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    Paid Media
    Data Science

    Your DTC reporting is killing your growth.

    Feb 15, 2024 |
    Written by:
    Daniel Watts

    Here’s how to fix it.

    Here’s my controversial take for the day: your shiny DTC reporting tool is silently killing your growth. And could be costing you >£1m/year. Here’s how to fix it.

    First some context: I’ve spoken to two DTC businesses at different stages of growth this week, one at roughly the £2m annual sales mark the other at £20m.

    Both have experienced rapid growth in the past 6 months. Both have wasted significant money. Both could have grown faster.

    Picture the scene:

    • Each brand has a healthy customer base with products that lend themselves to repeat purchase, albeit ad-hoc & infrequently.
    • Each use a well marketed plug-&-play business reporting tool to supplement in-platform advertising stats.
    • Each understand that in-platform metrics are not the source of truth, so track performance using total blended ROAS (total sales revenue/marketing spend).

    But herein lies the kicker.

    Despite having well intentioned reporting tools, neither had a true lens on the make-up of the fundamental catalyst behind their growth: new customer acquisition.

    The issue is two fold:

    1. With total blended ROAS as a KPI you have no perspective on new vs returning customer costs, value, contribution etc. And therefore no lens on where to direct incremental spend.
    1. New vs returning isn’t always what Shopify/an app tells you it is, skewing things further.
    • You sell a product, the customer returns it, then buys again 6 months later. Do you report a new or returning customer?
    • You sell a sample first, then your actual product to the same person. Do you report a new or returning customer?
    • A customer repurchases but uses their partner’s details at checkout. Do you report a new or returning customer?

    The list goes on.

    Accurate new vs returning splits are fundamental building blocks in ecommerce: you want to be acquiring customers as efficiently as possible, then squeezing every ounce of contribution via repeat purchase.

    The first step is to implement robust reporting for your business. The second is to control spend on existing customers.

    Now I’m an advocate for a small amount of supplementary advertising spend on existing customers, particularly around key sales or new product events. But in one of the businesses I spoke with, this small misalignment led to over 25% of the marketing budget being spent on existing customers.

    Assuming a 1:5 ad-spend to revenue ratio – conservative for a rapidly scaling VC-backed brand at these levels – that’s £150k-1M/year spent on customers you’ve already paid to acquire. And that’s before you factor in the cost of running your earned channels too.

    The implications are huge, and sadly meant new customer ROAS was 66% worse than one brand believed it to be.

    So what can you do if you’re in a similar position?

    1. Get real experts in your corner. The fee you perceive as high will actually save you money, then pay for itself tenfold.
    2. Set targets for and get bespoke reporting in place to track new vs returning customer insights.

    Do so and you might just add a million pounds to your bottom line.

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