The end goal for any business, big or small, is profitability. Managing costs and operating efficiencies is one way to increase profit margins, but savvy marketers know of another sustainable way to maximise profits — through customer lifetime value. Here’s why it works.
A customer who is happy, engaged, and continuously interested in your brand after they first buy into it will keep spending with you; this creates a virtuous circle of conversions. Every subsequent customer action brings profits, and every time they tell family and friends about your brand, it’s a priceless endorsement.
To drive the highest conversion value and maximise profits continuously, brands need to find valuable customers, connect with them at scale, and optimise this customer acquisition process.
Finding and connecting with valuable customers at scale
Winning the attention of valuable customers starts with putting your best content forward and showing up with relevant offers and the latest products. Once these customers take notice and are impressed, your business will more likely earn recurring visits, purchases, and profits. Indispensable to finding and connecting with valuable customers at speed and scale is marketing automation.
Brands that have used Performance Max enjoy an average increase of 13% in total incremental conversions at a similar cost per action.
Performance Max, for example, enables you to automatically prioritise customers who are likely to bring the most value to your business with simple inputs like your campaign goal and creative assets. Brands that use this marketing automation solution enjoy an average increase of 13% total incremental conversions at a similar cost per action.1
OPPO Malaysia’s Performance Max campaign, for instance, delivered exceeding results. To promote the launch of its A95 mobile phone, it ran a Performance Max campaign across multiple platforms, including Search, YouTube, and Display. The unified, automated marketing campaign enabled it to effortlessly unlock scale and increase conversions on its website significantly, as compared with adopting Search campaigns alone. It achieved 46X more conversions, at 96% lower cost per conversion, and a 2.6X higher conversion rate.
Optimise the process of acquiring your most valuable customers
Not every customer brings the same value to your brand, and not every interaction begets the same value for your business. The revenue a customer brings in via a store visit is different from that of a person making a phone enquiry, and a consumer filling out a form online. Knowing which customers and actions drive conversion can help you focus on acquiring more valuable customers and maximising your profits in the long-term.
You can start by identifying and attributing dollar values to your conversion actions. As in the example above, you can set a value for different actions such as a store visit or a phone call. Doing so enables you to maximise the conversion value of your campaign.
On average, advertisers that switch to a value-based bidding strategy see 14% more conversion value at a similar return on ad spend.
A value-based bidding strategy then allows you to monitor the real impact of a campaign on your business. For example, a return on ad spend bidding target enables you to bid to your desired outcome. On average, advertisers that switch to a value-based bidding strategy see 14% more conversion value at a similar return on ad spend.2
A key requirement of value-based bidding is the ability to measure the monetary or business value of your conversions, since not all conversions are equal in value.
Next, you can level up for conversion quality and value.
Value-centric measurement allows you to share and integrate first-party conversion value data such that the Ads products can learn and optimise for higher value transactions. This can be done by identifying the right KPIs or modelling how different consumer touchpoints impact conversion.
By using value-centric measurement, value-based bidding strategy, and marketing automation solutions, you can create a virtuous circle of high-value conversions. This makes it easier than ever for you to maximise profits in a sustainable way. Finding your most valuable customers and driving the highest conversion value to maximise profits will never feel like you’re looking for a needle in a haystack.
Watch the Google Marketing Live keynote to learn how Traveloka harnessed Google’s proprietary signals and automation capabilities to create a results-driven campaign aimed at driving higher conversion value, and how you can reach the highest value customers to maximise profit.