Transforming E-Commerce: How Smart Data and Strategic Moves Supercharged PHH Group's Growth
Background
PHH Group, a leading e-commerce entity in the Baltics and Finland, partnered with Analytical Alley to implement an advanced dynamic modeling system. This system was designed to create a comprehensive analytics ecosystem for PHH Group, ensuring comparable and holistic planning of offline and online media while predicting ROI across various channels. The overarching goal was to transform the marketing department into a powerhouse for achieving business objectives. PHH Group operates across four countries, completing 5.9 million orders annually, with a turnover of 260 million EUR and 1.8 million active customers.
The Results
- Achieved 95% accuracy in predicting monthly GMV (General Market Value) based on planned media and business actions.
- Media contributed 45%-60% of total GMV, varying by brand.
- Met revenue/GMV goals for 4 out of 5 brands, increasing total media ROI by 22% in 2023. This impressive ROI growth is the result of continuous modeling and optimization over nearly four years. PHH Group has significantly increased their media budgets. Even maintaining the same ROI while increasing investments would have been a great achievement, but they managed to improve it significantly.
- Optimized investment levels monthly, leveraging natural demand to boost ROI.
- One brand faced intense competition, leading to a strategic shift focusing on higher media ROI instead of set business goals.
- Enabled pre-testing of different planning methodologies, preventing actions that could diminish GMV.
- Empowered the CMO to demonstrate marketing efficiency, preventing reductions in media investments.
How We Did It
Analytical Alley created an analytical modeling system using real sales data from each brand and market data, including macro data (inflation, wages, seasonality), weather, competitor actions, and business activities. This adaptable system adjusted to changes in marketing KPIs and optimization goals, employing a combination of mathematical methods for accurate KPI predictions.
Our methodology involved multivariate linear modeling to identify channel and business impacts on GMV. Results were fed into regARIMA and Random Forest models, ensuring high accuracy in GMV predictions. Continuous updates captured changes in media, macroeconomics, competitor activity, and business aspects, with monthly re-modeling providing insights for media planning.
Each month, Analytical Alley provided detailed, actionable insights beyond just investment values and estimated returns. We delivered tailored suggestions on weekly natural demand weights for different campaign periods and a detailed daily online channel split, including precise investment amounts and natural demand calculations customized to the specific month.
To address the complexity of PHH Group's diverse markets, we developed multiple models for different companies within the group. This approach allowed us to craft tailored strategies for each market, understanding what channels and categories work best in each country. We combined all the detailed reports to create a cohesive and comparable overview across all countries, ensuring a unified strategy that still respects local nuances.
Why It Matters
E-commerce media strategies often rely heavily on Google Analytics, which can be off by up to 30% due to disabled cookies, sampled data, and regulatory restrictions. This discrepancy is insufficient for making strategic decisions. PHH Group needed a complete view, integrating offline media impacts and enhancing digital channel efficiency.
Our project moved PHH Group away from incomplete media views provided by Google Analytics, transforming their marketing/media department into a leader in achieving business goals. The advanced analytics proved the importance of marketing in revenue creation, optimizing ROI across all media channels.
The Big Picture
In the fast-paced world of e-commerce, relying solely on Google Analytics can leave significant gaps in strategy and data accuracy. Analytical Alley's approach provided PHH Group with a holistic view, incorporating both online and offline media impacts. This shift allowed for smarter, more precise planning and investment, driving significant growth and ROI improvements.
PHH Group's journey demonstrates the power of moving beyond traditional analytics, embracing innovative, data-driven strategies. With a clear vision and precise execution, they've set the stage for continued success. PHH Group is not just navigating the market; they’re pioneering new approaches for sustainable growth.
