Bloom & Wild focuses on customer retention over acquisition as it chases profitability
The direct-to-consumer flower business is reducing its marketing spend as it shifts its focus from growth to profitability, following £100m in operating losses last year.
Online florist Bloom & Wild has shifted its strategy to retaining customers rather than acquiring them, after reducing its marketing budget.
In its most recent filing to Companies House, which covers the year ended 31 March 2023, the brand indicates it is turning its attention “from growth to profitability”. Its quest for profitability saw it cut marketing spend early in the year, which it says it saw the financial benefits of in the second half.
“A natural consequence” of this reduction in spend was a shift in strategy away from acquisition of customers and towards retention, says Bloom & Wild.
“The group reduced investment in brand and performance marketing choosing to prioritise improving the lifetime value of existing customers over new customer acquisition,” it wrote in its Companies House filing.
Some marketing academics, notably the Ehrenberg-Bass Institute, have critiqued the idea that loyalty (customer retention) can be grown in isolation without growing market share (customer acquisition). According to the law of double jeopardy, loyalty is largely a predictable function of market share, increasing as brands grow the size of their customer base.
Customer acquisition is the only viable growth strategy in B2B, says Ehrenberg-Bass’s Romaniuk
Therefore, brands that have smaller customer bases will also see less loyalty among those customers.
Bloom & Wild saw revenues in the year decline by 19% to £118m, compared to £145.5m in the year prior. The business attributed this partly to softening demand across direct-to-consumer retailers post-pandemic, but also acknowledged the role of its “strategic decision” to move away from customer acquisition in this.
This revenue is also two and a half times bigger than its last yearly revenue recorded before the pandemic, it said.
Operating loss also widened, from £20m in its 2022 financial year, to £100.2m in its most recent financial year. Its adjusted EBITDA (earnings before interest, taxes, depreciation, and amortisation), which can be used as a measure of profitability, also saw increasing losses.
Adjusted EBITDA losses widened to £4.7m versus £4.2m in the year prior. The vast majority (£4.3m) of these losses were generated in the first half of the year, the business indicated. It hailed the “marked increase in profitability” in the second half and attributed this to the decision to reduce marketing spend and make operational efficiencies.
As well as amending its strategy to focus on retention, Bloom & Wild is expanding its offering to cover other non-flower gifts.
“This substantially increases the size of the market opportunity for the business and provides customers with even more reasons to purchase on a platform they know and trust,” it said in its filing.
