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How Wehkamp Honed Its Google Shopping Campaigns With Profitability & CLV in Mind

THE SCOOP

Wehkamp, one of the largest online retailers in The Netherlands, wanted to elevate its Google Shopping strategy by focusing on its most profitable products and its most valuable customers. That required a two pronged approach of optimizing bids for profitability, while at the same time increasing spend on products that attract repeat customers. Wehkamp collaborated with Sidecar to turn this vision into a reality and used its technology to meet granular ROAS targets and deliver the right products to the highest CLV shoppers.

PROFILE

Retail Category
Apparel & Lifestyle
Website
Headquarters
Zwolle, Overijssel, Netherlands

The goal

increase profits while valuing top customers

Before Wehkamp began working with Sidecar in 2016, the retailer struggled to develop a campaign structure for Google Shopping that would maximize the performance of its diverse product catalog which totaled over 400,000 SKUs. It wanted a scalable way to set bids based on product margins and drive greater revenue.

With the help of Sidecar analysts, Wehkamp was able to develop a campaign structure that grouped products together by margin, instead of category, and set appropriate ROAS targets for each group. Sidecar’s machine learning technology sifted through millions of data points within these campaigns to automate the complex bidding process.

More recently, Wehkamp asked Sidecar to further refine its bidding strategy and campaign structure by setting even more granular ROAS targets. Instead of using margins as its leading KPI, Wehkamp wanted to incorporate product profitability.

In the past year, profitability has become the guiding light for the Dutch retailer. Taking into account historical purchasing behavior, pricing, and return rates, Wehkamp developed an algorithm that predicts the future profitability of its products. These insights help the retailer spend its marketing dollars more effectively on the most lucrative items in its catalog.

Using the profitability algorithm, Wehkamp crafted hyper-targeted ROAS goals. For the first time, the retailer was able to budget marketing dollars based on individual product profitability rather than retail category and margins.

“This algorithm made it possible to be more granular and create more than 2,000 different ROAS goals for our catalog,” explained Karim Kamel, senior online marketer at Wehkamp.

In addition to meeting profit goals, Wehkamp also wanted to build long-term customer loyalty. After analyzing historical purchasing data, the retailer discovered that it captures the most repeat business in home and garden and apparel categories. That’s because shoppers in these categories are often purchasing on behalf of their families. Recognizing that, Wehkamp adjusted its profitability approach to bid higher in the home and garden and apparel categories in order to encourage repeat business and grow customer lifetime value (CLV).

“We really want to focus on these family buyers in home and garden as well as apparel because they have high CLV, and one of our main purposes is to become the number one retailer in the hearts and minds of families,” said Karim.

While Wehkamp was able to identify its most profitable products and high CLV shoppers, it did not have a scalable solution in-house that could apply these insights to its existing Google Shopping campaigns. That’s why Wehkamp turned to Sidecar to align its Google Shopping strategy with its dual mission.

BY the Numbers

400K
SKUs
on wehkamp.nl
30%
Click Growth
YoY in Apparel category
25%
Click Growth
YoY in Living category

The solution

Balancing profitability & clv

Sidecar collaborated with Wehkamp to build a winning strategy that combined the retailer’s profitability and CLV data with Sidecar’s machine learning technology. Together, they were able to transform a forward-looking vision that balanced complex goals around profitability and CLV into an actionable strategy that enhanced Wehkamp’s Google Shopping performance while valuing its most engaged customers.

“While we needed a lot of resources from internal data science team in order to build our profitability algorithm and identify our top CLV shoppers, Sidecar was critical to the execution of this operation. They made our vision a reality in our Google Shopping campaigns,” said Karim.

A critical part of executing Wehkamp’s profitability strategy was translating the retailer’s 2,000 ROAS targets into roughly 20 campaigns. To do this, Sidecar grouped together products with similar ROAS targets or products that simply did not have enough historical data to stand in their own campaign. For example, a product group with a ROAS target of 9.30 and another product group with a ROAS target of 9.50 were combined when Sidecar developed Wehkamp’s new campaign structure. Creating these ROAS buckets ensured campaigns could run efficiently with little manual management and still meet Wehkamp’s overall goal of driving more sales from its most profitable products. The ROAS buckets also allowed Sidecar’s tech to make important bid decisions using sufficient amounts of data.

While Wehkamp’s profitability algorithm guided the retailer’s campaign goals, Sidecar’s machine learning technology regularly evaluated data from Wehkamp’s product feed, shoppers’ search queries, historical keywords, return goals, as well as competitive metrics from Google to maximize bid efficiency. That data, also known as the Sidecar Retail Index, informs Sidecar’s algorithm, allowing the technology to set the most cost effective bids to achieve Wehkamp’s goals.

Sidecar refined the ROAS-bucketed campaigns further using negative keywords to filter out low converting and expensive search queries. The strategy ensured Wehkamp’s shopping ads were delivered to the most valuable consumers.

“Sidecar plays a key role in achieving our ROAS targets. I think the most important area where Sidecar’s tech helps us, is it decides how to bid products based on search query data while aligning with our profitability goals. Sidecar excels at pushing the right products towards the right customer,” explained Karim.

Sidecar built flexibility into its bidding strategy so that it could lower profitability goals and increase bids on products within high CLV categories, including apparel and home and garden. In particular, during five-day sales periods, known as “WannaHave Days,” Sidecar significantly bid up apparel and house and garden categories in order to maximize conversions and grow Wehkamp’s valuable family shopper demographic. 
I think the most important area where Sidecar’s tech helps us, is it decides how to bid products based on search query data while aligning with our profitability goals. Sidecar excels at pushing the right products towards the right customer.
Karim Kamel
Senior Online Marketer
Wehkamp

the results

conversion & clicks on the rise

Since instituting a profitability-first approach, Wehkamp has experienced massive growth on Google Shopping, significantly increasing conversions and expanding key business verticals in the apparel and living categories.

Conversions on Google Shopping are up 8% compared to last year, and Wehkamp’s conversion rate has increased by 4%.

The retailer also captured greater engagement in its high CLV categories of apparel and living. Apparel products experienced an over 30% increase in clicks on Google Shopping, while the living category grew clicks 25%, compared to the previous year. This increased engagement is an important step in nurturing brand loyal customers and lifelong Wehkamp shoppers, says Karim.

Wehkamp is excited to continue its work with Sidecar and strike the critical balance between product performance and customer value. Because Sidecar’s technology streamlines the bidding process and eliminates the need for manual management, Wehkamp is able to focus on more complex strategies to hone its profitability algorithm and continue to attract and delight family shoppers.

Sidecar made it possible for us to execute our vision of putting our product and audience data into action and improve performance from a profitability standpoint while also prioritizing engagement from our highest CLV shoppers,” said Karim. 

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