How to Use Facebook’s Value-Based Lookalike Audiences
Last summer, Facebook introduced a new tool for digital marketers that allows them to reach out to potential customers more effectively – Lookalike Audiences. Before Lookalike Audiences, Facebook had various options for marketers to target custom audiences by utilizing lists of their company’s past, current, and prospective customers on the social media network. While this is a huge help for businesses that have larger customer bases, smaller companies with smaller lists of customers could not capitalize on the tool as extensively.
Enter Facebook Value-Based Lookalike Audiences
This tool allows ecommerce retailers who use Facebook to locate potential customers who have similar buying behaviors as your custom audience. And now, Facebook has upped the ante by adding value-based criteria to the mix. That means that you are able to create a value-based lookalike audience, in which you upload your customer list (with a lifetime value assigned to each customer) and this becomes the criteria Facebook uses to identify your lookalike audience.
What is Lifetime Value?
Lifetime Value (LTV) is the value associated with your customers in relation to how strong their relationship is with your brand. LTV represents the actual net profit a company makes from a lifetime relationship of a given customer. The new Facebook LTV Custom Audience feature uses LTV to score high valued customers and creates an audience similar to them in Facebook.
Glew.io calculates LTV for you and summarizes it in the customer segments table where you can see LTV by various segments including VIP Customers, Active Customers, and customers by Average Order Value (AOV). It also features LTV by Marketing Channel and also by Product.
Reasons to Use LTV Audiences
The goal of Facebook Value-based Lookalike Audiences is to help you reach more potential customers who are similar to your current high-value customers. When you tell Facebook how much your existing customers are worth to you, by including their LTV, their algorithms will help you find more Facebook users who are similar to your customer base.
Because you are targeting Facebook users who share traits, shopping behavior, and potential value as those customers who already love your products, your messaging can be targeted much lower in the marketing funnel. You may be able to move right into promotion, skipping awareness, engagement and education. This will not only save you valuable time, but ad dollars and manpower as well.
Where Do You Find Your Current Customers’ Lifetime Values?
Value-based Lookalike Audiences require that you know your current customers’ LTV, it will not calculate it for you. That means that you have to supply the information. Typically businesses use some sort of analytics or CRM software to analyze their customers Lifetime Value (purchase history.) Once you have your LTV data, you are easily able to upload the information to Facebook so that they are able to create your lookalike audience.
Setup an automated value tracking system rather than manually tracking the Lifetime Value yourself. Calculating LTV manually isn’t really an effective use of your time or money, especially if your customer base is large. You want to be able to see the data you need quickly so that your time can be focused on growing your business and increasing your bottom line. When you use Glew’s analytics solution, with 25 pre-defined customer segments (plus more customer segments that you can customize yourself), you are able to easily drill down into key customer metrics, like LTV.
Steps to Create a Value-Based Lookalike Audience on Facebook
The following steps show you how easy it is to create your value-based lookalike audience:
Step #1 – Create a Custom Audience that Includes a Customer Value Data Column
- On your Facebook Audiences page click the “Create Audience” dropdown and choose “Custom Audience”
- Choose “Add customers with current and predictive value attached”
- Read and accept Facebook’s Value-based Lookalikes Terms
Step #2 – Upload Your Customer File
- Click on “Upload File” and select your file (or, you can copy & paste your file using the “Paste your content here field’)
- Name your audience
- Click “Next”
Step #3 – Choose Customer Value Column for Your Custom Audience
- Click on “Select value” column dropdown
- Select the column on your uploaded file that corresponds to LTV for your customers
- Click “Next”
- Save the new Custom Audience
Step #4 – Create Your Value-Based Lookalike Audience
- From your Facebook Audiences page, click the “Create Audience” dropdown and select “Lookalike Audience”
- In the source field, choose the Custom Audience with a Value Column that you previously created
- Choose your country
- Use the slider to choose the audience size you want
- Click “Create Audience”
Now, with the data that you uploaded, Facebook’s algorithms will find the people who are the most similar to the customers in your Custom Audience. It may take a little while to populate your new Lookalike Audience, but be patient. Once your audience is complete, you can begin using it to target potential high-value customers with Facebook ad campaigns.
Now that you have the basics down, you are ready to use your LTV lookalike audience to come up with marketing strategies that will draw in your potential customers. The ability to reach out to prospective buyers gives you a huge, budget-friendly marketing advantage.