London Cashmere Company
In the first year of trading, the company did very well for a start-up, pulling in large amounts of revenue. However this was heavily weighted to their pop up shops, with only 19% coming in online sales.
- 90% Point of sale
- 10% online
Pure was approached in summer 2020, towards the end of the companies first year of trading, with a view to developing an online marketing strategy. The idea at the time was to match the revenue being achieved in the pop up shops, with online sales.
The brief was relatively simple – establish a profitable sales funnel, which could then be scaled to capture a substantial share of the competitive cashmere market. Being a fairly new business with little investment, the strategy had to be self sufficient in a short space of time. Pure were given an ad spend budget and free reign to map out a strategy that would deliver on the brief.
With a limited amount of stock available, the strategy had to first be carefully forecasted, to help maintain the supply chain and avoid items going out of stock.
Phase One – Learning
With any new advertising strategy with little or no historical data, the first stage is to cast a wide net, drive traffic and create a pool of data to inform the ongoing strategy. The budget was spread out across various platforms, heavily weighted towards ‘prospecting’, which means targeting people who have never heard of, or interacted with the brand. A basic retargeting model was set up, to create a simplistic sales funnel.
At this stage, the funnel was far from fully optimised and conversions were not as cheap as they could be – however by investing in this stage, it was possible to broadly identify who the target audience was. By taking this decision too early or without testing, we would have confined ourselves to a specific direction that may or may not have been right – but will almost certainly not have been the full picture.
At the end of phase one, we had:
Thousands of people had been introduced to the brand and visited the website, engaged on social or signed up to the email database.
The massive pool of data started to show useful insights. The conversion data showed us who our audience was and the process they went through to become a paying customer. Our team analysed the data from a range of angles and dissected the insights to develop the phase two strategy.
Populated Custom Audiences
Although only a basic retargeting model was live, the team had created a range of custom audiences in the background – all of which were populating from the prospecting campaigns. Essentially creating an arsenal of tools to utilise in phase two.
Phase 2- Base Sales Funnel
Using the findings from phase one, the team tightened the wide net approach to make a much more refined sales funnel. We had conclusive data which gave us a blueprint to optimise the campaign around and make the ad spend work much harder for us.
Some of the learnings used to optimise around are:
- Budget distribution between channels
- Which channel to use at each stage of the funnel
- Conversion demographics, time & dates, locations etc
- Best performing creative
Once implemented, the strategy quickly started to show exceptional results. Not only was the volume of online sales vastly scaled, but the cost per conversion came down to a profitable rate and we started to see a positive return on investment. We had our base sales funnel!
Phase Three – Improving & Scaling
With an established base sales funnel that was consistently providing a profitable return on investment, we could turn our attention to other areas.
Optimisation never ends… results can always improve and staying ahead of the curve is essential to maintain the performance. Alongside the base sales funnel, we continually tested new optimisation tactics in small isolated experiments. If the results were negative, the tactics was disregarded. If the results were positive, they were worked into the base sales funnel and improved the overall performance. These incremental tweaks work to further lower the cost per conversion and increase the return on investment.
Scaling ad spend
To take a larger share of the market, a percentage of the revenue was reinvested as ad spend to increase the budget. By carefully scaling up the campaigns, we were able to increase the online sales. It’s important to do this slowly and strategically, to make sure the cost per conversion doesn’t suffer.
Scaling the product base
Rather than constantly focussing on taking a larger share of the existing market, we suggested looking into new products that could open up new avenues to target. We approached this in a strategic way, identifying search terms that had good volume but low competition. This also allowed us to counteract the naturally low sales periods in cashmere, (summer) with other products that were popular throughout the year (homeware).
6 months into the strategy and the results have been exceptional, with plans in place to scale in the coming year.
- 5.4x average return on ad spend
- Peak monthly sales scaled by 333%
- Online sales now account for 71% of revenue
The company has now changed the business model to focus on online sales as the main revenue stream.
Replicating the sales funnel in other markets
Now that a profitable sales funnel had been achieved – replicating this in other markets is a natural step. With cashmere being a seasonal product, the strategy will follow the cold weather!
Using data to forecast stock levels
One of the limiting factors has been running out of stock and relying on distribution networks to restock. Using the historical data collated so far and planned ad spend budgets, we can start to forecast stock levels and when they are most needed. Helping to maintain cash flow and take advantage of all the potential available.
Introducing medium and long termed channels
There are plans to introduce a search engine optimisation and a content strategy to add additional traffic streams and occupy more of the online cashmere real estate.