Lookalike Audiences: 3 Simple Steps to Grow Your VIPs February 23rd, 2016 David Taitelbaum, Marketing Strategist David Taitelbaum, Marketing Strategist David Taitelbaum, Marketing Strategist Author BioAs the leader of West Coast strategy services for Oracle's Bronto Software, David Taitelbaum consults with brands on digital marketing strategy and customer engagement campaigns throughout North America and Asia. He has over 15 years of experience leading ecommerce organizations and developing successful marketing campaigns for companies of all sizes. Most recently, Taitelbaum oversaw global ecommerce operations for City of Sleep, including support, marketing and channel distribution. He is a regular contributor to Bronto’s Commerce Marketing blog. When he is not guiding Bronto’s clients to strategic marketing success, he is spending time at home with his lovely wife, raising their two children. Read More About David David Taitelbaum, Marketing Strategist Let’s face it: every email address you add to your list is not equal. While we all want to make sure our subscriber list is growing, it’s the crème de la crème that really drive our email marketing revenue. Those familiar with the 80/20 rule, known as Pareto’s Principle, inherently understand that it’s this small segment of your customer base who can have the greatest impact on your overall business. They’re your VIPs, the people who open your email the most, purchase the most and have the highest total annual revenue and AOV. So how do you identify your VIPs and, more importantly, acquire similar subscribers who will buy into your brand? It’s not enough to just hope they show up. You need a systematic approach to get them to subscribe to your email messaging. First, let’s be clear. The cost of acquiring new VIPs will be higher than your typical email acquisition strategy; however, you should see obvious benefits at the bottom of the funnel as these customers convert more often and generate more revenue than your subscriber base as a whole. Exelate has done research on the lookalike customer acquisition model I am about to explain and found that for more than half of agencies, it generates 2-3x the return of standard targeting. If you don’t currently engage in any real form of customer acquisition targeting, your return from this type of campaign will be even higher! Now let’s dig in and take a look at how to acquire these high-profile subscribers to help you crush your email revenue goals for 2016. Step 1: Create a List of Your Best Customers In order to duplicate your VIPs, you first need to know who they are. Analyze your order history and identify the customers with the highest average order value, total number of purchases, total revenue, or any other conversion-based metric that accurately identifies your best customers. If you’re a traditional retailer, you could identify your best customers based on total number of orders per year or total annual revenue. For a seasonal business, average order value or average annual revenue might work better. For subscription-based businesses, customer lifetime value or average revenue per unit may be the way to go. Here are a few resources and online calculators to help you determine the best metric for your business: Average Order Value Customer Lifetime Value Average Revenue Per Unit Decide which metric works best for you, and adjust the parameters to give you a list of around 200 customers. The larger the data set, the more likely you are to find the best matches for future VIPs. Go too big though, and you run the risk of diluting the pool and paying to acquire customers who don’t convert as well. You’ll want a bare minimum of 100 contacts that Facebook can identify in order to build out your VIP acquisition campaign. Step 2: Build Your Lookalike Audiences Once you’ve identified your VIPs, import them into a marketing platform where you’ll build out your lookalike audiences. Facebook is the most popular platform for this type of campaign. With Facebook, you can exclude these subscribers from receiving your promotional ads. This should greatly diminish your chances of suffering inflated advertising costs for this campaign. Even if your campaign is successful in attracting new potential VIPs, it’s not enough to just get them to “like” you on Facebook. While that may be a great first step, the larger plan is to get them to engage with you. But Facebook determines whether or not you can contact them via Facebook, even if they’re a fan of yours. If anything, you’ll most likely only be able to reach them through additional ad campaigns, which increases your acquisition cost. With that in mind, I strongly suggest you focus your campaign and call to action on obtaining an email address rather than acquiring more Facebook fans. Once they subscribe, you’ll have full control over your messaging. And that’s ultimately the only way to have control over your return on this investment in customer acquisition. But Facebook isn’t the only avenue for this type of campaign. Some third-party vendors, such as LiveIntent, will create lookalike audiences for you and then target potential VIPs by putting your customer acquisition advertisement into an email network of various publishers. Promoting the ads in emails is beneficial because the people they target are clearly already comfortable with email marketing and taking action, such as clicking through from an email message to your site. The ads also run on all devices: desktop, tablet and mobile. If you have trouble getting Facebook users to convert (i.e. give you their email address), it might be worth it to explore this option. Google also has their own program called Similar Audiences; however, this service is currently only available on Gmail and YouTube. More options are available for those who use Google Remarketing. And Twitter offers a lookalike advertising component as well. Step 3: Go Live, Benchmark, Optimize and Repeat When you launch your campaign, it’s best to start small and only scale when you’re seeing real results. As with your other subscribers, you’ll want to drive this targeted group through the same onboarding process, such as a welcome series, that you’ve already benchmarked and optimized. By doing so, you can see how these potential VIPs compare to your overall subscriber metrics. Be sure to add this group to their own segment so you can continue to monitor their performance relative to your actual VIPs. Remember, it’s not just about growing your list, but rather attracting new subscribers who are most likely to grow into VIPs. It will take some time and effort, but the investment will be worth it. Keep bringing in new VIPs, and your bottom line will thank you.