Blog

Benefits of Adding Lifetime Customer Value (LCV) to Your Marketing Metrics

Lifetime Customer Value (LCV), also known as Customer Lifetime Value (CLV), is a metric that helps you, as a marketer, to understand the total worth of a customer to your business. By focusing on LCV, you can make better-informed decisions on allocating resources effectively, enhancing customer relationships, and driving long-term profitability.

How to Calculate Lifetime Customer Value

Lifetime Customer Value is a projection of the total revenue you can expect from a single customer throughout their relationship with you. It encompasses all purchases made by the customer and considers the profitability of those purchases.

How you calculate LCV can vary depending on the business model and desired detail level. Here is a simplified formula to get you started:

LCV = (Average Purchase Value) x (Number of Purchases per Year) x (Customer Lifespan in Years)

That doesn’t sound so bad, right? Calculating LCV has a lot of benefits, including:

1. Better resource allocation. By knowing the LCV, you can focus on acquiring high-value customers and invest in retention strategies that maximize long-term profitability.
2. Better customer segmentation: LCV helps identify customer segments based on their value. This allows you to tailor your marketing efforts to high-value segments using personalized offers and services.
3. More accurate marketing ROI: This ensures your marketing budget is spent efficiently in acquiring and retaining profitable customers.
4. Better strategic planning: LCV helps you forecast revenue, identify growth opportunities, and make data-driven decisions.
5. Competitive advantage: Companies that leverage LCV can gain a competitive edge by understanding their customers better and delivering superior value.

Real-Life Example

What might this look like in real life? Consider a subscription-based streaming service. By calculating the LCV of their subscribers, the company can determine how much to spend on marketing to acquire new subscribers. For instance, if the average subscriber pays $10 per month and stays subscribed for three years, the LCV would be:

LCV = $10 x 12 x 3 = $360

This information helps the company decide on a budget for acquisition costs, ensuring that they spend less than $360 to acquire a new subscriber, thus maintaining profitability.

What difference can knowing LCV make for your marketing?

Crafting Copy that Converts: Details Matter

When selling a product or service, the words you choose matter. It is not just what you say but how you say it. Whether you’re fine-tuning a direct mail headline or crafting the subject line for an email, making subtle tweaks can make a huge difference.

Let’s look at three examples from MECLABS, a research institute devoted to unraveling the factors that impact human decision-making to see just how much difference small changes can make. MECLABS has demonstrated how minor modifications can lead to substantial success by assisting companies in experimenting and enhancing their marketing strategies.

Here are three examples from the institute’s research that show just how much difference minor copy tweaks can make:

1. Boosting with psychology. One men’s style retailer boosted its newsletter sign-ups by 17% simply by changing its subject line from “Out-Dress the Other Guys” to “Don’t Let the Other Guys Out-Dress You.” The retailer struck a chord with its male audience by tapping into the fear of not looking your best.
2. Boosting with a twist. A French language blog saw a 0.5% increase in conversion rates by changing its headline from “Do you want to speak French fluently?” to Voulez-vous parler français? This unexpected twist sparked curiosity and drew more people in.
3. Boosting with insight. A private school looking to boost enrollment discovered that parents were more interested in developing their children’s personal qualities than just focusing on college prep. By adjusting its messaging to reflect the school’s emphasis on individual development and academics, the school saw a surge in enrollment.

These examples show that the devil is in the details regarding messaging. To see what resonates with your audience, try split-testing different wording, images, and headlines in your marketing materials. You never know—a small change could lead to significant results!

Should You Add Color to Your Envelopes?

If there are two envelopes on the counter, one in color and one in plain white, which one will you look at first? The one in color, of course. There are many statistics on the value of color in marketing, including mailing envelopes. But our own experience is often the most powerful evidence of all. We know what a powerful motivator color can be.

Let’s look at five ways you can use color in your mailing envelopes to increase the chances that your envelope will get opened and your marketing communications read.

1. Use Bold and Bright Colored Envelopes

Bright, bold colors like red, orange, and yellow are naturally eye-catching and can make your envelope stand out in a stack of mail. For example, a bank sending a promotional offer might use a bright yellow envelope to attract immediate attention and convey a sense of urgency. According to the Direct Marketing Association, colorful envelopes can increase response rates by up to 20%.

2. Add Custom Designs and Patterns

Unique designs or patterns, such as stripes, polka dots, or seasonal themes, make the envelope visually appealing and intriguing. For example, consider adding a seasonal-themed pattern for your next seasonal sale to evoke curiosity and a festive spirit.

3. Incorporate Branding Elements

Using your brand’s colors, logo, and tagline can make the envelope recognizable and reinforce brand identity. It can also build brand consistency and trust.

4. Utilize Full-Bleed Printing

Full-bleed printing, where the color or design extends to the edges of the envelope, adds color, and creates a polished and professional look. For example, a travel agency could use full-bleed printing to feature a white sandy beach with sapphire blue water and white-crested waves and a beach chair with the recipients’ name printed on it. Imagine the impact of that in the recipient’s mailbox!

5. Add a QR code

Consider adding a QR code to your envelope. QR codes are generally added to the interior letter, but why not put it on the outside of the envelope instead? Print it in color or add a full-color logo in the center. (This is quickly done in most QR code generation programs.)

Adding color to the outside of your envelopes doesn’t have to break the bank. It adds only incrementally to the cost, which can significantly increase the open rate and ultimately lead to higher engagement and response rates. Why not give it a try?

Gear Up Your Marketing Strategy for Summer Success

As the temperatures rise and the days grow longer, it’s time to embrace the season of sun, sand, and strategic thinking. While your competitors may be taking a marketing breather during the laid-back days of summer, you don’t have to. Use this time to gain a competitive edge. While your competitors are cooling their heels in the sand, you can revamp your strategies for the months ahead.

Here are three strategic steps to take during the summer months:

1. Reflect on the performance of your spring and early summer campaigns. What resonated with your audience, and what fell flat? By analyzing these insights, you can fine-tune your approach and set yourself up for success in the fall.
2. Establish clear goals. Whether adjusting your marketing mix, defining new target segments or personas, or infusing your campaigns with fresh seasonal tie-ins, setting specific objectives will guide your efforts and keep you on track.
3. Evaluate your metrics. How are you evaluating the success of your campaigns? Are your metrics the right ones to lead you to success? For example, are you still using simple response rates when conversions or order sizes would give you better insight?

You may be wondering how to navigate any new approaches to your strategy. Don’t worry. We’re here to help you refresh your brand and stay ahead in the competitive landscape. Our team of experts is ready to collaborate with you to elevate your marketing game.

So, as you soak up the summer vibes, remember that now is the time to strategize, innovate, and prepare for the successful marketing campaigns that lie ahead. Let’s make this summer your coolest one yet!

Embracing Print as a Sustainable Marketing Strategy

In today’s digital age, where we are used to hearing, “Go paperless! Go green,” print unfairly gets a bad reputation. However, print is a sustainable choice for businesses looking to minimize their environmental impact. Let’s look at some compelling data points that highlight the sustainability of paper.

READ MORE

Five Key Areas of the Direct Mail Envelope to Captivate Your Audience

Pay close attention to the envelope to maximize the impact of your direct mail campaigns. The envelope is your mail’s first impression, and optimizing its design can significantly boost your response rates.

READ MORE

Want to Keep Your Customers Loyal? Do This!

Did you know that loyal customers purchase more frequently, have larger basket sizes, and are more receptive to upsells? It’s no wonder two-thirds of most businesses’ sales come from existing customers.[1] Once you win those customers, you want to keep them!

READ MORE