The lifetime value of customers in PPC and conversion

Sun 20 March 2011 18:58, J-P De Clerck

The lifetime value of customers in PPC and conversion

The human psyche is a complex thing. What we do, when we do it and why we do it are not altogether clear or even logical. And while Pavlov may have been able to get a dog to drool at the sound of a bell, that hasn’t led to any sure fire way for you to make people convert on your website at your command. Consumers don’t buy at the sound of a bell or even the sound of a click either. They may see an ad online and then wait days or weeks before actually buying. Paid clicks and ads may have a lag time until actual conversion, but that doesn’t mean they didn’t get you a sale.

Not considering the lifetime value (future purchases) of a consumer when bidding on key words can result in you making decisions without having all the key information you need to make the smart choice and bid accordingly – other critical decisions can be negatively impacted as well.

What is the expected lifetime value of your customers?

A lot of decisions are affected by this, from optimizing your landing pages and creative to budgeting your bids for PPC. Waiting on those purchases to happen means you might be lagging in optimizing your conversion touch points and even your bidding strategies. If you do seasonal promotions than you need to be predicting that lifetime value based on the data you already have if you want to stay current and not waste money on irrelevant keywords.

What you know about the past helps you plan for the future more efficiently. So, using the conversion data you have and compiling it into a snapshot of what you can expect from the customer after their initial click to your landing page is a huge advantage.

A purchase (conversion) is not a customer. It is an action by a customer and a key part of marketing optimization is understanding your customer and optimizing your conversion components and process so as to increase the likelihood of conversion. You can’t do that unless you put some effort into understanding your costumer and using it to make some smart predictions of what you can expect them to do.

Using this data you can optimize your overall marketing strategy, reduce costs for such things as PPC and hopefully increase conversions. Simple changes to little things really can have a dramatic impact on your conversion rates. Something as basic as revising the text for calls-to-action (CTA) or even substituting a graphic button for text on your landing pages can make the difference and bring in more revenue.

It goes without saying that you should be testing everything you do, from email marketing campaigns (a/b split testing) to landing page conversion rates.  But don’t get smug about knowing everything there is to know about your customer. Look at your data, track behaviour, discern the patterns and then use that information to provide a better experience for your customers and higher conversion rates for you.

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