Pimp up your ads by implementing these proven, battle-tested strategies that have raised billions of dollars over many decades.

What You Will Learn

Learn from the Masters and Make Your Ads Rock

Does this problem sound familiar? You’re a smart marketer, so you delved deep into Facebook’s audience targeting options to find the right prospects. You filtered by demographics, location and interests. You have a great offer and compelling ads that should convert like a preacher at an AA convention. But…

…your campaigns are falling flat on their face. Facebook is eating your credit card for breakfast, and all you have to show for it are a few email subscribers and zero sales. It’s enough to make you cry in your cornflakes, right?

Don’t panic. We’ve all been there (sob). But here is the good news…you can fix the problem. Because although you have two thirds of the selling equation right, you are missing the final third. And that is what is killing your conversions.

To find out how to resolve this problem, we need to study the masters of prising open wallets and extracting dollars. Political fundraisers have raised many billions of dollars over the years, and they are very good at it. They have to be. They must persuade people to hand over hundreds or even thousands of dollars…and get nothing in return. That’s gotta be a really tough sell…

So how do they do it? The dirty little secret behind their continuing success is RFM Analysis.

So What Exactly is RFM Analysis?

All customers are not alike. Some will buy a low-ticket item from you one time only, while others may be rabid fans who buy everything you offer, and eagerly await your latest products. Common sense tells us that the rabid fans are the people you most want to target.

Time of purchase is also important. Someone who bought from you yesterday is far more likely to purchase your latest offer than someone who last bought six months ago. And if your ‘fan’ buyer has purchased numerous items, that’s an even better sign.

These principles apply not only to commercial sales, but also to fundraising campaigns. Political fundraisers know that the top 20 percent of their targets will produce some 80 percent of the money they raise. In practice, it may well be more like the top 5 percent producing 95 percent of the revenue. In other words, it is really important to focus on your best spenders.

In the world of non-profit fundraising, all of this is encapsulated in RFM Analysis. RFM stands for Recency, Frequency and Monetary. Donors are ranked according to:

The donors who come out at the top of the list – that is, the ones who have recently made several large donations – then get solicited for further extractions. There is no doubt that this works. The formula has been battle tested over several decades, and it still remains the heart of non-profit fundraising.

Equally Effective in the Commercial World

In commercial direct mail, too, this formula has been used extensively for many years. Mailing lists are bought and sold based on RFM analysis. For decades, it has been standard business practice for direct competitors to buy mailing lists from each other based on recency, frequency and monetary value of purchase.

Many direct mail companies made more money from selling their RFM lists that from selling actual products – that’s how valuable the information was to other mailers.

This may seem counter-intuitive. You might think that someone who has recently bought several investment newsletters, for example, would be a poor prospect for another similar offer.

Surely they have all the investment newsletters they could ever need, and you would do better to target people who haven’t bought one yet?

Experience clearly shows that the opposite is true. Recent, frequent buyers are highly likely to buy again and again – they remain hot for that kind of offer. And they are likely to be open to purchasing higher ticket items.

Applying RFM Analysis to Facebook Advertising

Thanks to the awesome sophistication of the Facebook ads platform, we can apply similar techniques to profile our best customers effectively. Although we can’t replicate RFM Analysis exactly, we can take the basic principles and adapt them to our purposes.

This is not hard to do, but it can have a dramatic impact on the success of our campaigns. When you target active users, you give yourself a massive advantage in the battle for profitable conversions.

#1. Recency

Let’s start with recency. You should, of course, be building custom audiences of your prospects, especially:

Facebook allows you choose the value for ‘X.’ Most advertisers leave this at the default level, which is currently 30 days for website audiences and 365 days for Facebook engagement. 365 days is far too long!

You can certainly test 30 days, but you may find you get the best results by reducing the number to seven days, or even three days. Recency really is a big deal! You must target prospects while they are hot for your topic. By next week, they may have lost interest and moved onto something else.

#2. Frequency

There isn’t a direct match for frequency in the Facebook system, but we can get a pretty good approximation. The whole point of the frequency metric is to identify people who are actively engaged.

We can do this in website custom audiences by focusing on the people who are most active on our website by time spent:

Now we’re cooking! We have narrowed our target audience down to people who spent a lot of time engaging with our website in the last week. They have to be sizzling-hot prospects, right?

#3. Monetary

Once again, we can’t measure this metric directly, but we can do something similar. As you can see in the screenshot above, we can narrow the audience down to people who have visited certain pages. So we may choose to focus on people who visited the sales page but didn’t buy, or who abandoned the checkout page.

These are people who were interested enough in your offer to check it out in detail. If they got as far as the checkout page especially, they were seriously considering purchasing. You would be a fool not to chase down every single one of these scorchers with an enticing re-targeting ad.

Forget Cold Traffic…Convert Hot Prospects!

So now we have narrowed our audience down to people who visited the website in the last few days, were actively engaged with your content and practically had their credit cards in their hands. These prospects are hot, hot, hot!

This is the third element in the selling equation. Defining your offer and selecting your audience are the first two steps. The third element is focusing your campaign on members of that group who are most likely to buy.

When you re-target such a focused, interested audience, your CTR is likely to be sky high. That means your cost per click will be low…yet your conversion rates will be off the charts. This is pretty much the perfect scenario for every Facebook advertiser.

So don’t let your best prospects get away. Adopt the proven strategies of RFM Analysis and use them to turn your loss-making campaigns into winners.