Latest / Scalability School / The Dashboards That Make Us Millions

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The Dashboards That Make Us Millions · Scalability School

0:00
People are looking at different things.
0:01
There are 17 different
0:02
versions of what revenue means.
0:04
When you say revenue, you can mean so
0:06
many different things.
0:06
You can mean order
0:06
revenue, total sales, net sales.
0:08
There are infinite numbers
0:09
for what that could mean.
0:11
I think it's really important to align on
0:12
what that number actually is
0:13
that you're trying to pay attention to.
0:15
And then I think a lot of times we've
0:17
worked with clients.
0:18
They come in with the expectation that
0:19
we're going to be looking at
0:20
what Facebook Roas says.
0:21
And it's like, "Well, it
0:22
should be deeper than that.
0:23
It should be what's your AMER?
0:24
What's your NCAC, generally speaking?"
0:26
I think there are other things that you
0:27
just want to align on.
0:29
So I think a lot of times they fail
0:30
because there's unclear
0:31
definitions of metrics,
0:33
which is everybody thinks that they
0:35
should send last emails,
0:36
but they should actually send more.
0:37
It's like you can do more of the right
0:39
thing is essentially what he said, right?
0:42
And not be hesitant about that.
0:44
And I think that's a huge difference
0:45
between where we were and where we are
0:46
in terms of understanding to like you're
0:48
brought in as a growth person.
0:50
Like you need to be focusing on news.
0:52
Unless you're a subscription brand, you
0:53
should be paying attention to it
0:54
as a metric to optimize
0:55
off of like CactiL TV.
0:57
You just shouldn't pay attention to it.
0:59
Yeah, it's way too misleading really.
1:01
It's way too misleading.
1:02
You have no indication of what that's
1:04
going to look like for your cash flow.
1:05
I think too many agencies, like
1:07
especially on Twitter,
1:08
have talked about optimizing off of LTV.
1:10
Unless you're subscription,
1:12
I think it's a horrible idea.
1:20
And now let's take a listen to the
1:22
Scalability School podcast.
1:25
I was always so glad to
1:26
be here with you guys.
1:28
What's going on?
1:29
90 degrees in Wisconsin.
1:31
It's about 100 something.
1:33
Talking about weather.
1:35
Very Midwest starts with a call.
1:38
It's bad.
1:39
Talking about Craig Culver, the Midwest
1:41
billionaires, you
1:42
know, just normal topics
1:44
for us to tap.
1:45
Yep, normal stuff.
1:47
Otherwise nothing.
1:48
Let's get into it.
1:49
Otherwise, we've all been on calls.
1:51
Yeah, nothing interesting.
1:52
Yeah, so today we're
1:53
actually talking about dashboards.
1:55
So dashboards that actually drive
1:56
decisions and what matters for D2C
1:58
brands and e-commerce teams.
2:00
So let's just get right into it.
2:01
Like dashboards, why they matter.
2:04
Zach, obviously you've been on both sides
2:05
of this equation, the agency,
2:07
and on the brand side.
2:08
What would you say of like
2:09
why dashboards often fail?
2:11
What are the pieces of it?
2:12
Is it too much information?
2:14
Lack of accountability?
2:15
Is it that plus other stuff?
2:16
What's your opinion?
2:17
This episode is brought to you by our
2:19
friends over at Northbeam.
2:20
The marketing attribution platform that a
2:22
lot of us that listen to
2:23
scalability school and the host of
2:24
scalability school, you know, we
2:26
swear by and use Northbeam rolled out
2:27
something brand new that I think
2:28
is pretty awesome.
2:29
It's real unlock, I think called clicks
2:31
plus deterministic views and
2:33
it's the first ever deterministic view
2:35
through attribution model.
2:37
I mean, let's be honest, right?
2:38
One day click had us flying a little bit
2:40
blind, you know, the drill, right?
2:41
Your TikTok or your CTV campaigns are
2:43
building awareness clearly, driving
2:45
site traffic and lifting sales across
2:47
channels, but your attribution
2:49
dashboard still gives all the credit to
2:50
Google search because it was
2:51
last click.
2:52
It's like tracking who made the final
2:53
shot in the basketball game, but
2:54
ignoring the five assists, right?
2:55
They got the ball there.
2:57
So clicks plus deterministic
2:58
views flips that it ties actual
3:00
impressions, not guesses, but verified
3:01
impressions to real conversions.
3:04
We're talking direct integrations with
3:05
meta, TikTok, snap, Pinterest,
3:07
and even CTV and Northbeam uses hard
3:09
identifiers like order IDs and
3:11
hashed emails to prove that someone saw
3:13
the ad didn't click, but later
3:15
bought that means you can finally measure
3:17
the real impact of upper
3:18
funnel campaigns and the
3:20
results are pretty nuts.
3:21
One brand saw 283% more attributed
3:23
conversions on TikTok.
3:25
Another got 175% more attributed revenue
3:27
than they knew even existed.
3:28
And you know, another one drove in 59%
3:31
row as lift on Pinterest.
3:34
So if you're tired of under budgeting
3:36
awareness, because attribution
3:37
can't keep up, this is your chance to see
3:38
the real journey in the full journey.
3:40
So Northbeam click plus deterministic
3:43
views is live now head over to
3:44
Northbeam.io forward slash demo to book a
3:48
walkthrough and tell them we
3:49
have scalability.
3:51
I mean, I think the number one thing is
3:52
like lack of input to make sure
3:54
your dashboard is actually dialed in to
3:56
be telling you data that you really
3:58
want to know and see.
4:00
So my example of this is triple whale,
4:02
which is a great tool.
4:03
All of us have used and it's a tool that
4:06
we started using at Homestead
4:07
really early on.
4:08
I think the biggest thing is that we've
4:10
seen brands when they don't spend
4:12
enough time building out all their
4:13
expenses and all the things that
4:14
actually go into what it
4:16
takes to run their business.
4:17
So that when a media buyer, an agency
4:19
like us, for example, or even just
4:22
anyone on their team is trying to like
4:23
make decisions on a day-to-day
4:25
basis, isn't getting the full scope,
4:27
truly the full scope.
4:28
Every dollar that goes in and out of the
4:29
business, having that a part of
4:30
it, you can like make decisions off of
4:32
really bad data really quickly.
4:34
So I think first things first, like
4:35
getting everything robustly built
4:37
out on the back end of a dashboard is
4:39
probably the first big mistake
4:41
that I see happen or the first big thing
4:43
that we really try to push
4:44
for, for our clients and
4:46
even just for our own brands.
4:48
Yeah, it's that financial understanding
4:49
of getting, you know, knowing
4:52
what they need to be successful.
4:54
Brad, when you dive into this, you know,
4:57
and you're helping a client
4:58
figure out this out, how do you help them
5:01
understand like the distinction
5:02
between a dashboard and report and
5:04
especially if they're trying to scale
5:05
quickly, like how do you make sure that
5:08
they're looking at the right things?
