For in-house marketers, the task of connecting top-funnel advertising to revenue is critical yet challenging. But while many teams focus on immediate returns or last-click attribution, the true value of marketing should be framed around long-term customer acquisition—taking into account not just the first purchase, but the lifetime value (LTV) of a customer. Shifting the conversation to acquisition goals based on LTV ensures that you’re looking beyond quick wins and investing in sustainable growth.
Framing Marketing Efforts Around LTV, Not Just Initial Conversions
When setting marketing goals, it’s important to align them with long-term business objectives rather than just short-term results. Many companies fall into the trap of expecting immediate ROI from their marketing efforts, especially when top-funnel activities don’t show immediate conversions. However, focusing solely on short-term metrics can undercut the true value of your marketing campaigns.
Instead, basing acquisition goals on LTV provides a more holistic view. LTV considers not only the initial purchase but also the total revenue a customer will generate throughout their relationship with your brand. This approach allows you to invest confidently in top-funnel efforts, knowing that while those ads may not drive immediate conversions, they are building the foundation for long-term customer loyalty and repeat purchases.
Example: How LTV Shifts the Focus
Let’s say you’re running a campaign that costs $50 to acquire a customer, and the average initial purchase is only $100. At first glance, a 50% return might seem disappointing. However, if your LTV is $500, meaning a customer typically spends five times more over the course of their relationship with your business, that $50 acquisition cost is suddenly much more justified.
By focusing on LTV, you can make smarter decisions about how much to spend on marketing, especially on top-funnel advertising that might not deliver immediate results but brings in high-value customers in the long run.
Setting Acquisition Goals Based on LTV
When setting acquisition goals, a LTV-based approach allows you to prioritize customer retention as much as acquisition. Here are a few ways to align your goals with long-term value:
Focus on Retention as Well as Acquisition: The cost to acquire a new customer is typically higher than the cost to retain an existing one. By focusing on LTV, you can prioritize retention strategies (like email marketing, loyalty programs, and personalized experiences) alongside acquisition, ensuring that your marketing dollars continue working for you long after the first sale.
Set ROAS Targets That Reflect Long-Term Value: Many marketers set return on ad spend (ROAS) goals based on the initial purchase, but LTV shifts this focus. If a customer is expected to bring in multiple purchases over time, your target ROAS can be adjusted accordingly. This might allow for higher upfront ad spend if you know the lifetime value justifies it.
Invest in Building Brand Loyalty Early: Customers acquired through top-funnel advertising often engage with the brand multiple times before making a purchase. Investing in the brand-building activities that resonate with your target audience, such as thoughtful content marketing, informative webinars, or engaging social media, pays off in the long term by nurturing loyalty.
The Power of Long-Term Thinking
In many ways, LTV helps you see the big picture of marketing ROI. Immediate results are not always a fair reflection of success, especially in today’s multi-channel, multi-touchpoint customer journeys. When stakeholders focus too narrowly on immediate gains, it’s essential to shift the conversation toward the long-term value that marketing efforts create.
A common challenge for in-house marketers is justifying the expense of creative and top-funnel advertising when the immediate returns don’t seem to match the investment. With a LTV-based approach, you can confidently communicate that these initial investments will pay off over time as customers move through the funnel and generate multiple purchases.
Bringing the Conversation to a Level Playing Field: Focus on LTV, ROM, and Absolute Spend
When it comes to communicating the value of your marketing efforts to the CEO, CFO, or other internal stakeholders, focusing on LTV and Return on Marketing (ROM) can help level the playing field. Stakeholders often get stuck in the details of granular data like ad conversion rates or click-through rates, which can skew the perceived success of top-funnel activities.
To bring the conversation back to universally accepted metrics, start by focusing on these key areas:
Absolute Spend: The total marketing budget allocated for a specific period.
Total Revenue: The overall revenue generated by the company during that same period.
ROM (Return on Marketing): This metric gives you a broad picture of how marketing investments are generating revenue, without getting bogged down in specific campaign data. ROM is calculated by dividing total revenue by total marketing spend.
This approach allows you to frame the discussion in terms of the bigger business picture, where long-term growth and LTV matter just as much as short-term gains. It takes the pressure off focusing exclusively on the conversion rates of individual campaigns and helps stakeholders appreciate the long-term value of marketing investments.
Conclusion: Long-Term Success Requires Long-Term Vision
The key takeaway is this: Marketing success shouldn’t be measured by the first purchase alone. By setting acquisition goals based on lifetime value (LTV), you position your marketing efforts as strategic investments in the future of the business. This shift in thinking allows you to confidently invest in top-funnel advertising, creative campaigns, and brand-building activities that, while not immediately profitable, are critical to long-term growth.
If you’re ready to shift your focus to long-term growth and align your marketing goals with the lifetime value of your customers, we’re here to help. At IoliteVentures, we specialize in helping businesses navigate these conversations and build marketing strategies that drive both immediate results and sustained growth.
Schedule a consultation with us today to learn how we can help you:
- Optimize your acquisition strategy based on LTV
- Align your marketing goals with long-term business growth
- Develop creative, top-funnel strategies that pay off over time
Let’s work together to unlock the full value of your marketing efforts and set your business up for success—both now and in the future.