Starting out in business is pretty tough. Although we live in age where it’s never been easier (or cheaper) to start a new business there is always an uphill battle to gain interest and more importantly, customers, to our new venture.
It is all too easy to burn through a whole lot of money on advertising and marketing for little or no return. Hoepfully this book will help you avoid some of the common mistakes we all make.
You can get the marketing strategies book here.
So what is ‘customer lifetime value’ (LTV) and why should you measure it?
Customer Lifetime Value is an extremely important metric that any size of business should be using to allow them to grow the business effectively. Why? Because in a nutshell it allows you to determine what you can spend to acquire a new customer and still remain profitable.
Imagine if you knew that every new customer cost you £100 to acquire but they were actually worth £200 to your business. You would keep spending that £100 over and over to grow the business.
Sounds straightfoward but many businesses don’t measure this or perhaps are not sure how to.
Firstly you need to determine your cost of acquiring a new customer. Now sadly this is where alot of systems fail, staggeringly many CRM systems, the very things that should be measuring this metric don’t! You need to track each channel you are marketing in and how many leads each channel generates. If you know your spend on a campaign and the number of customers it has produced then you have your starting point.
Now you need to calculate the total spend a customer makes over their ‘lifetime’. Now again this isn’t that straight-forward as how do you determine a customer that is dead from one that is live? Well you can use another metric called ‘latency’. Latency is the amount of time between each customer purchase.
Once you have your ‘average’ customer lifetime value and your current customer acquisition cost you can now determine if there are funds to enable you to increase your marketing spend. Many marketers use these metrics to actually lose money or break even on the initial sale to boost customer conversions as they know they can recover this cost on the ‘back-end’ by selling higher value items. This is also known as ‘moving the free line’.
Normally with copywriting it is all about the headline and then the copy. However if you are considering facebook advertising it is all about the image.
However when you think about it there is a fundamental difference from a Facebook user to a google searcher. One is (or you can determine) actively looking for information or to buy a product or solve a problem and the other is simply looking to hook up with friends and share their feelings/thoughts etc. The bottom line is this, you have no idea if they are looking to buy your product or service.
So you need to re-think your ads, you might not be able to sell them on your product or service but you might be able to get them to ‘Like’ your page which is setup specifically to promote your product or service. Once they are a fan you can then build that relationship and monetise later. The key here is, and my initial testing has found that you can significantly boost your click through rates, create a fan base and drive down your cost per clicks.
The point of this blog is to share my marketing wisdom as I leave behind my work as a developer. I have a free course on udemy which covers essential tips which I have learned from running adwords campaigns since 2006. The course is free and is available <a title=”Google Adwords Essential Tips” href=”https://www.udemy.com/google-adwords-essential-tips-for-profitable-campaigns/” target=”_blank”>here</a>.
I stumbled across an old customer last week who is paying for google adwords. Now the key thing is they are paying for their ads to be displayed for something <em>completely unrelated to their business</em>.
I was searching for a term related to something to do with software development. This particular tool has a name which also happens to be one of their product names too. So anyone looking for this keyword in the context of software development has no interest whatsoever in what he is selling (actually a small percentage might). But the point is this; the effectiveness of your ads is measured by the click through rate (CTR). So if your ads are showing for searches completely unrelated to your niche then your CTR is going to come down, and, even worse, your cost per click is going to go UP!
So how do you determine what negative keywords to include in your campaign?
Simple, use the google keyword planner and take some of the sites that are showing in the organic listings and run them through the keyword tool. This will give you a list of keywords you need to include in your negative keyword matches. So in our example this would be
If you aren’t including negative keyword matches in your campaigns then you really should investigate that the keywords you are bidding on are not triggered by some unrelated searches.
I do courses on Udemy and this particular one is what underpins what I do. The bringing together of marketing and IT to automate/measure the effectiveness and/or communicate your relevant message to your target audience.
Most small businesses have a mine of useful data already locked up in their accounting system. By using this data and segmenting it, it can be used to create compelling, relevant offers or perhaps reinvigorate potentially lost customers.
You can access the course here.