5:10
Yeah, I'll just add on to what Zach was
5:12
saying that like what can go
5:14
wrong from our perspective is just like
5:16
people are looking at different
5:17
things, like there's 17 different
5:19
versions of what revenue means.
5:20
When you say revenue, you can mean so
5:22
many different that you can
5:23
order revenue, total sales, net sales,
5:25
like there's infinite numbers
5:27
for what that could mean.
5:27
And I think it's really important just
5:28
like a line of what that number
5:29
actually is that you're
5:30
trying to pay attention to.
5:32
And then I think a lot of times we've
5:33
worked with clients that they
5:34
come in with the expectation that we're
5:36
going to be looking at what
5:36
Facebook ROAS says and it's like, well,
5:38
it should be deeper than that.
5:39
It should be what's your AMER, what's
5:41
your NCAC generally speaking.
5:43
You know, I think there's other things
5:44
that you just want to align on.
5:45
So I think a lot of times they fail
5:47
because there's unclear definitions
5:49
of metrics, which is the unfortunate
5:51
nature of like just dashboards,
5:53
I think have been a little bit pervasive
5:54
and making things a little bit
5:56
confusing in that regard.
5:57
But for us, I think that the primary
5:59
distinction between those two
6:00
is reports, kind of like a snapshot of a
6:02
moment in time and like how
6:03
things have trended and
6:05
dashboard for us is like live view.
6:06
So we set up, we use triple L.
6:08
I'm an investor, I
6:09
should probably say that.
6:10
So like we use triple L
6:11
for all of our clients.
6:12
It's solid.
6:13
It works for what we need it to.
6:14
It's a little expensive transparently,
6:16
but it does the job.
6:18
So we set that up
6:19
with all of our clients.
6:20
We send them a video of like,
6:21
here's what these things mean.
6:22
And here's the order in which we do it,
6:23
which I'm sure we'll get into.
6:24
And then that powers the reports.
6:26
So we just grab screenshots of those
6:27
things and then add context
6:29
into what the numbers mean from our own.
6:30
I mean, I feel like a simple error that's
6:33
just like very basic is are
6:35
you including like
6:36
returns in your reporting?
6:38
Right?
6:39
Because if you're, if you're including
6:40
returns in your reporting and
6:41
then you have media buyers making
6:43
decisions off of that, like for
6:44
Holo, we started the day
6:45
with $8,500 in returns.
6:47
Just boom, right out of the gate.
6:49
Right?
6:49
So if our head of growth jumps in there
6:51
and is like, hey, performance
6:53
is horrible because they're not taking
6:54
into consideration all those
6:56
returns which need to be treated
6:57
separately, then actual revenue
6:59
that's happening from today, you can make
7:01
a lot of bad decisions.
7:03
So that's just like a great relevant
7:04
example of like something that
7:06
I feel like people can just, if you're
7:07
not paying attention to the
7:08
finite details of what the actual sales
7:10
metric is, like Brad said,
7:12
it's pretty easy to make mistakes just
7:14
looking at the data.
7:16
Yeah.
7:16
So let's talk about like, I think one of
7:18
the pieces that happens, you
7:20
know, there's so many places you can go
7:21
with this in terms of the
7:22
complexity of it.
7:24
So the essential financial layer, I think
7:27
is, you know, contribution.
7:30
Brad, let me know what you guys think
7:31
about this, but contribution
7:32
margin with and without Amazon, estimated
7:35
net profit, including
7:37
estimated OpEx, OpEx and variable costs.
7:43
What do you guys think about that in
7:44
terms of like the main things,
7:45
Brad?
7:46
I know that was on your
7:47
dashboard that you shared.
7:48
Those are the things that were, you know,
7:49
you're looking at above
7:50
all else, basically.
7:51
Yeah.
7:52
So we try to do try to set, we try to
7:54
organize our dashboards and
7:56
in order and a reporting in order of like
7:58
least variability and
8:00
its ability to be confusing.
8:01
So I'll explain what that means in a bit.
8:03
But basically contribution margin at the
8:05
top, like minus the return
8:07
thing, which can cause some confusion.
8:08
I think that's a great
8:09
point for the most part.
8:10
Like that's the reality of the financial
8:12
reality of your business
8:13
pre-OpEx.
8:14
And then if you can estimate OpEx because
8:15
you know, I have these
8:17
salaries or these leases or whatever,
8:19
like I know these things are
8:19
coming.
8:20
I think having that combination on a
8:22
daily basis is like there's
8:23
no lying.
8:24
You know, if your net profit is negative,
8:27
you know, you're in a
8:28
little bit of a precarious spot unless
8:29
you intentionally plan for
8:30
it to be negative because
8:31
of some LTV consideration.
8:34
So having that at the top is the first
8:35
thing that you see is
8:36
probably stressful if it's negative, but
8:38
it's really important
8:38
to know that it's negative so then you
8:39
can work your way down
8:40
and make some decisions.
8:42
Brad, do you want to explain
8:43
contribution margin versus like
8:45
gross margin per se?
8:46
Yeah, sure.
8:47
For the listeners who don't know what
8:48
that word is and have
8:49
heard it a million times on
8:50
Twitter, but maybe just never
8:51
googled it or actually had
8:52
to think about what it is.
8:54
Yeah.
8:54
Well, then there's probably
8:55
also several definitions of it.
8:57
But the way that we look
8:57
at it is order revenue.
8:59
So it's every single dollar
8:59
that you take in minus cost of
9:02
delivery, which can be defined
9:03
in a bunch of different ways,
9:04
but it's effectively
9:04
what's the cost of your product?
9:06
What is shipping cost you?
9:07
What is taxes?
9:08
Did you give away a free gift?
9:10
Like that is cost of delivery.
9:11
It's everything associated
9:12
with getting the next sale.
9:14
Like you have to incur this
9:15
expense to sell the product.
9:17
That's cost of delivery.
9:18
So what you collect in
9:19
revenue minus what it costs you on a
9:20
variable basis to sell that
9:22
product and then the next layer
9:23
of this that's gross margin to get to
9:25
contribution margin.
9:26
You subtract out ad spend
9:27
per order per order in total.
9:30
However, you want to look at it.
9:31
That's how we get to contribution margin.
9:34
How does this relate to I
9:36
think a lot of people when they
9:37
start building it, I mean building
9:38
dashboards and going
9:39
through this is certainly
9:41
become a part of the conversation
9:42
last few years, but I think a lot of
9:44
folks still focus only
9:45
on return on ad spend and I
9:47
think that as a as a marketer,
9:51
like I didn't come from
9:52
this as a business owner as a
9:54
marketer. This is what we
9:55
were taught and brought up to
9:56
look at. It was like we're
9:58
looking at ads and that's what
9:59
I look at to gain my success.
10:02
How do you bridge the gap
10:02
between trying to teach people
10:05
contribution margin, gross
10:06
margin and then their ROAS and
10:09
how do these things relate?
