A marketer argues that lifetime value, not click counts or unit sales, should measure marketing success. He cites Byron Sharp's research to show that chasing purchase frequency wastes money on low-value customers, while acquiring high-CLV customers yields returns many times greater.
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What are some of the myths that you say marketers believe are true, but just, you don't believe are true, that they are not well backed up by the data? So part of it is, is you mentioned How Brands Grow by Byron Sharp, and I have the ultimate love-hate relationship with that book. 80% of it's spot on. People should read it. And instead of arguing why my business is different, they should accept it. So some of those ideas that it's really important to grow the base, focus more on penetration than say something like purchase frequency or loyalty, that the latter will follow from the former. Advertise broadly, emphasize a variety of different messages. The other thing that a lot of companies focus on is let's come up with products or campaigns that are broadly popular, that we're going to measure success based on how many people clicked on the thing or how much buzz it generated, or even how many units we sold of the thing. I'm much more interested in lifetime value. I'm much more interested in, well, what kinds of customers did the clicking or the buying or the responding? And that we maybe will sell a product or sell a bunch of units to a bunch of customers who never bought from us before and are never gonna buy from us again. The ROI on that long-term ROI isn't gonna be that high. Whereas we might come up with a product that doesn't really sell a lot, but it helps us acquire high CLV customers or elevate the CLV of existing customers. Then that second product might be worth 10x more than the first one. So we should be looking at everything we do through the lens of customer lifetime value.
