In our five years of majority ownership of Virgin Experience Days (VED), Inflexion’s experienced in-house Digital team and technology platform investment significantly improved the business's consumer proposition, helping to attract new customers and double revenues during the partnership.
Alignment is at the heart of private equity successes and Simon McMurtrie, serial Chair in the consumer sector who chaired VED from 2017 to 2022, recalls his first meeting with members of the Inflexion Investment Committee. “Everyone fully understood that with the right new management team, a strong focus on customer and marketing, much better technology and a ‘can do’ attitude in all areas of the business, there was significant potential to scale VED.”
Feeling strongly that the most highly valued consumer businesses are ones where the businesses own the data, know their customers, innovate with speed, and have a compelling, laser-focused digital strategy, he knew that in-sourcing VED’s tech was key. It would make it possible to track the steps of a customer’s journey and build up valuable data about how they interact with the brand – fundamental to building loyalty and growing Lifetime Value (LTV).
The original VED business had never looked at the customer LTV, nor how often the gift givers come back to make subsequent purchases. “To track this effectively, we needed to establish customer accounts, necessitating lots of work to consolidate their history, tracking both gift-giver and recipient. All of it builds a picture of customer LTV so you can determine profit per customer and thus understand how much you can spend to recruit new customers, then measure the acquisition cost by channel to determine how much you can afford to invest per channel to scale the business.”
Effectively VED had been an online business that had outsourced all of its technology and also digital marketing, despite both of these being critical for success. This was expensive and inefficient.
Rectifying it by in-sourcing the tech was a big process, but one which paid huge dividends. The traditional business had only interfaced with gift-givers, meaning the recipients could be a new source of custom - and in-housing the tech could help with this. “If they had a great experience, unsurprisingly they’d be in the market to go on more experiences themselves, and to give more to their own friends and relatives. So acquiring one customer enables you to acquire two or more.”
The tech in-sourcing required expertise, so Inflexion drew on its network of specialist digital associates for the task, with Josh Pert appointed CTO. “We knew that a super agile tech team would be at the heart of growing the business with marketing and tech needing to work hand-in-hand every step of the way,” Simon recalls. CEO Richard-Hurd Wood was also instrumental. “His experience in-sourcing tech and getting tech teams to work seamlessly with marketing and operations stems from his long experience in business including his time at Reward Gateway,” he says, referring to another successful Inflexion portfolio company.
Thinking outside the box
Migrating to the cloud was part of the journey. “We made a good old-fashioned transition plan to bring the existing platform in-house before we started to develop a new one to ensure it all stays on track and was seamless. But with the existing outsourced supplier relying on a physical server and suggesting we pre-order more servers to cope with our growth plans, we knew it was time to think outside the box. We engaged with AWS to transfer our infrastructure to the cloud, and it gave us resilience, security and flexibility, which was crucial for VED’s growth.”
The business then also had to work out what a change programme looks like for customer experience: VED’s site had been built for desktop, but increasing numbers were engaging on mobiles so we moved to a mobile-first approach, and a platform agnostic approach ensuring a good experience on all devices.
Josh and the team reflected on what more was needed to build an improved customer experience, better UX, customer self-service via a self-service portal, and an ability to use the whole plethora of marketing channels (TV and the full suite of digital and social channels). The self-service portal used RPA (robotic process automation) to manage the high-volume voucher extension process which, up until that point, had been managed by scaling the people-based customer service team.
The digital journey also helped to enhance VED’s b2b business through building an entirely new website, Virgin Incentives, enabling the commercial team to bring on board many new partners as well as scaling business with existing partners.
The whole exec team committed to a constant culture of change and innovation to take advantage of all the new tools coming on the market and experiences to be garnered from different sectors. Investment in digital must be a permanent feature of planning in the business as it leads to improved customer acquisition metrics, better conversion and a much better overall experience for the customers.
Inflexion funded the buyout of VED in 2017 and sold a majority stake to Equistone in 2022. Inflexion re-invested for a minority stake to remain part of VED’s exciting growth journey.