10:10
I mean obviously this is
10:10
just a different part of the
10:11
dashboard, but how do
10:13
you guys think about that?
10:14
I have a lot of thoughts.
10:15
I can I get started.
10:17
So we look at a couple of
10:18
different versions of like
10:20
I mean, you are in ROAS.
10:21
So let me I'll try to be very
10:22
specific in the way that I'm
10:23
using these terms because I
10:25
think they can be confusing
10:26
when I use M.E.R.
10:28
Generally speaking.
10:29
I'm talking about some
10:30
blended version of everything right?
10:32
It's it's total revenue
10:33
across the entire business, which
10:35
is Shopify plus Amazon or
10:36
just Shopify if you're on Amazon,
10:38
but it's that divided by ad
10:41
spend blended version of the
10:43
business when I say ROAS.
10:44
I'm generally talking platform specific
10:46
because I think that
10:47
helps me like distinguish the difference
10:49
between them because
10:50
I know a lot of people say
10:51
blended ROAS and that starts to
10:52
get confusing really fast.
10:53
So M.E.R. is kind of this
10:54
blended version and there's two
10:56
main ones that we generally find
10:58
ourselves looking at or
10:59
maybe maybe out of third in there.
11:01
It's M.E.R.
11:02
AMER which is gonna be new
11:03
customer and then ROAS and if
11:05
you're just looking at ROAS, I think
11:07
oftentimes it can cover
11:08
up a lot of different things
11:09
just like you're only looking
11:10
at M.E.R.
11:12
It's not uncommon for us to
11:13
come into a client's like do an
11:15
audit and we see that M.E.R.
11:16
looks great and they are
11:17
losing their ass on new customer
11:19
acquisition and they have no idea because
11:20
they've never looked
11:21
at it and platform ROAS
11:22
looks great because they're not
11:23
excluding existing customers.
11:24
They've got one day view in there.
11:26
They're sending a shit on emails.
11:27
You know, it's like so I think like
11:29
having those different
11:29
views allows you to just like
11:31
troubleshoot the problems.
11:32
I don't know if that answers your
11:33
question, but that's like
11:34
how we look at it.
11:35
Yeah, I mean, I think yeah, that's
11:36
exactly how you look at
11:37
it, right?
11:37
And I think one of the biggest
11:39
differentiers, I think to
11:40
Andrew's point about going
11:42
from thinking about ROAS versus
11:43
not is your business can be more
11:45
profitable on a lower ROAS
11:46
if your revenue is higher as long as
11:48
you're offsetting your
11:49
operating expenses.
11:50
I think like that is
11:51
probably one of the biggest lessons
11:52
that we had to learn for our
11:54
clients and teach our clients
11:55
and then do for our own
11:56
brands is that you know, a lot of
11:59
people have an expectation
12:00
of hey, we need to be at a 3
12:01
MER for every dollar in ad spend.
12:04
We need $3 in revenue.
12:06
There's a chance that based on
12:07
volume and based on offsetting
12:09
your operating expenses,
12:11
even with like, you know, decent
12:13
cogs or cost of delivery,
12:16
like you could be more profitable
12:17
at a 2.7 versus a 3 MER at more volume.
12:21
And sometimes more volume is easier to
12:23
achieve than even higher
12:24
MER.
12:25
So I think it's all like in
12:28
comparison to what your target
12:30
and what your goal is, but to Brad's
12:32
point, like you have to
12:33
be looking at each kind of one of those.
12:35
So yeah, I think Brad, you
12:35
should start ripping through
12:37
like what's the next slot in here.
12:38
Yeah, so let's talk through this.
12:40
So I'm dragging us
12:41
down and little things.
12:43
So you start with Brad,
12:45
you're talking about contribution
12:46
margin with and without
12:47
Amazon, estimated net profit using
12:50
estimated OpEx overview.
12:53
Then he goes to overview
12:53
and then total revenue.
12:56
And so go through like because I think
12:59
what we would ideally
13:00
want to do is give people the
13:01
ability to build the ultimate
13:03
dashboard that you have that you're
13:06
following because you're
13:07
my guru.
13:08
Oh good.
13:10
Good.
13:10
Hopefully, often not like one
13:12
of those weird, weird gurus.
13:13
Okay, so I will go through those.
13:15
I want to just touch on a
13:17
point from what Zach was saying
13:18
there, like the
13:19
difference between I think people's
13:20
year more profitable and a
13:22
lot of the times where we've
13:23
gotten tripped up on that with folks is
13:24
like they're looking
13:25
at profit margin as a percentage.
13:27
Like yes, your profit margin
13:28
percentage is probably going
13:29
to go down if you if you're
13:30
taking less MER, but if you
13:32
scale more the dollars go up.
13:33
I think that's that's
13:34
really important distinction.
13:35
There's probably a whole
13:36
another episode in talking about
13:37
the efficiency trade-offs of scale.
13:39
There's a whole spreadsheet and
13:40
calculation we can go through.
13:42
Okay, back to the dashboard.
13:44
Should we just like close
13:44
the loop on that real quick?
13:46
So the way that I think
13:47
about that just real quick just
13:48
because I brought it up and
13:49
I feel like it's my fault.
13:50
I don't close the loop for us
13:52
like for hollow for example,
13:53
if our goal, let's just
13:54
I'm throwing out numbers.
13:55
Let's say our goal is 5
13:56
million in profit for the year.
13:58
It very likely will be much easier for us
14:00
to achieve 5 million
14:00
in profit on 40 million in
14:02
revenue than 5 million in profit
14:04
on 10 million in revenue, right?
14:06
So the idea here in theory
14:07
is okay, what with more volume
14:10
to offset my operating expenses.
14:12
If I'm looking at like just MER as my
14:15
target, I could actually
14:16
lower my MER target with
14:17
more volume and actually produce
14:19
more profit at the end of the day.
14:21
It's just a volume game.
14:22
So I just want to like close
14:23
that loop of where I was at.
14:25
Yeah, okay.
14:25
Sorry, Brian.
14:26
Keep going.
14:27
Yeah, there's a counter from Ridge as a
14:29
very like underrated
14:31
hidden YouTube video that if
14:32
you asked me about and if we
14:33
could find it, maybe I'll link it
14:34
somewhere that he talks
14:35
about that and it's great.
14:37
It's very old.
14:38
But okay, back to the
14:39
dashboard and kind of how things are
14:40
ordered.
14:41
So here's how we order it.
14:42
At the very top, we go with
14:44
some version of contribution
14:46
margin with or without Amazon.
14:47
If you care about that view,
14:48
I like to see the difference
14:49
between them and then net profit and
14:51
you're just using an
14:52
estimate of OpEx because
14:53
obviously you're not reconciling
14:54
OpEx in real time, but
14:56
that's just kind of an estimate.
14:57
So contribution margin,
14:59
net profit at the top.
15:00
The next layer of this is
15:01
kind of like the overall what I
15:03
would call business metrics.
