A 5-Phased Process For Optimising Customer Lifetime Value in Just 100 Days

Black Diamond’s heritage goes back to 1957, when they started selling hand-forged rock climbing gear from the trunk of a car. 

Six decades later, the Black Diamond® brand is a global Outdoor Industry leader—known for engineering and manufacturing the world’s best climbing, backcountry skiing and mountain running equipment. 

With decades of experience as a leader in the outdoor equipment industry, Black Diamond had a very healthy wholesale business selling through prominent retailers such as REI, Dicks Sporting Goods and specialty retail. They wanted to grow their direct-to-consumer (DTC) business and evolve their business operations to serve customers in a relevant and personalised way—but they faced a number of challenges. 

These challenges included having a small DTC team without dedicated IT or analytics resources. This meant they struggled to find and act on customer insights as needed to develop winning marketing campaigns for customer acquisition and retention.

If that weren’t enough, their media budget was relatively small, so they needed to approach this process as efficiently and effectively as possible to drive growth.

“We brought on Lexer’s CDP to help our new direct-to-consumer business scale quickly. Their CDP and customer success team have been wonderful assets helping us achieve those goals with higher than expected margins.”

– Jan-Willem Driessen, VP of Global Marketing & DTC

Black Diamond partnered with Lexer to overcome these challenges. Together, we created a unified view of Black Diamond’s customer data and gathered insight into customer behaviour. This insight helped us develop agile and effective customer acquisition, cross-sell and retention campaigns across their channels.

Using the Lexer CDP, they cut their cost-per-acquisition (CPA) in half and more than doubled their return on ad spend (ROAS).

The CDP enabled Black Diamond to increase their agility, deploy a significant number of tests in a short amount of time, and gather critical feedback on their growth strategies. In just the first 100 days of our engagement, Lexer’s strategic, data-driven initiatives helped the team at Black Diamond achieve incredible top-line revenue increases, significant media efficiencies, and highly agile processes to scale their operations while increasing their impact.

Together, we achieved incredible results:

  • 169% increase in return-on-ad-spend when targeting existing customers
  • 50% reduction in cost-per-acquisition for new customers
  • 54% reduction in cost per opted-in email address acquired
  • 1,101% increase in revenue per email when targeting lapsed customers

 



Leveling Up Black Diamond’s Customer IQ and Marketing Performance: A 5-Phased Process

PHASE 1: Complete Historical Data Analysis

To kick off our engagement with Black Diamond, we used the Lexer CDP to compile all of their customer, email, transaction, and product data into a single customer view. Using advanced analytics and machine learning, the Lexer platform enriched this dataset with Experian data and calculated attributes like predictive customer lifetime value, churn risk and products purchased. 

Using this enriched customer dataset, we performed Lexer’s proprietary customer analysis that highlights the core drivers of sales and uncovers actionable strategies for growth and engagement. Key insights and recommendations included:

  1. Improving the ROAS from customer acquisition campaigns by targeting high-value lookalike audiences. 
  2. Growing the email database using social media sweepstakes targeting high-value customer lookalikes with personalised offers.
  3. Increasing customer retention using RFM segmentation and cross-channel winback campaigns.
  4. Increasing average order value from customer cross-sell campaigns through highly targeted segmentation and personalisation.

PHASE 2: Targeted Lead Generation 

After analysing Black Diamond’s previous lead generation campaigns, during which they targeted audiences based on Facebook Interest attributes, we wondered: Would tailoring the offer to a high-value lookalike audience improve their lead generation? 

We created a lookalike audience based on high-value climbing customers and ran a sweepstakes campaign offering the chance to win a set of climbing gear worth over $800. This campaign saw impressive performance improvements compared to their previous sweepstakes:

  • 54% reduction in media spend
  • 54% reduction in cost per lead
  • 481% increase in return on ad spend
  • 526% increase in sales per email

Sweepstakes are often viewed as short-term loss leaders, because their goal is to gain opt-in email addresses to be converted to customers via future email campaigns. However, the performance of this campaign challenged this viewpoint. The ROAS from the traffic driven to their website was so significant that Black Diamond yielded more than $1 of sales for each new email address captured.

