Case Study: Unlocking The Three Growth Engines for an Omnichannel DTC Brand

An e-commerce business specializing in health and wellness products faced critical challenges in customer retention and maximizing customer lifetime value (CLV). With sales channels spanning its website and a major online marketplace, the business observed significant differences in customer behavior between these platforms. While the website attracted high-value, repeat customers, the marketplace suffered from lower retention rates and smaller order sizes.

Key challenges included:

  • Low Marketplace Retention: Only a third of marketplace customers reordered within 12 months.
  • Order Value Disparity: Website customers spent 4.5 times more over their lifetime than marketplace customers.
  • Limited Cross-Selling: Marketplace orders often featured single products, with minimal bundling or complementary purchases.

To address these challenges, the business sought a data-driven approach to analyze customer behavior and optimize retention and revenue across channels.

Approach

The project utilized advanced sales analytics to uncover actionable insights.

Data Preparation

  • Collected and processed order and customer data spanning four years, with segmentation by sales channel.
  • Enhanced datasets with external demographic attributes, including age, gender, and income.

Analytical Technique: Customer Lifetime Value (CLV) Analysis

  • Identified the key drivers of CLV, including order frequency, product breadth, and repeat purchases.
  • Used statistical and machine learning models to measure the impact of various factors on CLV.

Analytical Technique: Market Basket Analysis

  • Examined purchasing patterns to reveal product affinities and bundling opportunities.
  • Calculated metrics like lift and confidence to understand the likelihood of cross-product purchases.

Analytical Technique: Cohort and Channel Analysis

  • Compared customer retention, spending patterns, and product preferences between website and marketplace channels.
  • Identified opportunities for tailored retention strategies and marketing interventions.

Results

The analytics-driven approach led to significant improvements in customer engagement and revenue.

1

Key Insights

Drivers of CLV:

  • Breadth, frequency and repeat were by far the main drivers of CLV, in that order.
  • AOV, customer tenure or even first order value were very poor predictors of CLV.

Channel Dynamics:

  • Website customers showed higher retention, broader product purchases, and higher average order values (AOV).
  • Marketplace customers primarily made single-product purchases, with a much lower AOV and CLV.

Seasonality and Retention Trends:

  • Retention rates peaked in May and October, providing opportunities for seasonal campaigns.
  • Product-specific insights revealed high reorder rates for certain supplements, while others required strategic bundling.

2

Implemented Strategies

Optimized Cross-Selling:

  • Introduced tailored recommendations based on product affinities, such as bundling complementary items.

Retention Campaigns:

  • Launched targeted email campaigns for first-time marketplace buyers, encouraging second purchases through discounts and curated bundles.

Channel-Specific Strategies:

  • Focused on driving product breadth and repeat purchases among website customers.
  • Introduced subscription models and “Subscribe & Save” options to improve marketplace retention.

3

Outcomes

Revenue Growth:

  • Increased CLV for website customers through higher repeat purchase rates and expanded product portfolios.
  • Marketplace CLV improved with targeted retention strategies and upselling initiatives.

Improved Customer Engagement:

  • Personalized recommendations led to higher cross-sell and upsell rates.
  • Seasonal campaigns boosted engagement during peak retention periods.

Data-Driven Framework:

  • Created a scalable framework for ongoing customer analysis and segmentation, ensuring continued growth and retention optimization.

Conclusion

By leveraging advanced analytics, the brand transformed its approach to customer retention and growth. The insights gained allowed for targeted interventions that enhanced customer value across both sales channels. Thanks to our Three Growth Engines framework, the brand was able to identify its main weakness (in this case, the Retention Engine) and to address it with appropriate strategies and tactics.

Real Results. Proven Success.

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