15:05
I should shout out CTC for
15:07
this at least to a little bit
15:08
because I think a lot of this was
15:10
inspired by some documentation
15:11
they put out years ago, which is great.
15:13
So that business metric layer
15:15
is going to be some combination
15:17
of revenue, spend, and MER.
15:20
And if you have Amazon, it's
15:22
Shopify plus Amazon in your
15:23
revenue.
15:24
It's Shopify plus all DTC
15:26
spend for your spend section and
15:28
then you're creating some
15:29
kind of version of blended MER.
15:31
So the one that I'm looking
15:31
at, maybe we can include this
15:33
as a screenshot somewhere
15:33
too, is what I call Omni revenue,
15:36
which is Amazon plus Shopify,
15:39
Omni spend, Omni MER, and then
15:40
it goes to ad spend.
15:42
Yeah, things like that.
15:42
So that's kind of that overview layer.
15:44
What's nice about that overview layer is
15:46
you can quick see, is
15:47
my MER on track with the goals that I
15:49
have for the year or
15:50
for the day or for the week and you can
15:52
get a quick snapshot.
15:53
If it is on track, great.
15:55
You might still want to go
15:55
to the next layer to make sure
15:57
you're not uncovering, you
15:58
don't have a huge problem that
16:00
you're going to uncover from there.
16:02
And if it's below, great, you can still
16:04
go to the next layer
16:04
and try to figure out why it's below.
16:06
But I'll pause there on
16:07
the business metrics section.
16:09
Any questions about those?
16:11
No, no, I think you
16:12
should go to the next stage.
16:14
Cool.
16:14
So the next one is going to be the
16:16
customer metric breakdown
16:17
then too.
16:18
So it's going to be new
16:19
customer revenue, CAC, AMER, and then
16:23
some kind of version of how many new
16:25
orders you're getting.
16:26
But it's just this, it's this
16:27
view of the business on a new
16:28
customer level.
16:29
So revenue, CAC, AMER, new customer
16:31
orders, maybe you want
16:31
to throw in a new customer
16:33
AOV because that's probably
16:34
differs from your repeat business, but
16:36
just gives you a sense
16:37
of that.
16:37
The reason that this is super
16:38
important, I think that this
16:39
is what is historically been
16:41
missing from a lot of brands
16:42
that we come into is
16:43
they're looking at their Facebook
16:44
ROAS, they're looking at their MER,
16:46
maybe, and they're like,
16:47
cool, on ROAT track, all
16:49
right, my business is dying.
16:50
I don't know why.
16:51
And you go one layer deeper and you say,
16:53
oh, you not generated
16:54
any new customer revenue this year.
16:56
You've just been hammering emails.
16:57
So your revenue looks great.
16:58
You're discounting crazy
16:59
and things look really good.
17:00
But this layer allows you to
17:01
see, are you actually acquiring
17:03
enough new customers to
17:04
continue to fill up the overall pie
17:07
to keep your business
17:08
on a healthy trajectory?
17:10
And then in that same
17:11
bucket, you can break out returning
17:13
customers in the same way.
17:14
So returning customer
17:14
revenue, returning customer orders,
17:17
AOV, things like that.
17:18
Amazing.
17:18
Yeah, I mean, I think for us,
17:20
one of the biggest things is
17:22
helping brands also realize,
17:24
depending on how hard you're
17:25
pushing and what your goals are for the
17:27
year, like for Holo,
17:28
we're trying to push 100%
17:29
year over year, is what you can
17:33
expect with your new
17:33
customer, with your new customer CAC.
17:36
So like for us, I'm
17:37
just like pulling the data.
17:39
And if triple wheel loads quickly, I'll
17:41
be able to list it off.
17:43
We are up 110% year over year
17:46
as far as like year to date.
17:48
Our new customer ROAS is up 14%.
17:53
But our new customer CPA is also up.
17:56
So meaning that we were able to increase
17:57
our new customer AOV
17:58
by 46% year over year.
18:01
And that's the only reason why we've been
18:04
able to continue to grow.
18:05
So again, if you're not looking at new
18:07
customer AOV, new customer
18:09
ROAS, new customer CAC,
18:11
you're going to miss one of those
18:12
pieces that is throwing off, "Oh, hey,
18:15
our MER looks good, but
18:16
our profitability is shit.
18:17
Oh, it's all returning customers." And
18:18
because all of our new
18:19
customer acquisition and everything, all
18:22
the efforts going in
18:23
there are just not contributing well to
18:25
the whole ecosystem.
18:26
So I think you have to look
18:28
at each one of those pieces to
18:30
then identify the holistic
18:31
problem versus just trying to say,
18:33
"What's the issue at the end of the day?"
18:35
It's a great point.
18:36
We literally just went
18:36
through this with somebody where it
18:39
looked like MER was...
18:43
So they would grow up like
18:44
call it 30% year over year in
18:45
revenue, but spend was up 80%.
18:47
And MER was like, "Oh
18:48
shit, this looks bad.
18:50
Like not trending in the right direction.
18:52
We're not as efficient as we were." But
18:54
then if you go a layer
18:54
deeper and you look at this new customer
18:56
piece, their new customer
18:57
piece was scaling at the same pace as
18:58
their ad spend and their
18:59
AMER was flat.
19:00
The problem was repeat customer was down.
19:02
"Okay, well, why is
19:02
repeat customer down?"
19:03
"Well, okay, they sent half as many
19:05
emails this year as they did
19:06
last year." It's a brand where that's
19:08
really meaningful and
19:08
it drives a ton of stuff.
19:10
For you, it could be maybe you
19:11
didn't do as many offers this
19:12
year as you did last year.
19:14
You didn't keep up
19:15
with your promo calendar.
19:15
Maybe you didn't release
19:16
products on the same cadence.
19:17
Maybe you had a cohort of
19:19
customers that got shit product
19:21
and they're really mad about it and they
19:23
didn't come back and
19:24
all of a sudden your cohorts are messed
19:25
up and that's a layer
19:25
you wanted to get to.
19:27
But that's why it's really important for
19:28
us from our perspective
19:29
is like if we're the ad
19:31
agency and I'm coming out from an
19:33
ad agency perspective when I
19:34
say this, we're doing what we
19:37
said we would do, which is
19:38
growing the new customer piece
19:39
of it. With this reporting,
19:42
what we can say and what we can
19:43
help the brand uncover is,
19:44
okay, you didn't send as many
19:46
emails. You didn't do these
19:47
things, but there's something
19:48
about this repeat that you need to dig
19:50
into and we can clearly
19:51
see it because it's split out
19:52
and that's hidden if you only
19:54
look at MER and it looks
19:55
like we're just spending money
19:56
inefficiently.
