The Chan Luu brand faced a direct-to-consumer (DTC) challenge in 2022 with a major drop in revenue, and a 20 percent drop in orders and 25 percent drop in revenue in 2023. As such, the brand wanted to reverse this decline.
Starting from her garage in 1996, Chan Luu has spent nearly 30 years building her brand of hand-crafted jewelry, accessories, and apparel. Over her long career, she has championed artisan craftsmanship, supported fair labor practices, and her efforts have been recognized by the United Nations.
The company's deep analysis revealed the drop in revenue was caused by a drought of products. The brand's best sellers were out of stock for nearly three months, from the end of November 2022 to end of February 2023.
To turn the situation around, Chan Luu knew it needed a fresh approach to both pay-per-click (PPC) and inventory to become more effective, save their year from a deeper downturn, and put the brand back on track.
While Chan Luu's revenue has tripled over the last five years ($2.5 to $9 million), the drop in AOV and revenue in 2023 showed that the company needed to better connect demand and supply to prevent disruptions that were holding the brand back.
Chan Luu's best sellers, the lifeblood of PPC campaigns, were typically out of stock at least 30 percent of the year, so the brand developed Conative AI to eliminate their inventory issues and bring a more product-first approach to their overall strategy.
Chan Luu doubled down on expanding the customer base, using PPC for prospecting new users, excluding previous buyers, reallocating half its spend from Facebook to Performance Max and leveraging Facebook as these campaigns provided better cost per click (CPC) to drive new traffic at a good return on ad spend (ROAS).
Chan Luu targeted three main age groups of women with tailored messaging:
All groups shared interests in art, designers, vintage style, craftsmanship, and surprisingly, Gossip Girl. The brand's strategy aimed to engage each segment effectively, highlighting Chan Luu's quality, ethics, and unique designs while accommodating different purchasing powers and preferences.
The brand's creative and media strategies reached Chan Luu's audience by combining authentic storytelling with targeted media channels.
Creatives focused on high-quality visuals and handcrafted storytelling resonated deeply on social media. Influencer collaborations and user-generated content (UGC) campaigns amplified reach and engagement, while personalized email marketing nurtured customer relationships.
Fashion enthusiasts who value authenticity and craftsmanship often use social for discovery and respond well to influencer endorsements. Paid channels and affiliate marketing expanded our reach, while brand partnerships and exclusive collections created buzz and drove sales.
The communications strategy adapted in real-time based on engagement and conversion metrics, helping to refine the content and targeting. For different markets, Chan Luu tailored strategies — focusing on influencer collaborations in trend-sensitive markets and emphasizing email marketing in markets valuing personalized communication.
For paid channels, ads were targeted based on demographics, interests, and behaviors that align with fashion-forward audiences. This dynamic approach ensured relevance and effectiveness across diverse audiences.
The total budget for digital was over $3 million across both desktop and mobile, split 60/40 between prospecting and retargeting/retention. Since the brand was experiencing a downturn, the priority was efficiency.
Beyond campaign structure and targeting, the real advantage from Conative AI was identifying both growth opportunities and cost savings through product analytics to optimize budget allocation.
Conative AI automatically aggregates and cleans data from marketing, inventory, and ecommerce sources, providing instant-access to a 360-degree view of each SKU in Chan Luu's catalog, showing not only sales and stock levels, but also conversion rate, ad spend, views, website placement, and adaptable AI forecasts at the product and variant level.
This allowed the brand to segment their catalog beyond best sellers, identifying high-converting, low-exposure products with potential to scale with higher spend, and reducing spend for slow-moving, low-interest products that could be discontinued.
The advanced AI also benefits from these marketing signals and real-time data, providing more reliable demand forecasts than manual processes based on historical data. Chan Luu was able to spot trends faster, buy more of what sells, and discontinue what didn't.
By improving stock and reducing inventory costs, Conative improved how the brand used their budget overall.
To generate demand in new audiences, Chan Luu reallocated its budget, reducing Facebook prospecting by 52 percent and moving it to Performance Max, which outperformed and became its primary user acquisition channel.
Chan Luu also bid higher for new customers to expand reach, growing new users from 60 to 80 percent of its audience and leading them into the retargeting and retention audiences further down the funnel.
Beyond brand and sale ads, we generated creative around seasonal themes, summer collections, Valentine's Day, etc., to increase conversion rates.
Conative AI was instrumental in identifying products for these campaigns. As the only platform bringing together marketing, inventory, and ecommerce data into a single platform, Chan Luu had a fuller picture of product performance, helping the brand make better decisions about which products to promote and where to promote them.
These real-time marketing signals were also included and weighed in demand forecasts generated by our sophisticated machine-learning AI, giving a more reliable baseline than historical sales data and ensuring Chan Luu was buying the right products at the right time.
Following Conative's guidance, the brand placed a larger order for BFCM in 2023, covering three additional months of product to start 2024. This supported more aggressive marketing than the previous year and boosted revenue.
With best sellers regularly out of stock for 30 percent of the year, especially with best-selling items being out of stock for three months, any momentum PPC campaigns generated earlier was stalled and the brand had to pivot blindly to under-performing products, confusing its identity and messaging with prospective customers.
It also made the brand more vulnerable in a competitive market, given the quality, independent jewelry brands fighting for the same audience.
By Q1 2023, Performance Max revenue nearly tripled from $1.2 million to $3.4 million, year-over-year. Chan Luu doubled spend while increasing ROAS and clicks went up three times (264,000 to 678,000).
Most importantly, new users increased from 60 percent to 80 percent of its audience, overall channel revenue grew 38 percent ($3.2 to $4.4 million) with a 20 percent growth in conversions (15,435 to 18,374).
This increase in new traffic also boosted revenue from retargeting audiences on other channels, with Facebook Retargeting rising 141 percent (from $31,170 to $75,175) and retention growing a staggering 425 percent (from $20,819 to $105,464).
This took Chan Luu's revenue in 2022 from -3 percent in Q1 to an 11 percent increase in Q4, and the additional stock bought ahead of BFCM drove a 44 percent increase in revenue in Q1 2024, with a 12 percent jump in AOV year-over-year.
The strategy for Chan Luu resonated deeply, bringing in more new users, improving campaign performance, increasing revenue, and strengthening the brand's position and branding in the market overall; Conative AI was a key element of the overall tech stack for growing brands.
