What’s the LTV for a NTF customer through SEM?
Confusing right? The marketing industry, like so many others, is being compressed into a confusing world of insider jargon and acronyms. But, fear not, what can seem complex and confusing at first, are usually quite simple phrases and concepts that are easy to pick up. Rather than needing to google acronym, we’ve spent a bit of time to break down these terms into the most common and simple definitions along with helpful examples.
*All examples below are fictitious and only being used for context and illustration.
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A/B Testing = Testing one version vs. another version of the same experience
This is the process of running two different iterations of the same process in hopes to understand which one performs better.
Example: Creating two websites with different colored “Learn more” buttons. The “Learn more” button is Blue on one site and Green on the other site. After running an A/B test, more people clicked on the Green button so the Green button is now used on that page.
B2B = Business to Business
These are businesses which sell their products or services to businesses.
Example: ADP Payroll services selling to CVS.
B2C = Business to Consumer
These are businesses which sell their products or services to consumers.
Example: CVS selling Trident gum to a customer.
CPA = Cost per action (or acquisition)
This is a measurement of how much money it costs to drive a specific action or acquisition.
Example: If Nike is trying to get people to sign-up for their newsletter and spend $100,000 on SEM advertising and receive 50,000 sign-ups, they’re getting a $2.00 CPA through their SEM advertising.
CPC = Cost per click (Also sometimes referred to as PPC = Pay per click)
Advertising (generally online) sold on a basis of how many times it will be clicked.
Example: If CVS buys 1,000 clicks from www.webmd.com for $2.00 per click, they are paying $2,000 for their advertisement to be clicked on WebMD’s website 1,000 times.
CPL = Cost per lead
This is a measurement of how much money it costs to drive a lead.
Example: If Adobe Photoshop is trying to get people to submit a lead form (Name, Email, Company) to “Learn more about Photoshop from our experts” and spend $100,000 on Social advertising and receive 4,000 lead form submissions, they’re getting a $25.00 CPL through their Social advertising.
CPM = Cost per thousand (impressions)
Advertising (generally online) sold on a basis of how many times it will be displayed.
Example: If CVS buys 1,000,000 impressions from www.webmd.com for a $5.00CPM, they are paying $5,000 for their advertisement to be shown on WebMD’s website 1,000,000 times.
*NOTE: This does NOT mean to 1,000,000 people, it just means this many pageloads.
CRM = Customer Relationship Management
This is a software which allows companies to capture, organize and analyze all interactions they have with their customers.
Example: A customer buys a queen mattress from Casper through www.casper.com. Casper captures this person’s contact information (Name, Address, Phone, Email etc…) and purchase information (Product, Cost, Date of purchase, Discount code etc…) along with various other customer profile details in their CRM.
CTA = Call to Action
This is the directive given by a person, website, advertise or commercial that tells customers to do something.
Example: Nordstrom sends an email about their new holiday gift ideas, their call to action is “Start Exploring”.
CTR = Click through-Rate
This is a measurement of how many people click on a given digital advertisement.
Example: Patagonia shows 100,000 impressions (Ads) on Outdoors.com and 5,000 people click on the advertisement. This would be a 5% Click through-Rate.
DTC = Direct-to-Consumer
These are businesses which sell directly to their customers – generally directly through their own website.
Example: Casper selling and shipping mattresses directly to consumers from their website.
KPI = Key Performance Indicators
These are metrics used to measure whether specified targets are being met which may determine if a great goal will be met.
Example: Xbox needs to sell 10,000 game consoles in their first year of sales. Xbox may use a KPI of 835 game console sales per month to understand if they’re on track to achieve their annual sales target.
LTV = Lifetime Value
The amount of value you can expect to receive from a customer over the course of your relationship.
Example: If someone buys 3 cars from a dealership at an average price of $20,000 each over the course of 50 years that customers LTV is $60,000.
*NOTE: Some people may measure LTV as revenue, profit or another variable.
NTF = New to File
This is a new customer who has no record of using a product or service before.
Example: Someone makes their first purchase from backcountry.com.
ROAS = Return on Ad Spend
This is the amount of revenue (or return) you would see for each dollar spend on advertising.
Example: Lenovo pays $10 for Google AdWords which drives a sale for $50. The Return on Ad Spend would be 5 which means for every $1 Lenovo spends on Google AdWords they can expect $5 in return.
ROI = Return on Investment
This is the measure of return you can receive from an investment. Generally relating to either marketing or advertising. It’s important to note this measure is not only used for monetary returns, it can relate to time or other elements as well.
Example: American Eagle pays $10,000 for a new email marketing provider and receives over $50,000 in orders driven from email marketing in their first year. This would be a 5:1 Return on Investment.
SaaS = Software-as-a-Service
This is software which is licensed for use on a subscription basis.
Example: Paying an annual subscription for Adobe Photoshop.
SMB= Small and Medium-sized Business
This depicts the size of a business based on either revenue, number of employees or structure. Most SMB’s are privately owned and maintain less than 500 employees.
Example: If someone buys 3 cars from a dealership at an average price of $20,000 each over the course of 50 years that customers LTV is $60,000.
SEM = Search Engine Marketing
Search Engine Marketing is a form of online marketing where websites pay to be promoted within search results.
Example: SCREENSHOT HostGator uses SEM to show at the top of the search page for the term “web hosting”.
SEO = Search Engine Optimization
Search Engine Optimization is the process of improving a websites quality and quantity of information in an effort to show up higher in organic search results.
Example: SCREENSHOT www.pcmag.com has extremely good SEO for the search term “Web hosting” so is showing as the top organic result.
“Social” = Social Media Marketing
Advertising sold through social media platforms such as Facebook, Instagram, Twitter, Snap or LinkedIn. This type of advertising generally allows for very specific targeting against a large audience. Social Media Marketing is generally sold on a CPC basis.
Example: SCREENSHOT L.L. Bean uses Social through Facebook to target men, between the ages of 29-54, who live in cold weather states in the US during the month of November to advertise their jackets. L.L. Bean pays Facebook every time someone clicks on their ad and goes to L.L. Bean’s website.
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Loved It.
It’s hаrd to find experienced people for this subject,
howеver, you sound like you know what you’re talking about!
Thanks