LekkeSlaap’s LTV Model Activates Smarter, More Effective Bidding

Tom Bruno March 2019

Offering thousands of accommodation options across South Africa and Namibia, LekkeSlaap is the world’s first Afrikaans-language online accommodation website. LekkeSlaap wanted to understand the attributes and behaviours of high-value customers as a way of predicting the future value website users. They planned to use these insights to optimise their customer acquisition and retention strategies.

Goals
Predict future value of existing customers
Understand attributes and patterns of high-value customers
Refine customer acquisition and retention strategies
Approach
Uploaded five years of transactional CRM data into a lifetime value (LTV) model
Divided customer base into five equal segments
Analysed behaviour patterns of high-value customers
Customised bids for specific audience segments based on their expected value
Results
2X higher conversion rate among LTV audiences vs. other audiences
21% click-through rate (highest across all Google Ads accounts)
50% lower cost per acquisition among LTV audiences vs. standard Search

LekkeSlaap recognised that customers who had proved to be valuable in the past might not be as valuable in the future. They also acknowledged that customers have different purchasing patterns, frequencies of engagement, values, and volumes of bookings. To identify their most valuable clients, LekkeSlaap worked with Google to develop and test a lifetime value (LTV) model.

The model incorporated five years of LekkeSlaap’s transactional CRM data and divided the customer base into five equal segments. Analysis revealed that 20% of the customer base was set to drive 65% of future revenue from existing customers.

Google and LekkeSlaap analysed the behaviour patterns that prevailed among high-value customers. When comparing the segments by channel, they noticed a higher expected value from customers sourced via Google Ads. Further analysis also revealed that customers who made enquiries before booking had a higher expected value than those who booked instantly.

LekkeSlaap then leveraged this information in Google Ads to provide tailored advertisements to specific audience segments based on their expected value. The team simply imported the LTV segments into their account and layered them into existing campaigns as a way of influencing those customers.

LTV audiences emerged as the account’s best performers, with a conversion rate that was twice as high as the audience outside of the targeting and the highest click-through rate (21%) across all of LekkeSlaap’s Google Ads accounts. What’s more, the cost per acquisition among LTV audiences was 50% lower than the brand’s standard Search campaigns.

“Building long-term traveller trust and loyalty is the heart of what we do. So being able to target travellers based on their future value is revolutionary. We’re making sure that our most important customers keep coming back to LekkeSlaap again and again.” – Marcel Van de Ghinste, Executive Director, LekkeSlaap

As they look ahead, LekkeSlaap plans to expand the impact of their LTV segments by importing them into Google Analytics and developing more insights to inform future marketing and remarketing campaigns aimed at high-value customers.