By Bryan Karas, CEO, Playbook Media
The 2023 holiday season is shaping up to be more challenging than usual for retail marketers. Recent reports anticipate flat year-over-year spending and show that more customers than ever (45%) will be leaning on coupons, sales, and comparison shopping.
I’ve been working with a lot of clients lately on strategies that incorporate LTV, or lifetime value. And I see LTV coming into play in a big way in Q4 – and into 2024, for advertisers who wisely plan to incorporate it into their longer-term approach.
In this article, I’ll look at LTV: how to position yourself to reference it this Q4, how it should inform your Q4 offerings, and insights you can take from Q4 and turn them into 2024 advantages.
How to position yourself to use LTV
At heart, LTV is based on first-party data and a good CRM set-up. You need clean data to accurately measure, and develop segments according to, customer LTV. Good first-party customer data can help you identify quadrants of LTV:
- low purchase frequency / low average purchase price
- high purchase frequency / low average purchase price
- low purchase frequency / high average purchase price
- high purchase frequency / high average purchase price
The last segment, of course, is your most valuable set of customers – but each segment will have commonalities (demographics, interests, purchase patterns) you can use to your advantage in Q4.
Once you’ve defined your segments, I recommend that you crunch the data, speak with your customer service team to get qualitative insights on each segment, and perhaps even conduct some focus groups to hear insights directly from your customers. That information will give you plenty of rich understanding to help you tailor separate, highly relevant advertising campaigns.
How to use LTV to inform your Q4 offerings
Yes, 45% of consumers cited above are looking for low prices. That means 55% aren’t – and as far as your user base is concerned, that 55% will feature a disproportionately high share of your highest-LTV customers. Those are folks who have already shown a preference for your brand; you don’t necessarily have to eat into your margins by offering them deals they’re not prioritizing. Instead, lean on exclusivity: memberships, early access to new products, limited releases, etc.
Users who purchase infrequently but go for higher-priced products may value things like durability that you can play up in your messaging and creative assets. And for your users who show a preference for lower-priced products, you should absolutely put coupons and sales in play – but create properties for those sales and point those segments to those properties rather than blanketing your site and all of your ad campaigns with a general discount. In other words, give away some margin when you need to do so to make the sale – and preserve it when you can entice people to buy without it.
How to leverage Q4 insights in 2024 strategies
First things first: if your CRM setup and data collection need maintenance, do it now so you’re able to gather quality data from the impending rush of Q4 activity. That data will be a big part of your customer understanding and subsequent ad planning in Q4.
Second, make sure you’re setting up post-purchase and nurture campaigns to continue to track activity from all Q4 customers, whether they’re new or returning. In my experience, Black Friday/Cyber Monday deal shoppers don’t necessarily have the same LTV as customers acquired outside of normal sales times – they’re shopping for deals, not shopping out of loyalty, and you may see that reflected in a lack of activity from your nurture campaigns. Those users will likely be enticed back by things like inventory clearance sales and promotional messaging, so consider using your lower-LTV segments to test different offers in 2024 – and manage expectations of incremental revenue from those users accordingly.