This is the third release of my weekly newsletter. I’ve got quite some learnings from this year after having audited a bunch of DTC businesses and their marketing efforts.
I get a lot of mixed feelings when doing so because the majority of founders coming to us sound similar, making similar mistakes, overlooking the same kinda bottlenecks in their business, etc. I’ll expand on this further down in this email.
This week we also drastically reduced CAC for one of our info-product clients using performance creative testing. Keep reading to know how.
If you find these emails valuable or even got some feedback; feel free to reply. That’ll just help me get better.
Awesome, now let’s dive in!
A. Auditing DTC Accounts & Why eCom Founders Are Missing Out! 🔍
An accounts audit is a part of our SOP before onboarding any DTC client.
Founders tell us their problems and most of them sound the same following ones –
“We’re not hitting our ROI goals“
“Ads not getting us sales“
“Not able to scale“
“How do we fix the ROAS?
How to bring CAC down“…, etc.
When we audit their Facebook ads, Google Ads, Shopify, Google Analytics, and retention marketing platforms, the issues often lie in the fundamentals.
ROAS, ROI, MER, and CAC; are outcome metrics.
In order to control the outcome, focus on the metrics that govern the inputs, the process, as well as a customer’s journey.
For instance, we audited an ad account in Home Decor & Lifestyle category that came to us with similar problems.
They could never spend more than ₹200,000/mo. on ads and get a ROAS of more than 2; despite AOV being as high as ₹8000 storewide.
Here are some red flags that were clear bottlenecks for this business:
🚩 Messed up META ads account. No clear testing or scaling process. Hence high CAC and low ROAS.
🚩 Website conversion rate is only 0.17% (far below the industry average)
🚩 Returning customer rate only 15%. No Email, SMS, or WhatsApp marketing in action. This could easily go up to 20-25% in this category.
Let me tell you about my experience working with high-ticket home decor brands. This category gets some of the highest Click-through Rates and high-AOV items sell like hotcakes.
One of our current clients in the same category made over ₹1,00,00,000 with a 6x MER in 2022.
But this was only possible because we fixed each fundamental part of their customer journey.
✅ Maintained a returning customer rate of more than 20% consistently
✅ High AOV maintained above ₹9000
✅ Store conversion rate increased from 0.22% to 0.43% by the end of the year.
A very important lesson for DTC marketers and founders is to look at and improve upon the complete picture.
It’s not always your ads to blame for low performance. They often very well do their job of getting your brand the eyeballs and store footfalls that you need.
If you closely look at the right data, identify bottlenecks and opportunities, and optimize your fundamental business metrics; that’s where you tap into profitability and sustainable DTC cash flow.
Reduced CAC and increased MER is then obvious outcomes.
Want to know how you can dig into data and discover opportunities to improve fundamental DTC metrics? Follow me in the next section.
B. Golden Reports Inside Shopify 📊✨
In the last section, you saw how just a couple of fundamental metrics can break a DTC business if not optimized well. Returning customer rate has a lot to do with retention efforts, remarketing strategies, customer experience, consumer satisfaction, and your product itself too. I’ll touch on this aspect some other week.
Conversion Rate is a metric that can have a dramatic impact on your revenue with marginal changes.
DTC founders and marketers often attribute low CVR% to their product pages, which definitely is a contributing factor.
However, your store’s conversion rate is actually a cumulative function of several pages on your website. These include PDPs (product pages), Collection pages, your Home Page, or even a custom landing page.
While you can always improve the conversion rate by tweaking prices, using tactical apps, and testing different offers; a very uncommon way to get an instant spike in our CVR% lies in not doing something new, but re-organizing your current efforts.
Here I would talk in the context of high-SKU e-Commerce stores with multiple products and categories. After running Facebook and Google ads to your store for a while, you have probably gathered tons of data across your store.
