Why your brand’s growth strategy must revolve around the acquisition of high value-added users

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User acquisition efforts are simply not what they used to be for brands, in large part because of a long list of recent changes. On the customer side, there have been lifestyle pivot points, including the end of quarantines and shelter-in-place orders. On the business side, changes between ad networks and operating systems have resulted in lower return on ad spend (ROAS) and reduced scalability.

The question is, what are the growth teams supposed to do in the future, as it is obvious that previous efforts are no longer up to par? Brands that have lived through it during the pandemic must figure out how to build momentum and scale quickly, before entering the danger zone. So what’s left?

The solution of the future for sustainable growth

If you ask me, I would say what growth teams need is a lasting solution to all of these challenges. After all, it’s just not possible for User Acquisition Managers (UAs) to keep changing policies in panic mode due to unexpected changes. For me, the best approach is to relaunch the focus on growth and maintain profitability by focusing on high-value UA through predictive modeling – a statistical technique used to predict future behavior. This modeling can overcome obstacles by using a single signal to embody a user’s lifetime value (LTV) based on a set of actions and behaviors, in addition to campaign performance. This allows marketers to send predictive signals to users most likely to make high-value purchases over time.

This is important, as there are difficulties with the limitations imposed by short-term optimization, which emphasizes top-funnel events such as enrollment, completed trials, commits of tutorial and many one-off purchases. These are great, but don’t tell if users will make a second purchase.

Related: Why industry leaders are turning to predictive analytics

Conversely, long-term LTV-based optimization, especially with prediction-based UA, allows growth teams to target loyal followers, pay less for one-time buyers, and tap into a untapped audience (in this context, people who would be more inclined to shop outside of the attribution window). There is less competition there, which means lower CPA and higher profit margins for brands.

Top Companies That Have Been Successful After Applying LTV Optimization

Facebook uniquely understands and recognizes the importance of LTV optimization. A series of discussions at the 2021 Facebook LTV Summit covered how top companies have successfully incorporated LTV data into predictive modeling to amplify growth efforts. One example discussed was the ever-popular BoxyCharm subscription product brand (owned by Ipsy), which wanted to target high-value customers in order to increase ROI and reduce churn. The company had optimized its UA on subscriptions within the standard seven-day conversion window. This approach worked, but only to a limited extent, given that even though it gave high subscription conversion rates, the churn rate was still a concern. What was needed was to target its long-term LTV audience to reduce churn and increase both LTV and profitability on a large scale, and BoxyCharm ultimately turned to a marketing tool to help. create a prediction model, then launch campaigns by optimizing that signal. The A / B tests have proven to be successful: the acquisition of high value-added customers which generated a higher return on investment.

The Facebook summit also included a presentation on how a leading casual gaming brand has also benefited from predictive modeling. She wanted to increase ROAS and expand her audience beyond the CPI cap, and this was only possible by creating a single predictive metric to target her LTV audience in the long run, lowering the cost of customer acquisition. and increase LTV and profitability at scale.

Related: 7 marketing trends that will define success in 2022

An LTV prediction model (based on an internal data lake) was created and activated by sending a personalized conversion signal to Facebook, allowing the company to launch the campaign by optimizing the signal. The results were remarkable across the board and included a 150% ROAS increase and a 75% reduction in CPU costs.

These solutions are aimed at businesses either in growth mode or already large and established, but even the largest growth teams with the richest pockets can benefit from an extra boost to amplify their UA campaigns on Facebook.

How LTV Data Can Be Used to Maximize User Acquisition Campaign Results

If your brand is having difficulty growing or even sustaining growth from 2020, you should consider focusing on LTV to achieve growth and scale. By matching demographics with affinities, interests, and other factors, you can create whole new audiences with the same track record as current customers of the crème de la crème. This essentially opens up opportunities for campaign diversification by covering a larger part of the customer journey and, therefore, acquiring new audience groups that might have been missed before. Scalability will be increased, without suffering from diminishing returns on ad spend. You can also use this data to optimize retention campaigns after promotional periods, or optimize paid search campaigns by focusing on keywords. There are many use cases!

Related: This Growth Hack will help your business win in 2022

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