Background and challenge
The client, a leading multinational corporation specializing in manufacturing and distributing everyday consumer products, sought an assessment of a potential acquisition in the body expressions industry. Specifically, the client was interested in evaluating whether a specific tattoo, professional beauty, and body jewelry platform had the digital capabilities necessary to succeed in the current and future economic environment.
The client sought assistance in assessing the extent to which the target’s performance was influenced by external industry trends as opposed to customer digital experiences. Additionally, the client aimed to evaluate the target’s digital capabilities in relation to industry and analog benchmarks, specifically focusing on capabilities that support customer experiences.
L.E.K. Consulting was tasked with developing a comprehensive digital performance and capabilities fact-base to help the client make an informed decision about whether to invest in this asset.
Approach
To help our client answer these important questions, L.E.K. conducted extensive research and analysis, during which we:
Assessed the body expressions market to uncover key market growth drivers and trends, including changes in underlying end-consumer demand, artist shopping and buying preferences, and the importance of digital channels for the B2smallB owners. This allowed us to contextualize recent target performance.
Analyzed the target’s web performance against key competitors across metrics such as traffic, traffic source, average visit duration, bounce rate and pages per visit. This further contextualized recent target performance and uncovered relative areas of strength versus opportunity.
Evaluated the customer digital experience across 10-plus target, competitor and B2smallB analog brands through L.E.K.’s in-house Digital Customer Lifecycle Assessment, which tracks approximately 100 quantitative and qualitative metrics across the acquire, sell and maintain stages of the customer lifecycle. This enabled us to identify drivers of web performance and highlight opportunities for improvement.
Examined the target’s digital marketing efforts, including spend by digital channel and impact on traffic, conversion, average order value and revenue, as well as the quality of the customer (as measured by repeat orders, brand engagement through social media and email/SMS, and cost of customer acquisition). As a result, we made recommendations for people, processes and technology to optimize return on ad spend.
Pressure tested Amazon as a potential threat or opportunity through a robust set of quantitative metrics and customer feedback to understand the overall size of the opportunity, share shift between competitors and risk of new entrants, brand risk of customer loyalty and engagement, and margin risk of pricing pressures and associated fees. This facilitated a nuanced understanding of a key digital channel and empowered us to make recommendations for the target’s near- and longer-term marketplace strategy.
Results
L.E.K. provided our client with an exhaustive report, offering invaluable insights on the digital performance and capabilities of the target compared with industry and analog benchmarks. These insights offered a tailored assessment of current and potential future performance of the target, informed by quantitative data as well as qualitative customer feedback and L.E.K. observations.
These robust insights from the L.E.K. team helped our client make an informed decision regarding the investment.
If you’re interested in discussing how L.E.K. can help you evaluate high-growth market opportunities, please contact us at Digital@lek.com.
The authors would like to acknowledge L.E.K.'s Digital Practice members Julie Sussman and Sophie Sun for their support and effort in this case.
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