19:57
Yeah, when I was at the
19:58
founders meet up the other week,
20:02
Jacob Sappington, I said, what's one
20:04
thing with email that
20:06
and you know, retention generally that
20:09
people don't consider
20:10
because he's like, everybody
20:11
thinks that they should send
20:13
last emails, but they should actually
20:14
send more. It's like
20:15
you can do like more of the
20:17
right thing is essentially
20:18
what he said, right? And not
20:20
be hesitant about that. And I
20:22
think I think that's a huge
20:23
difference between where we
20:23
were and where we are in terms of
20:25
understanding to like,
20:26
you're brought in this
20:27
growth person like you need to be
20:28
focusing on new and that's
20:31
it. That's definitely a good
20:32
good thing to go on the next level to the
20:35
platform. So platform
20:37
level overview and then pacing.
20:41
So let's talk about those
20:42
two things that you go through.
20:43
Yeah, so then the platform
20:45
level overview is just like trying
20:46
to get yourself a quick snapshot of how
20:48
each of the channels
20:49
are performing. If you're
20:52
like the way that we operate is
20:53
we're kind of looking at how did
20:54
yesterday perform? How
20:55
is today looking so far?
20:56
How does last seven days look?
20:58
So if I'm going through
20:59
these kind of like order of order
21:01
of operations of just
21:02
checking in on the health of things,
21:03
your M.E.R. can be on track. Your
21:05
A.M.E.R. can be on track.
21:06
But if you have a ROAS target
21:08
on Facebook of two and you're
21:10
at a 1.5, okay, on a one-day window,
21:13
maybe you don't want to
21:14
like raise any alarms yet, but what
21:16
you're going to start
21:16
paying attention to is like,
21:17
how are the platforms changing
21:19
and influencing the above
21:20
metrics? And there's probably a
21:21
whole discussion to get into about
21:22
incrementality, because
21:24
that's the buzzword of the
21:25
year and like how should you set
21:26
your platform targets? I think a simple
21:28
way of thinking about
21:29
it for now is just looking
21:30
historically and just mapping
21:32
out how A.M.E.R. looks
21:33
against your meta ROAS as an example
21:36
and then just kind of like
21:36
understanding that relationship.
21:38
So when my meta ROAS says
21:40
2.5, I know my A.M.E.R. is about
21:42
a 3. I think House just released an
21:44
incrementality report
21:45
that said on a seven-day click basis,
21:48
meta is under reporting
21:48
by 15%. So you can use that as a
21:50
benchmark if you have no
21:51
increments or anything to go
21:52
off of, but the quick platform
21:54
snapshot just allows you to
21:55
see like are each of these
21:56
individual platforms kind of on track
21:58
with the platform goals
21:59
that we have? So then pacing
22:00
is you can put this into the
22:02
dashboard. We put this into a
22:03
spreadsheet primarily because
22:04
I don't think that there's
22:05
a way to my knowledge to put
22:07
goals directly into triple
22:09
oil and just like see how you're
22:10
pacing against an actual goal. You can
22:12
see how you look period
22:13
over period or year over
22:15
year, but that doesn't really tell
22:16
you how you're pacing
22:16
against goals. So we have a pacing
22:19
sheet that basically is
22:20
like literally day by day.
22:21
What are all these metrics and we try to
22:23
focus in on the ones
22:24
that we care most about.
22:25
So, you know, a lot of clients
22:26
would be okay. What is
22:27
our what is our A.M.E.R.?
22:29
What is our A.M.E.R.? What is our
22:30
revenue? What is our spend?
22:31
Maybe those are the core metrics and
22:32
things you care about.
22:33
Contribution margin should
22:34
probably be in there because we
22:36
just talked about how important that is.
22:38
Point being you pick
22:39
those three to ten metrics
22:42
that you want to track on a daily
22:43
basis and then map them
22:44
against the goal. And now you have
22:45
this spreadsheet that says okay on July
22:48
23rd, which was just
22:50
a couple days ago at this point. I can
22:51
see how I looked against
22:52
the goal and then you can
22:53
start to build this this map of
22:55
how you're pacing for the month.
22:56
Basically, for like for us
22:58
it's just to look and say,
23:00
okay, are we are we spending
23:01
efficiently? Can we push
23:02
harder to either produce more
23:04
contribution margin? Maybe we're out
23:05
spending the goal that
23:06
we had for the month or do we need to
23:08
pull back and try to
23:08
preserve A.M.E.R. to close
23:10
out the month from an agency
23:11
perspective is just like helpful to have
23:13
that to make sure that
23:13
we're on track with what we
23:14
said we would do and then for
23:16
clients it just gives them quick
23:17
visibility into like how
23:18
things are performing if they
23:19
don't want to open up a triple
23:20
dashboard for whatever
23:21
reason. People are comfortable as
23:22
spreadsheets. So just a quick
23:24
way to see how you're looking
23:25
against the actual goal. And are you
23:26
using like rolling averages
23:28
to smooth out things like on
23:30
noisy data points or do you
23:32
ever set like tolerances
23:34
like where if the ROAS is up 30%
23:38
and then you look at the
23:39
trailing average or is just like
23:41
a look like a pacing look
23:43
like generally overview. Yeah,
23:45
literally just day by day.
23:46
I think the rolling stuff is
23:48
really valuable when you're
23:49
starting to use it to make
23:50
decisions, but the pacing
23:51
sheet is just to see like, it is
23:53
what it is. Yeah, yeah,
23:54
yeah, revenue versus revenue goal
23:56
spend versus spend goal very, very
23:58
plainly. So you then go
24:00
into let's talk about cash flow for a
24:03
minute. This, you know,
24:06
I think there's a lot of
24:06
different ways you can think
24:07
about this in terms of looking at the
24:09
dashboard piece of this
24:10
but I'd be curious about
24:13
how you think about like burn
24:15
versus profit visualization,
24:18
cash on hand forecast. Do you
24:20
have do you do any like
24:22
inventory looking in that within
24:24
cash flow as well? Yeah, so
24:27
these couple of other things
24:28
are things that we try to
24:31
just like cash flow is a little
24:33
bit tricky for us as an
24:34
agency because I think it requires
24:35
like way more insight into
24:37
inventory PO's and things like
24:38
that. That gets just a
24:40
little bit tricky for us, but you
24:41
can have an estimated
24:42
version of what cash flow might be
24:44
for the day. So maybe we'll
24:46
have a metric in there that
24:47
tries to estimate what
24:48
cash flow is or you create a
24:50
separate dashboard for
24:51
managing that. The other things
24:53
couple other quick things I
24:54
will maybe like to check not
24:56
every single day, but every
24:57
couple of days is just like
24:59
outside of cash flow is
25:00
going to be like, how are my
25:02
products selling
25:02
individually? If we have multiple skews
25:04
like what skews are selling
25:05
well today, which ones are
25:07
selling well to new
25:07
customers versus returning customers
25:09
versus the whole piece of it and just
25:11
kind of like keeping
25:12
an eye on how all that's
25:13
trending to see. Okay. Are there
25:14
any other areas of
25:15
opportunity? We have several clients
25:17
that just have like a ton of
25:18
skews and some of sometimes
25:20
like you can see new ones
25:21
pop into the top five over a
25:23
seven-day window. And if we
25:25
don't have a campaign live for
25:26
that, you know, that's a
25:27
good signal to maybe say, okay,
25:28
maybe there's some seasonal moment
25:29
hitting. Maybe there's
25:30
some organic moment that hit
25:31
that we want to consider and
25:33
maybe we can pull that into a
25:35
campaign to push it a little
25:35
bit further. I don't know if
25:38
you have any better insights
25:39
around cash flow specifically
25:40
and how you guys are looking
25:41
at it. I just had super
25:43
useful. Yeah, I mean, it's not
25:46
in a dashboard. It's in
25:48
Google Sheets. We're building out
25:50
like 13-week cash flow
25:50
statement and stuff like that.
