convert some sales.
You see that the average cost per click to for retail (e-commerce) is $2.60. Would I say that is pretty good right?
Nope, it actually does not matter. To be honest it is actually quite irrelevant.
Look at the conversion rate for retail (e-commerce) advertising it is 3.04%.
That’s a pretty low conversion rate compared to others.
So continuing with the example lets say the conversion rate is 3% for the sake of doing the math.
Let's say your product is $30. Now if you want to get just 3 purchases you would need to get 100 clicks to drive literally just 3 conversions if you have a conversion rate of 3%.
Now multiply the clicks needed to get 3 purchases.
The cost per click: $2.60 * 100 clicks = $260
Yea, so $260 - $90 = $170. That means you lost $170.
Now you can’t expect to turn a profit because your average sale is just $30.
How are you going to make a profit then?
This is where lifetime value comes in.
You clearly can’t afford to bid on AdWords for what you sell.
But if you have a good customer lifetime value campaign.
And they purchase on average 5 times from you. Well, you can expect to make a great deal of profit. That makes your acquisition cost so worth now.
But how do you know if you are getting the right customers who are going to continue to spend money on your product or service?
One thing that you could do is increase the lifetime value of your current customers by setting up email marketing campaigns.
Increased lifetime values mean spending more on acquiring customers is worth it because you know that they will spend $XX over their lifetime with you.
Which allows you to not microfocus on your CPC.
Now, where does Facebook come into play and how can you get a ton of lifetime customers?
Let's go over it.
You can create lookalike audiences on Facebook that target only customers that are most likely to purchases multiple times over the course of the next few months.
Lookalike audiences are highly effective.
They utilize your current customer data to find new audiences that most closely resemble your most valuable customer's on Facebook.
Matching demographic data with affinities, interests, behaviors, and so much more. Creating a whole new audience with the same background as your current customers that have made the most purchases with you.
Come on... Tell me that doesn't sound like the best thing ever.
And yes it works.
AdEspresso tested on Facebook to analyze the performance of lookalike audiences. Based off their most valuable customer.
With lookalike audiences, you can customize the audience size by % of the country/area you are targeting.
For instance, selecting “1” would be 1% of the country you advertise in.
AdEspresso found that the 1% audience converted best. Now, this should be of no surprise.
If you only focus on the top 1% of people who are most similar to the people who purchase most from you clearly you can expect to get a ton of conversions.
The 1% audience drove 115 leads with just $500 in ad spend. Which is great! But not as great as our 1,844 leads for $100.
Anyways I'm not here to compare.
You just need to know incorporating lookalike audiences can be well worth the investment.
Here’s how you can set them up using lifetime value to start getting more engagement, loyalty, and sales.
To get started with using lifetime value to create a Facebook audience, head to your Facebook Business Manager dashboard and navigate to the “Audiences” section:
Create a new "Custom Audience" first.
Next, select “Customer File”.
You can find your customer file by downloading all the emails of your customers as a CSV file.
This is the file that Facebook will take and find the most valuable lifetime customers.
Next, select “Include LTV for better performing lookalikes.” This option will allow you to create a file with lifetime value metrics.
Depending on what platforms and products you sell, this will either be very fast and easy or somewhat time-consuming.
If you run an online e-commerce store with Shopify, you can find your lifetime value data very easily.
If your business is more consulting or lead-based and focused on landing clients or accounts, you will have to do a bit of editing.
Now you need to create a lookalike audience. So you can target similar people to your most valuable customers.
If you feel like you are lost be sure to reach out to your marketer or agency.
Now the next thing you would do once you have your lookalike audience is to then set up and create your ads.
You're going to want to drive these potential CLTV through your sales funnel to get the best results.
Facebook is by far the biggest social media platform in the world.
With it being full of amazing features to reach your target audience with exact precision.
But even so, if you're missing your audience just from one small error. That can throw everything you're doing off.
And most brands and businesses do. So it's very important to make sure you have a professional or a team of professionals to get this done right.
If you're wasting money on campaigns right now. Then it's time to take a second look.
If you do implement this strategy you can expect a lot of sales to come in as you let time run its course.
Customer lifetime value audiences are important to businesses success.
Lifetime value is a metric you want to know.
Try creating this customer lifetime value audience on Facebook to capture the most interested users and drive your profits into the sky.
Set up your new lookalike audience with the lifetime value feature on Facebook.
This will help you target customers most similar to your top purchasers for increased revenue.
Next, create the most compelling ads and split test them for better performance.
Make sure you are driving those customers through your proven sales funnel.
What has been the most valuable campaign you have launched on Facebook?
The Chappell team is here to help business owners scale their digital marketing results.
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