How Optimizing your SEM Customer Acquisition with CLV can Triple your Revenue

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Search Engine Marketing (SEM) is a bread and butter way to acquire new customers. You bid a certain amount per click, impression, or acquisition, and in return you get new visitors to your site. The key with SEM, as with any marketing channel, is to make sure that what you pay for new customers isn’t taking too big of a bite from your profits.

One of Custora’s customers, DataSauce, recently confronted this very issue. How could their client, “The Unusual Pea,” still profitably acquire customers despite low profit margins and thus a smaller budget for acquisition?

Read on for the summary of our recently published case study, and download the full case study below.

The Setup

DataSauce is an e-commerce and digital marketing consultancy based in Melbourne, Australia. They’re passionate about helping businesses reach the right customers with the right message at the right time. The Unusual Pea is a pseudonym for DataSauce’s client, who asked to remain anonymous. Despite the bit of mystery, we do know some key facts: They are an online food seller that services multiple locations in Australia, and are known for their insistence on food quality and the best ingredients.

The Challenge: Low margins. Low customer acquisition.

The Unusual Pea hired DataSauce to help them bring in more customers through advertising on Google AdWords. DataSauce’s first hurdle was The Unusual Pea’s low profit margins. Their average order is for a single diner who spends around $20, with The Unusual Pea’s profit amounting to $5, a slim margin. What this meant for DataSauce was that they could only justify a $5 or less Cost Per Acquisition (CPA) through Google AdWords to acquire new customers.

The Solution: Looking beyond the first order.

The lightbulb moment for DataSauce was when they turned to Custora to unlock the power of repeat purchasers and customer lifetime value (CLV). Armed with information about CLV, as well as the average repeat rate for their customers, DataSauce saw that instead of spending under $5 to acquire each customer, they could actually spend as much as $20.50 to profitably acquire a new customer.

The Results: Investing double and tripling revenue.

With Custora’s predictive CLV modeling, DataSauce felt confident setting their target at $10 CPA – double their initial investment. They assumed that spending twice as much on AdWords would double revenue. Happily for everyone, revenue tripled. In hindsight, that made sense: The higher CPA put them above the competition by ensuring that their ads were displayed more often, and allowed them to get better at identifying the keywords that brought in new orders.

According to Tzvi Balbin, Founder of DataSauce, “I can now say with conviction that the most important metric I measure is the CLV. For any direct marketer, it’s critical in guiding your data-driven decisions.”

To download the full case study, fill in the form:

Bonobos Increases Lifetime Value of its New Customers by 20%

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Bonobos is a leading E-commerce-driven men’s apparel brand focused on delivering great fit, a fun approach to style, and superb customer experience. Bonobos offers a full assortment of men’s clothing and has become the largest apparel brand ever built on the web in the US. Just as their product offering has evolved, so has Bonobo’s business model, expanding offline in 2012 with the introduction of e-commerce stores, called Guideshops.

The Challenge: No Easy Access to Customer Lifetime Value

Bonobos has always been a data-driven, customer-focused retailer. As such, it has always recognized the importance of knowing and making business decisions around Customer Lifetime Value (CLV). Initially the marketing team had used Excel to compute lifetime value metrics, but as the company experienced rapid growth and its customer base grew substantially, this became prohibitively time-consuming and tedious – so the analysis was not completed as frequently as the team would have liked.

The Solution: Custora’s Predictive Lifetime Value Analysis and Customer Segmentation

Using Custora’s predictive analytics platform, Bonobos’ senior leadership and its entire marketing team have immediate access to the CLV figures of their customer base overall, as well as the CLV of 25 customer segments. One such segment is customer acquisition channel. Custora’s statistical models analyze the lifetime value of customers acquired through every marketing channel Bonobos employs to acquire new customers. The analysis allows Bonobos to understand which acquisition channels are bringing in the most valuable customers, and optimize their acquisition strategy accordingly – in terms of both budget and team resource allocation.

The Results: Customer-focused marketing and improved customer experience. Real, measurable lift.

Over the past six months, Custora’s insights into which channels are attracting Bonobos’ highest-value shoppers has helped Bonobos increase the predicted lifetime value of its new customers by 20%.

To read the full case study and get a better understanding of how Bonobos partnered with Custora, enter your email address below:

One Kings Lane Realizes 4% Increase in Revenue by Leveraging Custora’s Predictive Lifetime Value Segmentation

OKLOne Kings Lane is a leading online destination for the home that connects daily design inspiration with a fresh collection of select home goods, designer and vintage items you won’t find anywhere else. Every day the site features more than 2,000 new home products assembled around inspirational decorating themes.

The Challenge: Waiting around for customer lifetime value

OKL is a data-driven organization dedicated towards building lasting relationships with their customers. As a result, the marketing team keeps a close eye on Customer Lifetime Value (CLV). The team was interested in segmenting customers based on lifetime value, as this would provide a way to identify segments of loyal, active customers and other segments of customers who were less engaged – with the goal of personalizing marketing communication for each customer segment to drive long-term customer engagement and loyalty.

The Solution: Custora’s Predictive Lifetime Value Analysis and API

OKL engaged Custora to leverage Custora’s proprietary lifetime value prediction algorithms. Within just days of initiating the relationship, Custora was predicting the lifetime value of every single customer – even for those customers who signed up last week.

“We use Custora’s segmentation of high-value customers in our email marketing, promotional offers, and on-site. Instead of a “one size fits all” approach, we now look at which product categories, price points and messaging work best for every customer segment”, explained Elizabeth Dobbin, Senior Director of Marketing at One Kings Lane.

The Results: More agile, personalized marketing across all channels. Real, measurable lift.

OKL was able to immediately incorporate Custora’s predictive insights into various marketing channels. As a result, they realized a 4% increase in incremental revenue.

To read the full case study and learn more about how One Kings Lane leveraged Custora, enter your email address below:

If you’re interested in learning more about Custora and how your e-commerce marketing team might be able to leverage it to improve customer acquisition and retention, you can request a demo of Custora here.