Hey everyone! Welcome to part 4 of my Ultimate Guide to LTV where I go deep on all things LTV. Last week I shared how to identify high value users and now I’m closing the chapter by sharing how to leverage LTV in Marketing.

Let’s go!

Take any classic Marketing class and you’ll come across the 4 Ps of Marketing. The 4 Ps of Marketing are the foundational element that any company should think through when building their marketing strategy.

We seem to have lost that especially in B2C tech where the idea that a PM is the only one who controls product has become the norm. Then there’s a separate team that looks at Pricing and finally Marketing has a bit of “Place and Promotion”.

Regardless, it’s important to realize that Marketing can influence all 4 of thse Ps and below are 10 ways on how to build better Marketing leveraging LTV.

I’m not here to get into the debate of LTV : CAC vs payback period. In fact, they’re basically the same but I’ll save that for another day.

What’s really important is that you calculate LTV : CAC or payback periods on a segmented customer basis. Whether you use by channel or product platform (web vs mobile) or any other configuration you want, the reality is that you should be segmenting your customers to set smarter CAC targets using LTV.

If you’re not setting CAC targets based on LTV then you’re effectively rowing a ship without a clear north star. You have no idea if your current trajectory is sustainable or not.

If you can do this and action on it, you’re ahead of 99% of companies.

Taking Step 1 further is budget allocation and bidding optimization. This is where you not only set targets at a CAC level but then reinforce that decision by putting more weight behind it with better budget decisions and bidding decisions. Here’s 3 ways you can use LTV:

The last one is a really useful tool in digital channels where you can share lookalike audiences to platforms so they can find more of your best quality users.

Once you know who is a high LTV user, you can do 3 things through better creative and messaging strategy:

Example: If your analysis shows customers who engage with educational content have 2x higher LTV, invest in educational creative. Wow. Game changing.

This should be a pretty straight forward one, but the goal of any lifecycle marketing program is improving LTV.

If you look at any retention curve, the biggest drop is after the first activation (or maybe the first activation doesn’t even happen). After that, it’s usually that customers don’t come back to the platform so lifecycle marketing can help both:

As a bonus you can use LTV to identify and segment customers. You can also use LTV to segment audiences and identify expansion opportunities (aka cross sell and up sell).

Seriously, LTV can be used in so many forms.

So, you spent all of this time and effort bringing a user to your platform. You offer them the perfect thing to buy. And then your experience drops the ball. Whether it’s a poor pick up (Uber) or a bad delivery (DoorDash) or some other experience, you need to be proactive with your Churn prevention messaging.

Churn prevention proactively identifies moments of churn in a user’s journey and finds a way to bring that user back. This is one of the hardest and easiest ways to keep or improve LTV. It’s hard because customers obviously are in a moment of frustration and have a bad taste in their mouth. It’s “easy” in that the triggers should be easily identifiable yet most companies don’t even acknowledge it or build around it but it’s a surefire way to try and protect LTV that was hard fought.

The stated goal of any referral program is to create virality, but really it’s meant to be a more efficient acquisition channel. The great thing about referral programs is it’s one of the easy channels to measure and optimize because you know exactly how customers share

A good example is you can structure referral rewards based on the LTV of referred customers, not just the number of referrals. Someone who refers 10 low-LTV customers is less valuable than someone who refers 2 high-LTV customers. By tweaking the parameters you’ll be able to adjust the quality to quantity ratio.

Believe it or not, but one of your marketing channels is customer support. Here, you can use LTV to determine how much to invest in customer success by LTV segment. High-LTV customers get dedicated or prioritized support while medium-LTV get automated check-ins and low-LTV get self-service resources.

It's resource allocation based on actual value and that trickles down back into LTV as support costs is one of the line items you have to factor into LTV (Read here on how to calculate LTV). The feedback loop makes low LTV users higher LTV by automating support costs while increasing the LTV of higher LTV users through higher retention (to offset higher costs). It’s a much smarter way to build a program.

I don’t mean Brand Marketing. I mean Brand. Invest in it. Invest in visual consistency. Invest in having a POV. Invest in a voice . Invest in a tone of voice. Invest in committing to a value prop and delivering it. Invest in Brand Marketing (part of Brand). Invest. Invest. Invest.

This is the only one that is not guide by LTV from the start but there are 1,000 case studies that investing in Brand increases LTV so find what works for you and your company.

The examples above were all Marketing examples but I wanted to explore other ways “Marketing” can leverage using LTV exploring the other 3 Ps other than Promotion. Unfortunately it’s not always consistent where these roles sit I’ve put them in a separate section.

This one should feel obvious but I’ll state it anyway: use LTV data to influence what products/features to build next. If customers who use Feature X have 3x higher LTV, that tells product teams what to prioritize but also tells Marketing teams what feature to better communicate. It’s not always easy to understand WHY a customer is using that feature but at least you know they are.

As mentioned, Marketing can also help drive this LTV by coordinating with product teams to nudge customers in the direction of using that feature.

An experimentation objective of pricing is often conversions / conversion rate and that’s fine, but you can also test pricing changes with LTV as the primary metric, not just conversion rate. Well, to be more specific, you’d use revenue or if you have a long term hold out you’d use retention so you wouldn’t be using LTV directly but the point is you can make a trade off between volume and value of conversion.

A 20% price increase might hurt conversion by 15% but increase LTV by 40%. LTV helps you make smarter pricing decisions beyond immediate revenue impact. Remember, pricing is also a Marketing tool. It shows up in Google search results and is often a big reason for a customer choosing to or not to buy your product.

Use LTV by geography to decide where to expand next. Instead of just looking at market size, look at which regions produce customers with higher LTV. While TAM is always an important question, Sometimes a smaller market with better customer quality is more valuable than a large market with poor retention.

Now it’s not always possible to know beforehand but if you use your home base as a proxy and see how different you think that new market will be , you can not only get a good estimate of TAM but also of the value you can extract from that TAM.

Marketing has one of the toughest jobs of proving it’s value in an organization, but anchoring decisions to improving LTV is a good way to get over that. With these 11 examples, you can build better Marketing with LTV starting tomorrow. Just even acknowledging you need to make better decisions through LTV is a good starting point as it’ll create a cultural flywheel within the organization.

And this completes my 4 part Ultimate Guide to LTV

If you have any questions, don’t hesitate to reach out!

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Here it is: Ultimate Guide to LTV Part 3: How to identify high LTV users