From data to management information

The problem

One of our clients is a large e-commerce company selling in almost 20 countries in Europe. Over the past 10 years, the company experienced a steep growth curve but recently the growth curve flattened and the company experienced a decrease in monthly customers.

How we helped

In three months, we created a customer profitability analysis, developed a new financial model and implemented a metric tree. All three deliverables relate to each other. The customer profitability analysis showed in which customer groups your marketing money is best invested. These insights were included in a new company financial model to calculate how the marketing investments lead to EBITDA targets. E.g. CAC of X will lead to Y new customers who will bring in a Z amount of revenue over time. The metric tree combines the forecast from the financial model with the month on month actuals from the business. This way, the company has a driver based detailed monitoring tool to check-in on the progress.

Customer profitability analysis

The customer profitability analysis highlights which European countries are most suitable for future growth and investment. The analysis includes CLV calculations based on past orders and future value based on weighted retention rates. On the cost side, all cost of goods sold, acquisition and retention cost were considered leading to good approximation of customer profitability.

New company financial model

The outcomes of the profitability analysis were included in a newly developed financial model for the company. The financial model estimates revenue, costs, ebitda and their respective driver up to 3 years in the future and provides guidance how to attain revenue and EBITDA goals. The model is built up based on bottom-up targets over all the countries and provides detailed targets for e.g. the marketing team regarding acquisition, costs, churn and retention.

Metric tree

The targets from the financial model are included in a newly developed metric tree to quickly identify differences between targets and actuals. The metric tree will help the business to quickly adjust to the differences and recalibrate their strategy to attain their targets. For the company management and investors, we developed a monthly business report covering all departments and relevant information.

Want to learn more? Get in touch with us!