December 22, 2020
Vinomofo grows low-cost acquisition, retention, and lifetime value with Lexer
As one of Australia’s leading online wine retailers, Vinomofo saw a massive increase in new customers during the pandemic. In the face of steep ecommerce competition, rising acquisition costs, and shifting consumer behaviors, Vinomofo used the Lexer Customer Data Platform to grow lifetime value
and achieve remarkable retention rates among
new and old customers.
Like wine, every customer has their own unique character, history, and journey.
The process of understanding and appreciating good wine is similar to understanding and engaging your customers: Collecting data points or “notes” to learn what makes customers unique, understanding the history and journey of each customer, and segmenting or categorizing customers by attributes such as location, interests, behaviors, or lifetime value.
“Using Lexer to optimise our acquisition and retention strategies, we were able to decrease the cost of acquiring new customers and re-engage lapsed customers to increase the number of active customers,” says Mariano Favio, Head of Marketing at Vinomofo. “There are a number of driving factors behind these results, but the common denominator is the effective usage of our marketing channels due to the consistent single customer view within Lexer.”
By reconceptualizing loyalty programs with personalized, insight-driven customer journeys, Vinomofo was able to:
- Decrease customer acquisition costs by 42 percent.
- Increase active customers by 27 percent.
- Increase return-on-ad-spend through paid channels by 61 percent.
- Re-engage 12 times more lapsed customers than in previous win-back campaigns.
- Achieve a 4 times increase in net customer acquisition, including recovered customers.
Here’s how Vinomofo used the Lexer CDP to deliver on their brand promise of good wine, epic deals, and guaranteed customer happiness.
The context: COVID-19 forces customers (and competitors) online.
When Vinomofo was confronted with a major influx of new customers during the COVID-19 pandemic, they knew that a nuanced understanding of these customers, paired with data-driven personalization strategies, would be critical for high retention and lifetime value growth.
“COVID-19 represented an unprecedented acceleration of ecommerce in Australia,” says Mariano. “April was the biggest period in Australian online shopping history, where there were more than 200,000 shoppers entering the market for the first time. Consumers began reevaluating what is important for them and where they want to spend their money. COVID has disrupted the brick-and-mortar shopping experience, migrating shoppers from offline to online.”
This migration was particularly impactful on the wine and alcohol industry. Although Australian wine consumption remained fairly stable, wine sales channels saw a massive shift from brick-and-mortar to digital. Traditional wine wholesalers, marketplaces, and direct-to-consumer brands alike have all had to rethink their approach to digital engagement.
For Vinomofo, this rapid increase in online wine shopping attracted a high number of first-time customers with different personas and buying motivations than previous customers. Simultaneously, it led to an increase in ecommerce competition.
“At Vinomofo, we love competition and we actually encourage competition, because it keeps us on the move,” says Mariano. “But with competition brings an increase in cost-per-acquisition… and we now need to grow in the most sustainable and profitable way. Therefore, focusing on growing customer lifetime value has never been more important.”
In other words, understanding who your customers are and why they engage with your brand has become crucial to acquiring them profitably and growing their value through focused, data-driven retention strategies.
The challenge: Messy data leads to unclear customer relationships.
Before implementing the Lexer CDP, Vinomofo faced two types of challenges regarding effective customer retention: Business and technical.
Vinomofo’s business challenges included:
- Accessing data: Without real-time reporting and a strong alignment between the marketing and IT teams, Vinomofo struggled to access and utilize data in meaningful ways.
- Deriving actionable insights: Vinomofo didn’t have the customer insights needed to inform the relevancy of their acquisition and retention campaigns.
- Retaining customers: To retain more of their newly-acquired customers, Vinomofo wanted to remake the traditional loyalty program and provide that level of exceptional personalization for all customers but didn’t have the tools to do so.
These needs were later amplified by the significant uptick in ecommerce activity during the pandemic. With a plethora of new data and customers coming in, as well as an intensifying competitive landscape, Vinomofo valued the ability to understand these changes and hone their approach to acquisition and retention even more.
“We had to adopt a new model of seeing things at Vinomofo,” says Mariano. “We’ve migrated to a customer value model driven by information.”
But that customer value model wouldn’t be possible until Vinomofo could solve their technical challenges, which included:
- Messy data: Prior to implementing the Lexer CDP, Vinomofo’s data wasn’t normalized and included many duplicate profiles. Because of this, it was difficult to determine true customer behavior that could inform personalization strategies.
