LendingTree, the online lending marketplace, has seen major benefits from shifting its focus to prioritise the lifetime value that is generated by its customers.

Akshay Tandon, LendingTree’s vice president/analytics, discussed this subject at KNect365’s Marketing, Analytics and Data Science (MADS) Conference.

When the company started out 22 years ago, he explained, it provided exactly one product: home mortgages. And that singular offering, in turn, meant it primarily looked to optimise discreet transactions.

“A mortgage is not a product that consumers buy very frequently,” Tandon noted (For more, read WARC’s in-depth report: LendingTree turns to lifetime value.)

But as LendingTree’s portfolio has diversified over time, so it has helped over 100 million customers acquire more than $50bn in loans – be it for a home, a new car, or to grow their small business.

“Now, we cover the full gamut of lending products – personal loans, home equity, mortgage, credit cards – a very diverse product set,” Tandon said. “With that came multiple repeat transactions.”

That evolution led LendingTree to shift its focus from the value of individual transactions to customer lifetime value, a move Tandon said has sparked dramatic changes in its marketing and internal operations.

“Lifetime value is greater than the value that we get from a customer in any given transaction,” Tandon said, “so we can spend more to acquire customers. We can throw more marketing dollars into our cost of acquisition.”

In addition, he said: “Taking a lifetime value view forced us to think more about acquiring high lifetime value customers – ones that had a value beyond just the first transaction, had a greater propensity to repeat, and, when repeating, bought higher value products.”

Evolving the fundamental metric of value provided a better assessment of the profitability and worth of different marketing campaigns and product offerings, too. It also clarified which customers should be retargeted more aggressively.

The ideal outcome? “We could start measuring changes to our platform [and] our product initiatives against lifetime value. Certain product changes would lead to a higher engagement but not necessarily monetise in the moment,” Tandon said.

“And we could measure the value of those by looking at the lifetime value that resulted from that change initiative, as well as think about retargeting, and really retargeting higher lifetime value customers.”

Sourced from WARC