Google’s latest customer lifecycle bidding updates are interesting. Advertisers can increasingly tell Google to prioritise customers who are likely to be worth more over time.

I like the principle. I’ve frequently been willing to make a loss acquiring a customer.

But there’s a big difference between understanding customer lifetime value and blindly trusting an algorithm to decide what a customer is worth.

Sometimes losing money is the right decision

I’ll happily offer an extreme incentive to acquire a promising long-term customer, providing I’m confident there’s a realistic opportunity to make that relationship profitable later.

The first order doesn’t always need to make money. But there needs to be a credible plan for the second, third and fourth.

That’s a commercial judgement, not simply an advertising calculation.

Revenue isn’t profit

I wouldn’t trust anyone outside the business to make decisions about true profitability.

An advertising platform can see transaction values and whatever cost information you feed it. That doesn’t mean it understands the actual profit on an order.

It can’t automatically account for every operational cost, commercial consideration or customer-specific circumstance.

I’d rather use advertising algorithms to help execute a strategy than allow them to determine the strategy.

Don’t assume a customer will come back

I’m also a strong believer in win-back advertising.

Just because somebody bought from you once doesn’t mean they’ll buy again.

You’ve reduced their perceived risk by delivering a good experience, but your competitors are still trying to win their business. They might have improved their pricing, service or reputation since that first purchase.

You need to be visible wherever that customer is considering their next purchase.

Lifetime value is an educated guesstimate

You’ll never truly know a customer’s lifetime value until much later.

Historical data helps. Customer conversations help. Buying signals help. Experience and judgement still matter.

If your average customer spends £1,000 across three orders, that doesn’t mean you can spend £1,000 acquiring them.

But if you’re selling a subscription with an expected £5,000 lifetime value over two years, spending £1,000 to acquire a customer might be perfectly reasonable, depending on the margins, retention and cash flow.

The point isn’t to avoid acquisition losses.

It’s to understand why you’re accepting them, how you expect to recover them, and what happens if the customer never returns.

Customer lifetime value should inform your decisions. It shouldn’t make them for you.