- No reporting: A lack of reporting is a classic startup challenge. For Vinomofo, much of their reporting was done in different systems that were telling different stories about customers.
- Unclear customer relationships: Some of Vinomofo’s data wasn’t connected with their CRM, making it difficult to discern clear customer journeys.
Vinomofo solved these challenges by implementing the Lexer CDP.
The solution: Combined, enriched, actionable customer profiles with the Lexer CDP.
With the Lexer CDP, Vinomofo achieved a true, persistent single view of the customer.
“The Lexer CDP is integral to everyone’s role, not only marketing,” says Mariano. “Everyone uses it to gain their own insights. It’s very simple to use. At Vinomofo, we build a data-driven culture where everyone has access to every report at any time, including Lexer, so they can question the data and gain ideas.”
Here’s an example of the single customer view made possible by the Lexer platform:
With over 140 standardized, out-of-the-box attributes, Lexer profiles show Vinomofo all of their customers’ information across channels, including lifetime value, average order value, last order date, location, browser behavior, and more. Additionally, the platform can show profiles for prospects who haven’t transacted yet, which typically makes up about 30 to 50 percent of a business’s database.
Lexer’s real-time, automated reporting enabled proactive, rather than reactive, customer engagement, which was a key competitive advantage during the tumultuous COVID-19 period. The ability to track ROAS, CAC, LTV, predictive attributes like next most likely product to purchase, and other key metrics at the customer level enabled a holistic approach to performance marketing and continuous optimization.
Finally, automated customer segmentation tools enable genuine, one-to-one personalization across channels and touchpoints. By using customer insights and automation to strike a balance between a high volume of communications and effective personalization, Vinomofo drove significant increases in lifetime value, conversion rates, and ROAS.
The impact: Significant retention, cost savings, and profitability.
With the ability to self-serve customer insights from the Lexer CDP, the team at Vinomofo took meaningful and data-driven actions to engage and retain their customers.
“By connecting that single customer view to our different channels—HubSpot, Criteo, Facebook, you name it—we can enable consistency in the customer journey,” says Mariano. "Using Lexer to analyze customer behavior, I know exactly when to offer a discount, when to offer someone different types of wines based on their past interests and purchases, and how to deliver this consistent, one-to-one personalization that builds lifetime value."
In particular, Lexer’s LTV and CAC reporting capabilities give Mariano and his team the ability to set guidelines for profitable acquisition strategies.
“For example, I can decide that I’m going to put a cap on acquisition that’s no more than 5:1 LTV to CAC,” says Mariano. “That allows me to focus on growth, so I can earn and acquire new quality customers and put the processes in place to retain them.”
Additionally, Vinomofo has used insights from the Lexer CDP to segment customers by relative value and build data-driven customer personas to inform their retention journeys.
“We’re building personas based on LTV and we’ve clustered those personas to deliver surprise-and-delight retention strategies,” says Mariano. “For example, if I know that Nick has been an excellent customer, I know that the average number of orders per customer is four per year, and Nick has purchased three times, then it’s likely that he’s going to purchase more. I’ll send him a gift to surprise and delight him. That will encourage the growth in LTV which will provide more profit in the future.”
These connected, consistent, cross-channel customer journeys led to a number of wins, including:
- Acquisition: A 42 percent decrease in CAC and a 27 percent uplift in active customers.
- Profitability: A 61 percent increase in ROAS in paid channels.
- Retention: 12 times more customers were recovered through win-back campaigns, resulting in 4 times increase in net customer acquisition.
The future: Continued CDP-powered personalization and internal transformation.
Like wine, every business evolves with time.
As digital continues to evolve and customers slowly migrate back into brick-and-mortar locations, Vinomofo plans to improve the customer experience with real-time, on-site personalization.
“We’re hoping to deliver website personalisation based on user behaviour and predictive behaviour,” says Mariano. “I believe that’s going to increase our conversion rates, keep increasing our ROAS, build our active customer base, and improve retention. That’s the key thing for Vinomofo in the next three to four months.”
Efficient and effective on-site personalization will depend on a true single customer view and an internal focus on customer-led strategies. For Vinomofo, Lexer will continue to be a vital tool driving those strategies.
“With the Lexer CDP, we’re able to see our business in a more holistic point of view,” says Mariano. “I would encourage everyone to start using one-on-one personalisation journeys to maximise the lifetime value growth of the customer.”