What do you do when your e-commerce ads aren’t profitable? Most people throw darts at the wall, which is the wrong way to go. In this post, we’ll talk about systematically fixing your funnel as well as a powerful metric that nobody talks about.
After working with 50+ D2C companies on acquisition, it’s clear that the strongest ones have a few common characteristics about them.
Over the next series of posts, I’m going to go over the characteristics of each one and introduce a model around them. Actually, they’re more akin to dimensions than characteristics, because there are tension between many of the qualities that make for a strong D2C company.
For example, AOV and CAC (as a percentage of overall LTV) are two different qualities that determine the strength of a D2C’s company’s long term viability. However, there are tensions between the two; as price increases, so does the overall population of customers willing to pay that price. The smaller the population, the higher the marginal cost for each additional customer, and therefore the higher the CAC.
Any time I hear conversations about the miraculous power of Facebook and possible the “tricks” of the trade, they tend to revolve around the sexier aspects.
Things like Facebook’s ability to target users in almost-scary fashion (something something Cambridge Analytica) or characteristics that make a good creative usually take center stage.
Rarely do I hear any talk of metrics in these conversations. And for good reason. Sure, if you’re a true geek, metrics may be exciting. But most people would rather watch an egg boil while doing jumping jacks on lego blocks than master an understanding of metrics.