PHASE 3: New Customer Acquisition 

In the last five years, customer acquisition costs have increased by more than 50%. The dominance of Google and Facebook has resulted in a significant increase in the number of brands bidding on their media, driving significant increases in auction costs. To combat these rising costs, brands are becoming more sophisticated with audience selection and targeting in an effort to increase effectiveness amidst higher costs.

One option for improved audience targeting is to license audiences from third-party data providers. Black Diamond was curious to test these audiences from a prominent data provider for a campaign selling backpacks.

We decided to run a test using audiences created with Lexer’s CDP and measure how they performed against audiences using Black Diamond’s well-known third-party data vendor.

Using the Lexer CDP, we were able to zero in on Black Diamond’s highest-value customers that had purchased backpacks. We sent these customers to Facebook and used them as the seed audience to build a high-value lookalike audience. Black Diamond ran the campaign to the two audiences using the same creative to test which audience yielded the most favourable performance.

The results? 

The CPA from Lexer’s high-value lookalike audience was half that of the third-party audience: $38 vs. $76 per acquisition. Additionally, the ROAS for Lexer’s audience was 135% higher. 

 



PHASE 4: Retention, Upselling and Cross-Selling

For any business, customer retention, upselling and cross-selling are the most effective ways to accelerate growth and increase revenue. In fact, studies have shown that it’s 6.7 times more expensive to acquire a new customer than to retain an existing one. 

With that in mind, we recognised an opportunity to target Black Diamond’s 180 day inactive customers with more personalised product offers as a strategy to drive sales growth.

During our initial analysis we uncovered high customer repurchase rates within the same product category. In other words, someone who purchased a backpack once is highly likely to come back in the future and purchase another backpack. 

Turning insight into action, we created hyper-targeted inactive customer audiences based on their past purchases and ran campaigns featuring products from the same product category. These niche audiences enabled us to use messages designed to retain, upsell or cross-sell each segment as appropriate. 

These hyper-targeted customer audiences dropped past customer targeting CPAs by more than half and increased ROAS by 169%, providing a significant jump in sales.

PHASE 5: Reactivating Lapsed Customers

We’ve shown that targeting inactive customers who haven’t purchased for more than 180 days is a very profitable strategy—but would that same strategy work for customers who haven’t purchased for more than a year? 

Email winback campaigns are a common re-engagement strategy for lapsed customers. Unfortunately for most brands, lapsed customers tend to be opted out or disengaged with marketing emails. This certainly held true for Black Diamond.

Lexer’s solution: Automated cross-channel winback campaigns. 

By targeting email-engaged customers with personalised email campaigns, we increased Black Diamond’s conversion rate by 555% and their revenue per email by 1,101%. For lapsed customers who were unreachable by email, we targeted them using Facebook ads and yielded a 4.48 ROAS.

“The Lexer team is incredibly engaged. Whether supporting us on a daily basis, partaking in strategic planning or coming up with original campaign ideas. Simply a pleasure to work with.”

– Jan-Willem Driessen, VP of Global Marketing & DTC

The Takeaway 

  • 169% increase in return-on-ad-spend when targeting existing customers
  • 50% reduction in cost-per-acquisition for new customers
  • 54% reduction in cost per opted-in email address acquired
  • 1,101% increase in revenue per email when targeting lapsed customers

With the CDP and the Lexer team to offer expertise and support, Black Diamond was able to become agile, efficient, and insight-driven, even with a small team and limited resources. 

In the first 100 days, we tested, learned from, and optimised initiatives that would’ve been impossible—or at least, difficult, time-consuming, and expensive—otherwise. For the next 100 days, Black Diamond plans to scale these proven strategies to drive significant revenue growth. 

Ready to produce results like Black Diamond? Schedule a demo with our team to see how Lexer can help your business.


Contributors

Author profile
Digital Marketing Manager

Will runs digital marketing and analytics for Lexer. He has spent the last decade helping startups grow by harnessing the power of new technologies in traditionally non-tech-savvy industries.

Outside of the office he enjoys spending time with his wife, young son, and extended Los Angeles family.