2x growth in website revenue with 20% increase in overall margins

How a leading digital house of brands 2x’ed their website revenue while improving their contribu on margin 2 (CM2) from (4)% to 16% in 4 quarters

About the brand

X is a digital first house of brands that manufactures and sells hair care and skin care products across channels like their own website, marketplaces such as Amazon, Nykaa and Flipkart and modern retail channels.

Problem Statement

X approached us with the challenge of growing their website channel revenue while improving channel profitability.

The channel had remained stagnant on a quarter-on-quarter basis with minimal improvement in profitability margins at the cost of de-growth.

Solution

We implemented a 3 step-focus strategy to increase revenue and profitability

1) Identify lower CAC and higher AOV opportunities to grow the channel – We identified the best-performing creative types, audiences, offers and products that had performed well in the past and doubled down on them. We also brought in a mix of new ad creatives with the help of external agencies and leveraged new campaign types like advantage+ shopping and ad placements like reels on meta for hyper-scaling.

2) Prevent spend leakages – We identified Google ad spends (25% of overall ad spend) being targeted towards bottom-funnel customers leading to inflated ROI and minimal incremental revenue. We cut down the spend by ~30% and diverted some of this spending to owned channels like email and WhatsApp to improve ROI

3) Improve revenue from repeat customers – We identified higher repeat rates and LTV drive the profitability for the channel given no acquisition cost for repeat buyers. We identified products with higher repeat rates + AOV and pumped acquisition money into acquiring users for those products.

Results

  • 2.25x Growth in Overall Revenue
  • Marketing spend went down to 44% of total revenue in Q1FY24 from 64% in Q1FY23
  • AOV went up from Rs 686 in Q1FY23 to Rs 925 in Q1FY24