Leverage Lifetime Value in Investment Decisions: How a D2C Business Unlocked Its Subscription Model and Grew Subscription Revenue to 50% Without Sacrificing Transactional Sales

Problem Overview

Client Background

• Type of Business: Direct-to-Consumer (D2C) transactional business.
• Business Model: Mix of single transactions ($20-$30) and monthly subscriptions ($10-$50).
• Acquisition Channels: Paid digital (7+ channels), TV, email, and SMS.
• Geographic Focus: United Kingdom (UK).

Business Challenge

Goal: Increase customer lifetime value (LTV) and engagement while maintaining acquisition volumes.

Problem:

• Introducing subscriptions increased CAC and lowered conversion rates, impacting acquisition growth.
• Unclear strategy for transitioning transactional customers into subscribers.
• Limited insights into the impact of different acquisition channels on LTV.

Key Pain Points

• Needed a balance between transactional revenue and subscription growth.
• Uncertainty in how to optimize for LTV without hurting acquisition efficiency.
• Limited CRM strategies to upsell customers from single to multiple transactions.

Deployed Solutions

Violet Growth + Exactius Growth:

• Machine Learning for LTV Calculations: Built an LTV prediction model to guide acquisition strategies.
• CRM & Upsell Strategies:
  • Transitioned customers from single transactions to multiple purchases.
  • Developed new creatives to test subscription vs. transactional models.
  • Created targeted acquisition funnels by channel.
  • Implemented upsell mechanisms between transactions and subscriptions.
• Performance Optimization:
  • Shifted performance tracking from CPA to LTV-driven acquisition goals.
  • Built real-time server-to-server LTV events to provide accurate feedback to marketing channels.
  • Designed landing pages optimized for different goals (transaction-only vs. transaction & subscription).

Key Results & Outcomes

Insights & Actions:

• CRM channels were highly effective in upselling first-time transaction customers into subscriptions.
• Adjusted acquisition strategy to optimize for First-Time Subscriber % and LTV instead of CPA alone.
• Enhanced machine learning model to better predict high-LTV customers.

Impact:

• Subscription revenue grew from 0% to almost 50% of total revenue without negatively impacting new customer acquisition volumes.