eSalon is a company in the women’s beauty brand space trying to optimize its ad spend based on customer value.
We look at a comparison of what each customer actually spent over the past 6 months and which per-customer revenues we predicted six months ago. The average error was $3.54 over the last 6 months, and the median error was 0. For comparison: The company’s average LTV per year (measured in gross profit) is $49.
Together with Ocurate, eSalon integrated the real-time LTV predictions into the Google and Facebook bidding APIs.
In May, June, July and August, before VBO was deployed, the average 12-months gross profit of all customers acquired on Google and Facebook was $49.01, In September, October, November and December, after VBO was deployed, the average 12-months LTV of all customers acquired increased to $56.43 – a 15% increase.
Achieved Result: 15%+ increase in LTV
Significance: increase first-year gross profit from customer acquisition by 15%
Overall revenue impact: $590K increase in annual returns from $3.9M to $4.4M
