Your Affiliate Marketing Longevity
In the affiliate marketing industry, cost-per-acquisition has always been king. It’s the metric that tells us how much it costs to drive a sale, and how much can be spent in order to close that sale.
But what if there was a different metric? One that gave a deeper understanding of the customer journey and of which customers are the most profitable? Did the customer purchase the upsell offered after the initial purchase? Did they subscribe to receiving your product for months at a time? Did they make a related purchase for a new product?
All these questions can now be answered with the help of new technology and advanced analytics tools that are accelerating the evolution of the affiliate marketing industry. The analysis and valuation of consumer behavior beyond the initial click can be aggregated into a single metric known as Customer Lifetime Value (CLV), and it may be the most important metric that you are ignoring.
Customer Lifetime Value
A simplified way to think about a customer’s lifetime value is the dollar amount gained from their “lifetime” of engagement with you. Depending on your product, this lifetime could be short or long term – analyzing your data will give you a good idea of what an ideal customer lifetime value is. How many customers made a repeat purchase? How long did a customer continue to stay receptive to your product offerings? Answers to questions like these will help you quantitate the average “lifetime” for your ideal customer.
A tracking platform can help you pull the necessary data on each of your customers by assigning all of a buyer’s purchases to an anonymous individual ID. Examining an average of your customer behaviors will provide insight into which ones contribute most to profitability and thus make a huge difference in your marketing efforts.
Using CLV to Optimize Across Platforms
If you’re utilizing multiple affiliate platforms to drive traffic to your campaigns, CLV analysis is a great way to compare the performance of each platform. It’s one thing to know the amount of traffic received from an affiliate platform, but it’s arguably even more important to know the quality of the traffic and how profitable it is over time. Analyzing this CLV data will help you determine if your expectations are on target, too low, or too high, and whatever the outcome, it is much better to be able to make informed decisions rather than just flying blind.
CLV allows affiliate managers to see the true value of their entire channel and which affiliate partners drive the most loyal and profitable traffic. This information can then be used in the creation of promotions to reward the most profitable lifetime customers and encourage them to keep returning.
Applying Machine Learning to CLV
Thanks to machine learning advancements in affiliate marketing, customer lifetime value analysis can now be used to discover related products that your customers are likely to purchase. Using accumulated data on previous purchase combinations and on typical customer behaviors, you can now identify related items that a given individual customer may be more likely to buy.
This is called association analysis, and it’s a genius way for brands to proactively position themselves up for increased sales. Having insight into exactly which types of products to market together, or in sequence, is likely to lead to the greatest chance of a customer making multiple purchases.
Over time, your customer lifetime value data becomes extremely powerful. When CLV is high, it will tell you where to continue pushing your efforts. If it’s low, it may well be a sign that it is time to reevaluate the products and partners you work with.
As with all metrics, it’s important to remember that, while collecting CLV data is important, it is not the end all be all analysis solution, however with the volume of granular data that affiliates and affiliate partners now have access to, there is every reason to focus on the big picture of exactly which customer behaviors drive most profit.
Clickbooth is a technology company that takes a programmatic approach to traditional performance marketing resulting in zero risk and higher returns for clients. The company’s proprietary performance exchange provides advertisers looking for new customer acquisitions access to the largest distribution network of online marketing experts, specializing in display, social, native, search, email and contextual traffic. Affiliates using the platform see 30% higher EPCs and let the platform handle optimization, cap management and offer testing for them, allowing them to aggressively scale their businesses. Visit us at www.clickbooth.com.