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Customer lifetime value (CLV) and lifetime value (LTV) are among the two most significant metrics for evaluating loyalty.
LTV shows the amount that customers will bring over the total time they interact with your company. On the other hand, CLV shows how much a customer will bring over the entire time they interact with your company.
CLV vs. LTV share the same meaning.
But the key difference is that lifetime value deals with aggregate customers while Customer lifetime value focuses on an individual customer.
The two metrics are aligned with Kaizen practices (continuous improvement).
And this means if you continually optimize your campaigns by 1% for a year, your ROI will balloon by a whopping 3,778%. You’ve got to test, measure, and optimize consistently to keep customers coming.
To optimize your CLV and LTV metrics in real time, you need a tool to keep you informed via a stream of easy-to-digest and real-time insights.
There’s an AI-driven application that can save you time by providing you with real-time insights into the two metrics. More so, the aforementioned tool is aligned with the Kaizen practices.
In this blog, you’ll learn:
Before we address the key theme of the blog, let’s address the following question: what is CLV?
The customer lifetime value (CLV) is the present value of a brand’s customer based on past or predicted purchases.
The metric can help you forecast the value of a customer based on past interaction data. Besides, you can easily segment your clients into high, mid, and low-value customers. The CLV can help you divert market spend to the customer base that drives maximum value with minimal costs.
Also, you can define customer lifetime value (CLV) as the total amount of revenue a business can expect to earn from a customer over a period they remain a customer.
Keep reading because we’ll highlight CLV vs. LTV benefits for businesses like yours in the coming section. But first, let’s address the following question: why is CLV so important?
The CLV identifies the specific customers that contribute the most revenue to your business. And this allows you to serve them with products/services they like, resulting in them spending more money.
Of the companies that experienced stagnant or decreasing revenue in 2021, only 29% agreed that investment in customer satisfaction was significant.
On the other hand, businesses that invest heavily in customer success are likely to earn more revenue.
If you optimize your CLV consistently, you’re likely to experience customer loyalty and retention growth.
And with more loyal customers comes a lower churn rate and an increase in referrals, positive reviews, and sales.
Keep reading because we’ll address the CLV vs. LTV benefits in great detail in the coming sections.
You’re likely to reliably forecast the amount of money customers will spend in your business over time if you know their customer lifetime value.
Besides, you can easily develop an acquisition strategy that targets customers that will spend the most on your business.
Acquiring new customers is costly.
A recent article from The European Business Review noted that acquisition is typically five times more expensive than retention. Retaining high-value clients can really boost your profit margins and reduce costs in the long run.
Keep reading because we’ll address the following question in the coming section: what is LTV?
LTV is a metric that measures the net profit attributed to an ongoing relationship between customer and product.
You can easily set marketing budgets by forecasting an estimate of the amount a consumer is likely to spend on your products.
If you can successfully predict a user’s lifetime value (LTV), you can plan for a low-cost and highly targeted campaign to win your best customers.
Keep reading because we’ll address the following question in the next section: why is LTV so important?
With each ad, post, or piece of content, one of your goals is to see a return on investment.
The other goal may be to attract some high-quality customers or clients who will buy again and again. While you can measure your cost per lead and retention rates, the aforementioned metrics don’t tell you much about the time customers are spending in your funnel.
This is where lifetime value (LTV) comes in.
The lifetime value metric can help you calculate a long-term return on investment. And this is because it goes beyond just one campaign.
LTV can help you know your most loyal customers, especially when setting up loyalty-based programs.
In the next section, we’ll address the following: what is the difference between CLV and LTV?
The difference between CLV vs. LTV is blurred.
Why?
The two metrics measure the value of a customer over an extended time. However, LTV focuses more on the cumulative value of all customers interacting with your brand continuously.
Automation is one of the innovative ideas you can use to shape your customer loyalty and retention strategy without spending hours tediously updating scope, timing, and targeting.
Leverage third-party applications to do the hard work for you.
Remember, it’s almost impossible to keep an eye on every change in your marketing campaigns. Automate some of the most time-consuming activities related to retaining return customers.
Without an AI-driven marketing tool, you’ll have to spend an exhausting amount of time analyzing your data for opportunities to retain high-value clients within the ever-changing stream of numbers.
This is where PPC Signal comes in.
So, what is PPC Signal?
PPC Signal is designed ground-up purposely to help you optimize your SEM campaigns.
Besides, this iconic time-saver is designed purposely to help you implement data-driven strategies at an affordable price.
PPC Signal uses artificial intelligence technology to monitor your data for significant changes requiring your action automatically.
The changes mentioned above can be categorized as:
A shift occurs when consecutive data points fall above or below the norm. On the other hand, outliers are single data points that fall way above or below the standard deviation line. Trends are the relatively long-term up and downswing movement of a particular phenomenon.
These noteworthy changes are presented as signals, and each signal is labeled as either a risk or an opportunity.
Take a look at a PPC Signal dashboard, as shown below.
Let’s explore the insights provided by PPC Signal, as shown above.
Key insights are denoted as risk or opportunity using red and green colors, respectively.
In the last 28 days, the cost per conversion has been on the rise, which is a risk. And if left unattended, it can easily drain the ad budget.
PPC Signal provides you with the ability to filter your signal (risk or opportunity) based on:
The blue Explore button provides more details about a signal using charts and additional information.
You can easily bookmark a signal for later reference by clicking the Bookmark button.
You can also explore the signals provided in visual form to gain in-depth insights. Besides, you can easily forecast the occurrence of a risk or an opportunity by extrapolating the chart.
PPC Signal has the Take Action button which, if clicked, corrects all the problematic areas contributing to risks in your pay-per-click (PPC) campaign. Furthermore, it produces automatic signal reports with recommendations you can take to drive high ROIs with minimal costs.
For instance, if we were to optimize the campaign in the screenshot above, we would’ve taken the following corrective actions:
Firstly, we would’ve written compelling, clickable PPC ads highly relevant to the keyword/search query and your intended audience. Also, we would’ve added high-intent mid-tail and long-tail keywords that indicate a searcher is in the buying phase.
Secondly, we would’ve maintained a high degree of relevance between our ads and corresponding landing pages. Our landing page would’ve been re-designed to align with the promises made by our ads.
Lastly, we would’ve tested our landing page design. We would’ve conducted A/B testing to find the right layout, copy, and colors that push the highest percentage of site visitors to convert.
Maintaining the performance of your business’s CLV vs. LTV should never be challenging. Try PPC Signal today.
No, but the difference is blurred.
The customer lifetime value (CLV) is the present value of a brand’s customer based on past or predicted purchases. LTV is a metric that measures the net profit attributed to an ongoing relationship between customer and product.
Customer lifetime value (CLV) and lifetime value (LTV) are the two most significant metrics for evaluating loyalty.
LTV shows the amount that customers will bring over the total time they interact with your company. On the other hand, CLV shows how much a customer will bring over the time they interact with your company.
CLV vs. LTV have minute differences.
But the key difference is that lifetime value deals with aggregate customers. On the other hand, the customer lifetime value focuses on an individual customer.
No matter how complex or paralyzing your data is, PPC Signal provides actionable observations about positive and negative changes occurring in your marketing campaigns.
Sign up for a 7-day free trial to retain more high value customers and drive the sky-high returns from your budget.
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