To improve metrics such as the Conversion Rate, rather than fidgeting with on-page elements, here are two ways you can utilize Shopify reports to make informed marketing decisions and maneuver your way to higher conversion rates.
1. Sessions by Landing Page – Report
The first metric that arises from your ad spend is a ‘session’.
And when you are marketing a high-SKU brand such as in fashion, home decor, or a jewelry niche; your total marketing spend is distributed on your store in form of visitors and sessions.
The above screenshot is from our Home Decor client with an average store CVR of 0.44%
If we closely analyze this report, we can clearly find opportunities in the form of high-converting landing pages. With a basic application of Pareto’s Principle, all we need to do is drive 80% or more traction to those pages which are not even 20% of the entire website. And that’s what we are up to in 2023!
On the contrary, the account we audited had a not-so-good view of this report if we see it for the last 90 days. The majority of traffic-gaining pages had astonishingly low CVR%. Some even 0!
This is a very efficient way to detect marketing opportunities and improve conversion rates simply by diverting your traffic to high CVR% landing pages.
2. Sales Attributed To Marketing – Report
This is a simple report giving you an estimate of how each marketing channel is performing for your business.
Using this, you get a fair idea of what the current traffic distribution is, and how you can adjust your marketing plan to better-converting channels.
For instance, above is the report I pulled up from our client’s 2022 numbers. We can clearly make out the fact that Instagram converts better than Google search, while Facebook maintains the average VR at scale.
What next? Allocate more budgets and hence more proportion of sessions to FB and Instagram combined.
So you see how simply identifying the business leaks using data and optimizing for potential opportunities; be it top-performing landing pages or even marketing channels, can help you elevate fundamental metrics like the Conversion Rate; which eventually adds up to a huge chunk of revenue on the top line.
C. We Reduced CAC for This Client By Over 60% [Here’s How ]👇🏻
One of our oldest clients in the Fashion Design e-Learning space was witnessing a huge surge in CAC right from the start of this year.
The best-branded videos that were professionally shot and edited stopped performing.
We decided to revamp the style of ads and shifted to performance creatives rather than branded videos.
Here’s a summary of how we did it:
Ideated and planned founder-focused ads; leveraging her personal brand, social proof, etc.
Each ad had a specific angle addressing the target audience.
Completely shifted from branded style to UGC style video production.
Every video had the same structure:
– Strong hook calling out a problem or desire.
– Accentuating desire and relieving the problems
– A story that introduced & reinforces the solution
– Simple Call-to-action towards the end.
No videos are more than a minute long. All of them are optimized for vertical placements such as stories and reels.
Fast editing and catchy music for better CTRs and Hook rate.
We tested 5 such videos; and the results?
Gradually brought down the high CAC from ₹4000+ to under ₹1000 now.
We’ve always vouched for UGC-style ads as they perform the best if executed well. But this experiment and the results were an epiphany.
Definitely going to reduce that CAC even further this month!
Quick plug: If you are a founder wanting to create such high-performing ads and scale your campaigns, head to this link, and let’s chat.
D. Tweet of The Week 💎
Ash, the co-founder of OBVI made a very legit point and a similar idea to what we saw in the first two sections.
Sticking to fundamentals!
The majority of success in DTC is simply a result of –
Capturing attention & acquiring quality traffic
Converting them efficiently with better CRO and marketing strategy.
Retaining for long-term sustainably through quality products and consumer experience.
In this Twitter thread, Aswin shares a detailed blueprint of how he implements the same in his own brand. Click the banner to read 👇🏻
That was all for this week.
Found this helpful?
Definitely reply to this email. I’d love to hear from you!
Stay tuned for more upcoming releases every weekend.
PS: If you are a founder in the direct-to-consumer space, struggling to make paid ads work, my team and I would love to help you escape the bottlenecks of your business.
Whenever you’re ready, book a FREE discovery call with us.
Don’t forget to follow me on social. Let’s keep in touch!👇🏻