25:52
I think like even on the
25:53
agency side, we're usually not
25:54
looking at that. It's
25:54
usually like net profit goals for
25:56
the month and then making sure our
25:57
clients are like filling
25:58
in as much in every detail
26:00
as they can into triple whales
26:02
like expense settings that
26:03
we can actually see what's
26:04
going on. And then you kind
26:05
of have to have a little bit
26:06
of a holistic view. The
26:08
other big thing when it comes to
26:09
that too is like depending
26:10
on how much if like everything
26:12
is filled out in there,
26:13
you can like start every day
26:14
negative. So technically
26:15
like you start the day with like
26:16
negative OpEx. So you're
26:18
starting the day maybe with
26:19
like a 6k loss out of the
26:21
gate because you have team
26:23
costs and software and
26:25
everything else that it costs
26:26
just to run the day-to-day of the
26:27
business. So I think
26:29
it's also interesting to
26:30
like call that out because we,
26:31
I mean like I wake up in
26:33
like in the middle of nights
26:34
and I was and look at stuff
26:34
and I'm like whatever we're
26:36
at negative 10k to start
26:37
the day and I'm like, okay,
26:38
this is going to be a fun
26:39
one and then I teach you how
26:40
to myself. Yeah, and then
26:41
you have to remind yourself.
26:42
Oh, yeah, it's like just
26:43
the OpEx reset for the day out
26:44
for the day. So yeah,
26:46
anyways, I think that that's that's
26:47
mostly how we do it. So all
26:49
a lot of the financials and
26:51
stuff like that we go
26:51
Google Sheets not necessarily
26:52
dashboard-based. It's just
26:54
too many moving pieces bills
26:55
get moved around stuff like
26:56
that. It's a little bit harder.
26:57
So mostly it's like net profit
26:58
per day is what we're looking
27:00
at. So the so let's talk
27:01
about like LTV Brad you had
27:04
that listed and want to talk
27:05
about you know, do you is it
27:08
LTV by cohorts over 30 60
27:10
90 whatever when you do that
27:12
do you ever pull in like
27:14
payback window visualization
27:16
or anything like that? I
27:17
guess I'm scared as how you
27:18
handle LTV. I know I mean
27:19
obviously exactly you as well
27:20
done a lot with sub brands
27:21
and yeah, so we're we will
27:25
look at LTV less rig. It's
27:27
not it's not a daily probably
27:29
not even weekly. Maybe
27:30
it's a more of a monthly thing
27:31
just to make sure that
27:32
cohorts are behaving in the way
27:33
that we anticipated when
27:35
we set targets to my point
27:36
earlier if all of a sudden
27:37
you sell a consumable product
27:39
and you were sending I
27:41
had this experience recently
27:41
where I got protein shakes and they
27:43
tasted like cigarettes
27:44
when I tasted them is crazy. So like
27:46
yeah, that's a really
27:47
bad experience for a
27:48
customer. They're probably not
27:48
going to come back and buy
27:49
from you again and like all
27:50
of a sudden your your LTV
27:51
cohort for that month looks
27:52
like shit. So the way that
27:54
we're looking at LTV is when
27:55
we're setting maybe ROAS
27:57
targets we can make in especially
28:00
if it's a subscription-heavy
28:01
brand we can go we can look
28:02
at the cohorts and say
28:03
what can we expect to get over
28:05
30 60 90 day window and
28:06
then maybe we can adjust down
28:07
our ROAS target according
28:08
to that and it will just be
28:10
the other the traditional
28:11
kind of like cohort view where
28:13
it's month by month of
28:15
how that looks maybe you'll
28:16
add some filters in for
28:18
what product people purchase
28:19
first things like that.
28:20
But yeah, it'll kind of give
28:21
you that payback analysis
28:22
in there. Is that anything to
28:24
add on LTV? My like maybe
28:27
not so hot take on LTV is like
28:29
unless you're a subscription brand you
28:30
should be paying attention
28:31
to it as a metric to
28:32
optimize off of like Cacti LTV.
28:34
You shouldn't you just
28:35
shouldn't pay attention to it.
28:36
Yeah. Yeah. So wait, it's
28:37
way too misleading really.
28:38
It's way too misleading.
28:39
You have no indication of what
28:40
that's going to look like
28:41
for your cash flow. I think
28:42
too many agencies like
28:44
especially on Twitter like talked
28:45
about like optimizing off of
28:46
LTV unless your subscription.
28:48
I think it's a horrible
28:49
idea unless you're you know, a
28:52
nine-figure business or high
28:53
eight-figure business and you
28:54
have five six years of solid
28:56
historical data to actually
28:57
back into that. If you're
28:59
sub 20 million and you're less
29:00
than five years old and
29:01
you're mostly focused on one-time
29:03
purchase, you know products and
29:04
customers. I just wouldn't
29:06
look at it again subscription
29:07
completely different business
29:08
right then that's
29:09
completely what you're optimizing off
29:10
of once you can cash flow to the point
29:12
that you can actually
29:13
say hey, I can actually lose
29:14
10 20 30 40 50 dollars in this
29:16
first purchase because my
29:17
LTV within a 90-day window is
29:19
going to have me fully paid back and
29:20
produce profits. It's
29:22
a completely different
29:24
scenario, but I think that's where
29:26
like for Holo. We like
29:27
don't really look at it. We are
29:29
paying attention to it now and our
29:30
biggest thing that we're
29:31
trying to optimize for is
29:32
more about the time gap between
29:33
purchases. So like we've now
29:35
spent a lot of time looking at
29:36
purchase one versus purchase
29:38
two and the average time was
29:39
like in the 70 days over the
29:41
last 365 days like over the
29:43
last year. It takes like 70 days on
29:44
average for someone to
29:45
come back and buy again. How
29:46
can we close that window? To
29:49
me, that's a more important
29:50
metric to pay attention to
29:51
than LCB. So again, like
29:54
we'll look at it. We don't pay
29:55
attention to it for Holo,
29:56
but for other brands, we care
29:58
more about it.
29:59
Yeah, I think that's like a
30:00
really good point. Like maybe
30:02
there's a so all of these
30:03
things that we talked about up
30:04
to this point are maybe like daily,
30:05
weekly, monthly things
30:06
that you're reviewing
30:07
pretty regularly. This LCB thing,
30:09
particularly if you're not a
30:10
subscription heavy brand or
30:12
you're not building a bunch of
30:13
like crazy forecasting models
30:14
based on it, but you're in
30:16
a similar business to Holo.
