Best practices for customer lifetime value

You can send us your customer lifetime value data as part of your custom audience list. You can then use that custom audience as the source for a value-based lookalike audience, which is a group of people you can target with ads who are most similar to the high-value customers you already know.

Different people calculate customer lifetime value in different ways. Here are some ways that you should avoid if you're going to send us the data for use in a value-based lookalike audience:

• Rating your customers. Say you have 3 customers worth $100, $10 and $1, respectively, and you use a 1-5 rating system. Don't send us data where they're rated as a 5, 2 and 1, respectively. This doesn't work because the value isn't proportional to the ranking. In other words, the $100 customer was factored by 20, but the $10 customer was only factored by 5 and the $1 customer wasn't factored at all.
• Ranking your customers. Say you have 100 customers and each one is worth between $200 and $1200. You rank them from 1 to 100. This doesn't work because value isn't proportional here either. It tells us if one customer is more valuable than another, but doesn't account for a scenario where the number 5 customer is worth double what the number 6 customer is, whereas the number 20 customer might only be worth 1% more than the number 21 customer.

Send us the data as another column in a list you use to create a custom audience.

Below are tips for formatting the data, similar to the tips for other identifiers in the first section of this article.

Once the list for your custom audience is created, use it as a source for a value-based lookalike audience. Use that lookalike audience as the target audience for your ads to reach people who are most similar to your high-value customers.