Customer Lifetime Value And How You Can Use It In Facebook Ads

What Is CLTV?

Customer Lifetime Value (CLV or often CLTV), Lifetime Customer Value (LCV), or Life-time value (LTV) is an estimate of the overall profit attributed to the entire future association with a customer.

Importance Of CLTV

By calculating CLTV, this crucial metric will help you answer key questions related to your business such as - the most economical way to acquire customers, how to turn visitors into customers, and how to convert a one-time customer into a lifetime customer.

The Most Important Metric

Out of all important metrics, Customer Lifetime Value is an essential metric, about which you need to know everything - this will help you evaluate your marketing efforts and calculate ROI.

Calculating CLTV

CLTV: Annual revenue per customer x Customer relationship in years / Customer acquisition cost. Or, use the upGrowth calculator

CLTV And Facebook

For Facebook ads, customer lifetime value is especially relevant for value-based Lookalike Audiences. If you add a customer lifetime value column to a file you’re uploading to create a Custom Audience, you can use that Custom Audience as a source for a value-based Lookalike Audience.

Importance Of CLTV In Facebook

Advertisers can upload their customer lifetime value data as part of a customer file Custom Audience. They can use that Custom Audience as the source for a value-based Lookalike Audience, which is a group of people to target with ads who are most similar to the high-value customers they already know.

Avoid Ranking Customers

Say you have 100 customers and each one is worth between $200 and $1200. You rank them from 1 to 100. This won’t work because value isn’t proportional here either.

CLTV: & Facebook: Dos

Here are a few steps to use LTV custom audiences on Facebook. Include LTV in a custom audience. Then, create a value-based lookalike audience. And thirdly, measure your performance.

Here are a few steps to use LTV custom audiences on Facebook. Include LTV in a custom audience. Then, create a value-based lookalike audience. And thirdly, measure your performance.

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