30:18
Maybe you should set up a quarterly
30:19
cadence where you go
30:20
and review these things and
30:21
you set some goals like you
30:22
just did where it's okay.
30:24
I know my people are
30:25
purchasing between here and here
30:26
and this is how many days it takes. I
30:28
want to improve that.
30:28
Here's the things I'm going to
30:29
try to do to improve that and
30:30
then you go back and you
30:32
review it. Maybe that's the cadence
30:33
for how to think about using
30:34
that is set up a quarterly,
30:36
monthly, whatever. You go
30:37
check on it and you try to do
30:39
something with it. Now
30:39
ultimately should ladder up into
30:40
a bigger goal, which is
30:42
improving repeat customer revenue.
30:44
So it needs to ladder down
30:46
from that. It can't just be,
30:47
yeah, I want people to buy more
30:48
frequently and you're giving
30:49
away all your margin, but I think we
30:51
talked about this on
30:51
a previous episode. Zach,
30:52
where you like some of you guys
30:53
were going to try was just
30:54
being more aggressive in your
30:55
repeat customer offers because you've
30:57
already acquired the
30:58
customer. There's margin to
30:59
be had there. F round find out
31:01
with the the offers there.
31:03
So one quick aside. Well, do
31:06
you want to respond to that?
31:07
Zach?
31:08
No, no, no, we can keep going.
31:09
Okay. So one quick aside is
31:11
I've heard both of you say
31:13
privately in conversation
31:15
other people about subscription
31:17
brands and how great they are and
31:19
convincing in like saying
31:20
to other entrepreneurs like
31:21
hey, you should think about
31:22
having this be a
31:23
subscription brand right now.
31:25
How do you help a company
31:27
transition to thinking about
31:29
that? Because I think
31:29
it is it is a great idea.
31:31
It's like it makes it a
31:32
better model. Why do you guys think
31:34
it's a better model and
31:35
just like really quick aside on
31:37
subscription brands and
31:38
why is it so powerful?
31:40
Do you think?
31:41
I mean, it's you know, for Holo we can
31:44
kind of bank on like
31:45
25 to 30% of our revenue on a
31:47
multi-basis being returning.
31:50
If you're a subscription
31:50
business and you like play it
31:52
right, it could be 50 to 60
31:54
to 70% of your revenue on a
31:55
daily basis. So it just makes
31:57
much easier the idea of growing
32:00
a business. It just makes running a
32:02
business much easier
32:03
once you have people coming
32:05
back every 30, 60, 90 days.
32:07
And that's really the simple.
32:08
That's really the simple
32:09
answer of why it's better, right?
32:10
It's like you're getting
32:10
them to come back and spend more
32:11
money. The real crux of it is
32:14
like you need a good product
32:15
that people will actually
32:15
come back and buy again and not
32:17
cancel, right?
32:19
There's like some baseline
32:20
metrics of like what you can
32:21
kind of anticipate of like churn on a
32:24
like one through six
32:25
month kind of period. A lot
32:27
of brands, you know, that we
32:29
see that are like trying
32:30
subscription or trying to do
32:31
subscription well will be at
32:32
like a 10% retention at month
32:34
six, right? When we look
32:36
at the brands that have done
32:37
subscription really well,
32:38
they're much closer to 50%
32:40
retention by month six. And
32:42
if you get to 50% retention
32:43
by month six and you're billing on a
32:44
monthly basis, let's
32:46
say your AOV is 50. Like
32:48
we're talking about, you know, a
32:49
$250 LTV on like a $50 AOV
32:52
products. Your CAC to LTV, if
32:55
those are your actual
32:55
metrics can be absolutely insane.
32:57
You can spend $100. You
32:58
could literally be at a 0.5 new
32:59
customer ROAS on a daily
33:01
basis and it still backs out to
33:03
being profitable for you.
33:05
So that's where like the
33:07
hack comes in is when you have
33:09
a great product, you
33:10
have good retention and that
33:12
compounding effect actually
33:13
starts to set in that you're
33:15
bringing back so many
33:16
returning customers on a daily
33:17
basis that your new
33:18
customer CAC can go way down. And
33:20
that's where your your CPAs
33:21
in a Facebook or in whatever.
33:23
These are the brands that
33:24
we're seeing spending, you
33:25
know, seven figures a month on ads
33:26
because they can run
33:28
at a 0.9 ROAS and it's
33:30
great for their business, right?
33:32
So I think that that's like
33:34
the big thing now that, you
33:36
know, Brad and I have talked
33:36
about and we've seen clients
33:39
do is just like that's
33:41
that's the big hack for them is
33:42
they can just run at a
33:43
completely different mechanism
33:44
than a normal brand.
33:46
A two new customer ROAS
33:47
versus a 0.5, you know, it's just
33:50
a whole different ballgame.
33:52
Yeah, it's really a
33:52
beautiful thing actually.
33:54
Yeah, just probably don't
33:55
do it for your first product
33:56
business because you
33:57
will probably lose your ass.
33:58
Yeah, I mean, I think I
34:00
think that's the other thing to
34:01
be said is like that's a
34:02
great model, but you have to
34:04
prove that the product's
34:05
great first, right? And that
34:06
customers are actually
34:06
gonna come back and buy again.
34:07
Otherwise, you can shoot
34:08
yourself in the foot and
34:09
basically say, hey, I can spend $100
34:11
acquiring a customer
34:12
that spends 50 and then never
34:14
make that money back, right?
34:15
So it definitely takes
34:16
some, you know, some proof of
34:17
concept and proof of
34:18
returning customer before you can
34:20
go that route.
34:20
But once you have that and
34:22
once you feel like you can
34:24
validate that trying to
34:26
push more on the subscription
34:27
side, then just focus on
34:28
one-time purchase obviously
34:29
is a can be a big unlock
34:31
for a lot of these brands.
34:32
I mean, I'm bummed Brad,
34:33
you're not going to come back
34:34
and purchase my Marbolo
34:36
cigarette protein powder.
34:38
You know, it's crazy about that.
34:40
Too bad.
34:40
You know what?
34:40
We're bringing beef spec early today.
34:43
I want to tell this story
34:44
and you know, I don't know.
34:45
I don't know how many
34:45
people are gonna hear it or care,
34:47
but like I've been buying
34:48
these yeah, 10s of all 10s of
34:50
10s of listeners.
34:51
There's a company called
34:52
Only What You Need that's been
34:53
resold several times to private equity
34:56
probably a few times.
34:57
I might be butchering that.
34:58
If I've been on their
34:59
subscription for protein shakes
35:00
for probably five years, I
35:02
got I get three boxes a month
35:06
which is like 36 shakes and I
35:07
give them every single month
35:08
for five years.
35:09
Like that's a lot of money.
35:09
I've given these folks.
35:10
I got a package.
