And that’s where mobile engagement rears its ugly head. We’ve all downloaded apps with the intention to use them, only to use them once or twice. Slowly, those once shiny new apps get pushed to some buried screen on our smartphones or tablets, never to be opened again—victims of a condition known as disuse apptrophy.
It doesn’t have to be that way, however. If your company has produced or is planning on developing a mobile app, remember that it is really just a gateway to a different sort of proprietary audience. As such, you must launch your app with a mobile engagement strategy in mind. Smart app developers now do a few things to boost app engagement, including:
Acquire mobile app SUBSCRIBER email addresses to enable direct updates and other communications from the developer.
Encourage activation of the app’s push notifications (on-screen messages that appear within the device) to foster reengagement.
Whether we’re talking email, mobile or social media, engagement isn’t just a fluffy marketing term providing cover for those afraid of performance measurement. It’s a critical activity that helps ensure broader visibility/distribution of social media posts, increase email deliverability, and boost mobile app engagement.
Value
The final attribute we must seek to increase with our proprietary audiences is their value. If beauty is in the eye of the beholder, then value is in the wallet of its owner. Your company’s leadership rightfully expects proprietary audiences to deliver measurable ROI. But when it comes to audiences, what is the “Return” in “Return on Investment”? It is a value that we can measure in many different ways:
1. Lifetime CUSTOMER Value (LCV)
2. Lifetime Incremental Value (LIV)
3. Campaign Conversion Value (CCV)
4. Net Equivalent Value (NEV)
5. Direct Comparative Value (DCV)
6. Comparative Incentive Value (CIV)
Lifetime CUSTOMER Value (LCV)
Of all the ways you can measure a CUSTOMER’s value, Lifetime CUSTOMER Value (LCV) is probably the most important.14 LCV is best stated as:
The net present value of the future stream of cash flow a company expects to generate from a CUSTOMER.15
The easiest way to calculate LCV is the following equation:
LCV = (Average Value of a Sale) × (Number of Repeat Transactions) × (Average Length of Customer Retention)
Thus, if on average your CUSTOMERS make purchases of $50 per month, and you retain CUSTOMERS for five years, your LCV is $3,000 ($50 × 12 × 5) or $600/year.
LCV helps determine what you should be willing to spend on CUSTOMER acquisition. Some companies will spend up to, but not over, the value of the first sale ($50 in our example). Others may be willing to spend more depending on their ability to absorb the initial marketing expense and upsell CUSTOMERS over and above the projected LCV. Whatever the case, the LCV provides a clear line around which you can make marketing investments.
To use LCV to determine the value of a proprietary audience, you need to be able to identify which of your audience members are CUSTOMERS and which are not. Such efforts are easiest in industries where email addresses, loyalty program member numbers, or phone numbers are associated with CUSTOMER accounts (B2B, online retail, etc.). In such cases, you can use the following equation to derive the value of your audience:
LCV for Proprietary Audience = LCV × (Number of CUSTOMERS in Your Proprietary Audience)
Thus, if we have an email SUBSCRIBER base of 100,000 people, of which 10,000 are CUSTOMERS, the value of that proprietary audience to our organization is $30 million (LCV of $3,000 × 10,000 SUBSCRIBER CUSTOMERS) or $6 million per year (since our original LCV was calculated over a five-year period).
Put a figure like that in front of management and you’re bound to convince some folks that audiences are assets! After all, you don’t just want anyone being a push button away from $30 million in future revenue. You’d want your best people, and you’d want them happy and healthy.
While using LCV can turn heads in the C-suite, it can also lead your Proprietary Audience Development efforts horribly astray. That’s because LCV is not solely attributable to your proprietary audience communications. Advertising, experience with products, the quality of your service, and many other factors contribute to a CUSTOMER’s LCV. Thus, when we use it to express our proprietary audiences’ value, we must recognize that while LCV tells how valuable the people in our audiences are, it doesn’t indicate how much more valuable they are than any other group of CUSTOMERS.
Fortunately, there IS another measurement that does.
Lifetime Incremental Value (LIV)
To get to that deeper appreciation of the value our Proprietary Audience Development efforts adds, we must modify the LCV calculation to help derive a given audience member’s Lifetime Incremental Value (LIV):