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LEVERAGING CUSTOMER LIFETIME VALUE DATA to Power Your Digital Marketing Strategy
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Inputs:
Outputs:
Order size
Best customers
Gross margin
Best campaigns
Repeat purchase rate
Best products
Time between purchases
Best collateral
...
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Patrick Terrell VP of Marketing Prep Sportswear
Rose Hamilton @pet360_Rose
Amy McDowell @amy_liang
EVP & CMO Pet360
VP of Digital Marketing BaubleBar
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RJMetrics: CLV Optimization Experts
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Trend #1: CLV is not always CLV
Consider gross margin? Why not first purchase? Why not just sum up all revenue? What’s truly apples-to-apples?
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CLV as cohort analysis
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Trend #2: Data Silos
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The data warehouse
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Trend #3: Analysis Paralysis
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Patrick Terrell VP of Marketing
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15-second commercial: Prep Sportswear
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CLV framework: know thy customer
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Case study | • Surf and Streetwear Retailer - Brands and Styles
• • • •
2+ years in operation Only one acquisition marketing channel Email campaigns were batch and blast Best Customer Service was the focus
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Customer Data | Findings
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Customer Data | Findings
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Customer Data | Findings
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Customer Data | Summary • Significant % of CLV concentrated in customers that transact a lot from 18+ month time segment • Purchase segment 5X crossed into significant gross profit contribution grouping • The most highly valued customer segment by second purchase was the 0-3 month segment
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Strategies • Increase successive purchases sooner and more often • Target highly valued segments • Cause lower segments to shift to mid-tier segments
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Results • Disrupted retail market • 1100+% growth over 3 years • Quickly gained significant market share
Considerations • • • •
“What type business are you in?” Retention was major factor…but there were others Iterative customer analysis Watch your margin at all times!
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Thank You!
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Rose Hamilton EVP & CMO
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15-second commercial: Pet360 Pet360.com is the most comprehensive online resource for pet parents.
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A brief history 1997
$7.5MM Investment
2007
2010
$18MM Investment
2011
2012
2014
2013
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The burning platform • • • •
Competitive forces Customer behavior Technology trends Customer feedback
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The vision for Pet360.com
Personalization
Trusted Information
Peer Support
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Integrating LTV into marketing • •
•
Balance customer value with cost structure Connect “intangible” customer value to profitable customer behavior changes Marketing and Finance Unite: LTV -
Balance CPA with LTV for growth Content/Community: Organic Growth Media: Monetization of Every Visitor Leading KPI: Engagement, AOV, CTR Lagging Indicators: LTV and Profitability
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Summary • • • • •
Enterprise View of Data Know Your Costs Customer Segmentation & Value Engagement vs. Marketing Focus = Long Term View Build “Proof Points” Along the Way
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Thank You!
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Amy McDowell VP of Digital Marketing
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15-second commercial: BaubleBar
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100’s of new styles added each week. Fashion jewelry is an easy and affordable way to stay on-trend. The BaubleBar experience is fun and social.
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STANDARD PRODUCTS (RETAIL $20 - $60)
PERSONALIZED PIECES (RETAIL $30-$150)
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BURIED BAUBLES Every Monday and Friday we secretly mark down an item to $10 or $20. Subscribers receive emailed clues to help them with the “treasure hunt”.
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Does the Buried Bauble program help or hurt? PROS: High email engagement and conversion rates st 1 time buyer NPS is strong Customer interviews indicate very positive interest Market is familiar/comfortable with flash model CONS: Low AOV of Buried Baubles Training customers to wait for discounts? Inventory planning is challenging and time-consuming
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Cohort analysis: firsttime buyers Percentage of 1st time customers broken out by types of products bought
Very few first-time buyers purchase only Buried Baubles. 10% buy Buried Baubles with non-Buried Bauble product.
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Cohort analysis: LTV Index LTV Index of 1st time customers broken out by types of products bought
Given the lower PP of Buried Baubles, the LTV of these cohorts are lower than Control, but only by 15%.
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Cohort analysis: LTO index LTO Index of 1st time customers broken out by types of products bought
First time buyers who purchase Buried Baubles have a LTO that is 24-57% higher than Control.
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Summary •
•
•
Decide which KPIs are you optimizing for and measure them. Test your hypotheses using cohort analysis as a barometer. You don’t need a lifetime worth of data to do a CLV analysis.
Thank You!
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Panel Discussion
Patrick Terrell
Rose Hamilton
Amy McDowell
Robert Moore
@pet360_Rose
@amy_liang
@robertjmoore