FormelSkin Case
Boosting FormelSkin’s ROI by 15% in 4 Months with ML
In a dynamic landscape where skincare holds utmost importance, FormelSkin, based in Berlin, emerges as a health-tech startup focused on delivering personalized solutions for acne. The company relies on a distinctive operational model, where dermatologists meticulously curate monthly skincare regimens, customized to suit individual customer preferences.
Like many other brands, FormelSkin faced a significant marketing challenge. Despite an expanding marketing budget fueling numerous concurrent campaigns, the struggle lies in pinpointing the most effective ad strategy
Subscription-based Challenges
Specifically, the difficulty revolved around distinguishing campaigns that attract customers likely to stay with the company for approximately two years, as opposed to those that merely draw in one-time buyers.
The problem is further exacerbated by the company's business model, requiring upfront campaign expenditures that don't immediately result in revenue. This meant that marketing campaigns are paid for now, while potential clients may or may not return that investment within the next 2 years, leading the company to question whether or not ad campaigns justified their financial investment.
So how could FormelSkin know if their marketing campaigns can generate a solid ROI in the next couple of years?
This is where we enter the picture
Magically Predicting Customer Loyalty
As a solution, FormelSkin partnered with imaga to institute a dependable framework for assessing the efficiency of all ongoing ad campaigns. This unique approach allows FormelSkin to focus more on campaigns that bring in loyal long-term customers instead of investing a large chunk on campaigns that do not bring much value. They can now gauge whether to continue investing in their current strategy or redirect resources to a more effective one.
New PetStory ecosystem
Genie #1: End-to-End Analytics
Much like a genie granting wishes, analytics provides actionable information and knowledge, helping businesses make informed decisions and uncover hidden opportunities.
We implemented a robust analytical system, designed to critically track which ads within the sales funnel ultimately led to the conversion for a paying customer. The need to integrate and analyze data from a multitude of ad systems and accounts, each running several campaigns was a good challenge on the way to our solution.
As a result, the collected data allowed us to establish significant correlations between marketing campaigns, the Customer Acquisition Cost (CAC), and the associated Lifetime Value (LTV) of each acquired customer.
We recognized that the LTV values we held were based on current statistics. Given that an average customer is engaged for approximately 2 years, it became crucial for us to project the future LTV of our customers to ensure our marketing strategies are both informed and future-proof.
And each new set of user purchase data was added to the repository, further refining the precision of the ML model's predictive capabilities, making projections better as time goes by.
Genie #2: Machine Learning
Here is where FormelSkin’s wishes are granted
Just like a genie, ML can provide insights into the future, analyzing data patterns to make predictions and generate valuable insights. We deployed a predictive model that utilized our user data as a training set, and the factors considered in the model consists of a range of user data, including:
- Username
- Age
- Gender
- Medical treatment history
- Pregnancy status
- Known allergies
- Diagnosis Timing of acquisition
- Dates of the first and last payments
- Net Promoter Score (NPS), as provided by customer surveys
- UTM tags
“In a realm where wishes become strategies and insights, the metaphorical genie reveals that within every challenge lies an opportunity for extraordinary solutions to emerge”
Just like a genie, ML can provide insights into the future, analyzing data patterns to make predictions and generate valuable insights. We deployed a predictive model that utilized our user data as a training set, and the factors considered in the model consists of a range of user data, including:
With this approach, FormelSkin can evaluate the effectiveness of an ad campaign at a much earlier funnel stage and redistribute its marketing budget towards more impactful campaigns, and the result of our joint strategy is truly impressive.
Within four months, FormelSkin reported a 15% increase in their marketing ROI, a figure that continues to trend upward as the average customer lifetime extends.
