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Getting your ads budget approved is tough. One of the top reasons behind the difficulty to get budget approval is the onus of proof. Business owners and CEOs demand higher accountability. They expect you to dish up proof of the return on investment (ROI) of marketing budgets.
Even though Facebook is the channel with the biggest ROI, according to HubSpot’s 2024 State of Marketing Report, you still need to prove that Facebook Ads work for your eCommerce business.
So, the question is how do you maximize the ROI for Facebook Ads when you don’t have a big budget? The short answer: campaign budget optimization boils down to creating customer-centric campaigns.
When you have a limited Facebook Ads budget, focus on selling to your loyal customers first. Maximizing the customer lifetime value (CLV) first will help you build a strong case for increasing your cost per acquisition.
To do this effectively, your campaigns have to give your customers what they want, before they know what they want.
I call these customer-centric campaigns.
Here’s proof that customer-centric campaigns work:
Our team at SCUBE used customer centricity to scale the revenue of an automotive performance cooling parts manufacturer by 55% and maintained an impressive return on ad spend (ROAS) of 1,200%.
That’s hard to beat.
In a nutshell, we did this by segmenting their product catalog so that we could more effectively tailor it to various customer segments (more about segmentation later). Then, we created new ad copy for each of these segments (get used to seeing keywords like segmentation and segments a lot).
Now that you know it works. Here’s the how:
Customer-centric campaigns involve two components: customer centricity (obviously) and Facebook Custom Audiences.
Your customers are the reason why your company is in business in the first place. Your target audience is also one of the seven pillars of successful Facebook ad campaigns.
To put it bluntly, businesses that better adapt to customer needs win.
The same HubSpot report found that a massive 75% of marketers believe that creating personalized experiences drives sales and increases the average customer lifetime value (remember, that’s what we want). What’s more, when you use AI-powered personalization it can increase ROI by as much as 70%!
This leads to the second component.
Facebook Custom Audiences allow you to reach your customer segments (yes, here’s that keyword again—more on them later) and deliver a highly personalized message in a way that makes them feel like the advertising is relevant and helpful.
Before we dive in, let’s clarify the conversation with a couple definitions.
Facebook’s definition of a custom audience is “an ad targeting option that lets you find people across Meta technologies.”
There are five types of custom audiences based on the touchpoint source with your business:
In this article, I’m focusing only on a custom audience from a customer file.
Facebook defines a custom audience from a customer list as a type of audience you can create that’s made up of your existing audience network. In reality, a customer list is broader because it refers not only to customers, but to first-party contacts (for example, leads and newsletter subscribers) too.
Audience size matters. Though, it shouldn’t be at the expense of customer experience. When it comes to crafting a successful campaign strategy for running paid ads on Facebook, start by improving how you engage with current customers first, something which you can do in just three steps.
Every eCommerce company has customer data. Data can tell you a lot about your customer base.
Every customer is different. However, when you segment your customer database into specific customer segments, you start seeing similarities.
There are many ways to segment your customers. Here are a few segmentation models to start with:
This exercise will give you a deeper understanding of each segment. You’ll be able to launch more personalized Facebook Ads for that audience versus casting a general message for everyone in an attempt to reach a larger audience.
Segmentation is a strong contributing factor for better campaign ROI. The email marketing industry in particular has found segmentation extremely valuable for years as the following infographic shows.
But you’re here to learn more about using paid ads as a digital marketing strategy. Here’s how you can leverage customer segments when using Facebook Ads:
Analyze your customer database around common data points (more examples later) and create segments.
For example, for one of our campaigns, customer segmentation revealed how often our client’s customers repurchased their products and when they typically re-started the buying process for this product. This helped us to create customer segments using the following criteria:
Aside from learning more about customer behavior, you also gain better insight into the ROI of each segment.
After the segments are created, you have to upload them to Facebook. You can upload email addresses, phone numbers or Facebook user IDs (UIDs) from each segment.
Facebook will match them against its user base and return you an audience ready to use for targeting advertising containing only the people in that list. Match rates vary, but expect about a 50% rate.
To create your customer segments, start with the following four data points (which you probably already have in any case):
The most basic data you collect with each purchase is the purchase date. With purchase date, you can:
The second valuable data point you likely have in your transactional data is the product type.
Segmenting your customers by product type helps you to identify additional product groups your customers may need (and potential upsell and cross-sell opportunities). It also makes it easier to anticipate when they’ll need to repurchase your products (in the case of product categories like skincare items, for instance).
This data point is great because it helps you to concentrate your digital marketing efforts on high-value customers and create future campaigns to re-engage with them.
