A digital marketing company was preparing to negotiate their annual contract with one of their data vendors. They had a suspicion that they were overpaying the vendor for the service, but with no ability to track the lifetime value of the customers they acquired, it was impossible to see if investing in this costly channel was profitable or not.
The Komodo Solution:
Komodo began by setting up data pipelines that integrated all the information available about customer interaction after they were acquired into a single database. This allowed us the client to track user-level data for the first time, and see the lifetime value of the customers coming in from the data vendor. Unfortunately, their customer acquisition cost from this channel was close to $3 per customer, while the LTV of each customer was only about $1.
Komodo then put together a plan to 1. Renegotiate the contract with the original vendor, and 2. Find other profitable channels for the client to invest in. We went to 15 competitors of the data vendor and performed an initial assessment of their services, then set up week-long trials with 7 of the vendors. From that trial we were able to perform analyses to show how each vendor performed, and which ones were profitable or not.
With Komodo’s analysis in hand, the client was able to negotiate for a restructured contract that allowed them to pay by user acquired instead of by data provided, which left them paying only one third of the price of their previous annual contract. The client also onboarded two new data sources. With these new changes, the client saw recurring quarterly profits increase 2-5%, starting in the next quarter.