Using purchase value, you can segment your list even further and break down your customers into the following three groups:
You’ll quickly understand the price consciousness of each segment.
Once your segments are ready, you can start developing ways to engage with each group.
“What’s the point of using Facebook Ads for your email list, if you can send emails without paying the ad spend?”
— Uneducated Email Marketing Manager
Fair enough. Let’s look at the stats.
According to HubSpot, the average email open rate in the eCommerce industry is 34.2%. This means that on average 65.8% of your sent emails remain unread. In other words, the majority will never see your educational emails.
To answer the email marketing manager, you have to ask what’s the value of an unread email?
To me it's 0. Case closed.
Let’s get back to business.
If you have a strong email marketing team, you’ll likely have advanced segments available for your newsletter. However, if segmentation is a new topic, I recommend that you start by creating the following three segments:
At this point, you should have well-defined customer segments. The next step is to do customer research.
As mentioned earlier, your goal is to give your customers what they want before they know that they want it. Put differently, you have to know what they want and communicate it using their words.
Start with the voice of the customer (VOC). Shopify defines it in one of their recent blog posts as “a customer research program that gathers feedback about your customers’ preferences, needs, and experiences with your business.”
It will allow you to understand:
This will empower you to state what customers want in their own words.
Your customer research will also fuel your offers and messaging for each customer segment when developing Facebook Ads campaigns.
Begin with what you have and only then perform additional research. In addition to using eCommerce analytics to improve your PPC ROI, I recommend that you use the following four tools to research what your customers want:
Customer review sites like Trustpilot resonate well with eCommerce companies. Aside from helping you with customer research (what we care about right now), they can also help to improve customer demand, click-through rates, trust, and sales.
In fact, according to Statista, high-quality reviews and a star rating (even if it’s merely average) are more likely than shopper photos or videos to convince potential customers to buy your product. One out of five shoppers admit that they’re influenced by reviews.
To find out what your customers care about in their own words, here’s how we analyze customer feedback left on review sites:
You’re likely using some sort of customer service software (like live chat or a help desk) to solve customer problems. It can be a goldmine of information for customer research as it offers direct feedback at critical points within the customer relationship.
This method works similarly to using customer feedback on review sites. Here’s how:
SurveyMonkey, Typeform, or even Google Forms probably come to mind. Any other tool your eCommerce business has used is fine, as long as you have data from your customer surveys.
If you haven’t surveyed them yet, do it this week!
To help you get started, here are some areas that you can explore:
Once you have the feedback, follow the three-step method described earlier.
See an example below of how we analyzed customer survey responses:
You may be using on-page surveys for conversion rate optimization (CRO). These tools offer non-intrusive surveys for your website’s visitors that will pop up at the bottom of the page, allowing you to collect customer feedback when they’re taking action on your site.
Most notable tools are:
Like the logs of your customer support tools, these surveys are a goldmine for insights. Make sure to collect enough data so that you can get meaningful insights.
Once you’ve collected the data, the process is once again no different than analyzing customer feedback. Here’s a refresher:
Before we continue, let’s stop for a moment and recap where we are:
Finally, you’re at the last step—building customer-centric campaigns.
Put simply, it means developing offers, ads, and landing pages that speak directly to each segment.
To connect the dots, focus on the following three things:
The main data point that represents the segment will help to develop a hypothesis for intent. For example, a customer segment for those that purchased your product in the past 12 months and are eligible for an upgraded version.
Or, a segment of the top 20% of customers, using the amount spent with your business. They have a higher affinity to purchase additional products and represent upsell and cross-sell opportunities.
Then, where you can add value based on the context and intent, map your offer to each segment.
Let’s take the top 20% segment as an example again.
You have many options to engage this customer segment. A few ideas to start are:
As for your messaging, incorporate the positive and address the negative feedback in your ads and landing page.
Here’s how Sensodyne UK incorporated custom audiences into their campaign strategy:
To boost product awareness about their Sensodyne Clinical White toothpaste, Sensodyne UK used video ads. They showed the video ads to UK adults older than 17 and a custom audience comprising people who’ve visited the brand’s website before.
According to Lucy Else, Sensodyne’s brand manager at Haleon, they reached a whopping 15 million people in just two days at the lowest cost possible. This is proof that you can reach a larger audience without advertising costs necessarily climbing too.
Customer-centric campaigns will help you to maximize the ROI with your existing advertising budget. This is because you’ll maximize your customer lifetime value by giving your customers what they want before they know what they want.
To do this, you’ll need to focus on customer research, segmentation, and personalized messaging. The early success will give you momentum and a clear case to increase your daily budget and possibly even expand to other marketing channels like Google Ads.