35:12
I opened it.
35:12
It tastes like cigarettes.
35:13
I email them and I'm like
35:15
this tastes like cigarettes.
35:16
Like can I get my box
35:18
replaced my boxes replaced because
35:19
they literally all three boxes all 36
35:21
shakes tastes like cigarettes.
35:22
It's disgusting.
35:23
And like oh, yeah, sometimes
35:24
happens with natural protein.
35:25
Whatever.
35:25
I was like, no, that's fine.
35:26
I get it.
35:27
I've been drinking these for a while.
35:28
I'm willing.
35:28
I'm willing to get a replace.
35:30
They send me one box to replace it.
35:32
I'm like I bought three boxes.
35:34
They all taste like shit.
35:35
What are we doing here?
35:36
And they're like, oh, we gave you that as
35:37
a favor for being loyal.
35:39
Like what you're not doing me any favors.
35:40
You send me cigarette
35:41
tasting protein shakes.
35:42
I've given you thousands of dollars.
35:44
What are you talking about?
35:45
So I can't cancel my subscription that
35:46
day and I'm moving moving.
35:47
I'm now a koya as as these guys know.
35:50
I got we're not vegan.
35:50
We're not vegans.
35:51
Yeah.
35:52
Yeah.
35:52
So that is but anyways, that's my yeah,
35:55
don't don't piss off
35:55
your customers.
35:56
Sorry.
35:57
Yeah.
35:58
Yeah.
35:58
There are I think we all I
35:59
think you know in all seriousness.
36:01
I think that one of the benefits of being
36:03
marketers who own businesses
36:05
like you guys, you know is like and
36:07
myself with the founders membership
36:09
and the other like related businesses.
36:10
We have is we all go through
36:12
stories like that all the time.
36:14
And if you notice it and care, it will
36:19
set you apart just by the
36:20
natural fact that you've been a marketer
36:22
and you're like working
36:23
with clients running an agency and you're
36:24
like, what the hell?
36:26
Why wouldn't you
36:26
replace that for that person?
36:28
Because I'm over here getting blown up in
36:29
the ad comments about this
36:30
or whatever like, you know, you see it
36:32
and you know it and you that's
36:33
like a big differentiator.
36:35
Okay.
36:35
So so taking us back to
36:36
the dashboard for a second.
36:37
So all right.
36:38
So you go through all this and you've
36:40
gone through cash flow.
36:41
We talked about ltv.
36:42
Let's talk about product breakdown and
36:44
day of week sales a breakdown
36:46
in Shopify.
36:47
How do you look at those and how
36:49
regularly you looking at those Brad?
36:51
Yeah, product breakdown is probably
36:53
closer to like a weekly thing and
36:56
it depends on the brand right?
36:57
Like if you if you go to single-ski
36:58
store, you never need to pull this
37:00
up, but if you have once you start to get
37:02
a couple of variants that's
37:04
when it starts to become a
37:05
little bit more meaningful.
37:07
I'd say weekly one from an opportunity
37:09
standpoint, like I said earlier
37:10
to see if you can add something into the
37:12
ad account because it's
37:13
picking a volume and you don't have it.
37:14
It's not represented in
37:15
the ad account currently.
37:17
And then the other thing is just like if
37:18
you have an expectation of
37:19
a certain product carrying the load and
37:21
all of a sudden that thing
37:22
starts to fall off, you want to keep that
37:24
in mind because these,
37:25
you know, if you're building a forecast,
37:28
an inventory forecast based
37:29
on an expectation of certain products
37:30
making up a certain mix and
37:32
all of a sudden one of them starts to rip
37:33
and you're scaling ad spend
37:34
and the other one's falling behind, but
37:35
you have a shit ton of inventory
37:36
in the other one, it starts to get weird
37:38
really fast and maybe you
37:39
need to spend more time trying to figure
37:40
out and move the product
37:41
that's not moving or saying,
37:43
saying screw it and just scale
37:45
the thing that that is working.
37:47
I don't know if you
37:47
have anything to add there.
37:49
I mean, this is just like the crux of
37:51
holo for this year is that we
37:54
we find like it takes a few months.
37:56
We launch we launch the new products.
37:58
It takes a few months.
37:58
We get some like banger ads working and
38:00
then we like stock out of
38:01
the product and especially when you
38:04
launch new products,
38:04
you're I mean your forecast and you're
38:05
just coming up with ideas
38:06
of how many units you think you can sell
38:08
and you don't really
38:08
understand like what the market really
38:10
will say and it's just a
38:12
risk, you know, like profile that you
38:16
have to set on a new product
38:17
when you launch it and say, hey, I'm
38:18
willing to order 50,000
38:20
these units or 5,000 these units.
38:21
Let's see what happens.
38:23
So yeah, I mean for us for holo, we're
38:24
looking at this almost
38:26
on a daily basis at this
38:27
point because we have close to 100
38:30
skews now and just like the fluctuation
38:32
from going last year
38:33
from having like 40 skews to a hundred
38:35
skews is just like completely
38:36
different. Our year-over-year comps are
38:39
just absolutely ridiculous
38:40
and trying to like set expectations from
38:42
that is just really hard.
38:44
So I think for brands that are growing
38:45
and trying to add new products,
38:47
which is like a you know, we're talking
38:48
about LTV and trying to get
38:49
people to come back.
38:50
That's a lot of it is adding new products
38:52
and giving customers
38:53
a reason to come back
38:54
and buy from you again.
38:56
This part is really hard to do.
38:57
I mean like in all honesty, this is
38:59
probably like one of the hardest
39:00
things that we've struggled with this
39:01
year is just like not building
39:02
off enough surplus, but also not like
39:05
shooting ourselves with like,
39:08
you know ordering too much of
39:09
one product that we have set on
39:10
that for an entire year because it's
39:11
seasonal or something like that.
39:13
So yeah, for us again, like the
39:16
complexity of the business the more
39:17
you'll spend time on
39:18
this easier the business.
39:20
You don't even have to worry about it.
39:22
Yeah, day of week and time of day.
39:25
Want me to jump into that?
39:26
Yeah, let's do it.
39:27
Yeah.
39:28
I actually think these are
39:29
particularly the day of week.
39:30
I think is like massively slept on.
39:32
I think everybody kind of has this
39:33
intuition around when their
39:34
business is more or less efficient and
39:37
maybe not even efficient.
39:38
I think some people will be like, yeah,
39:40
my weekends are great.
39:40
And some people say my weekend suck.
39:42
Zach knows that when
39:43
he wakes up at 3 a.m.
39:44
to take a leak, he's going to be negative
39:46
10k in the hole or whatever.
39:47
But like by noon, maybe he's positive and
39:49
then the rest of the day is great
39:50
because he makes you know, so like I
39:51
think from a time of day perspective,
39:53
I think it's helpful to just like
39:54
understand that cadence, especially
39:55
if you're you know, one of those surf
39:57
scalers or whatever they call it
39:59
that are scaling the budgets intraday.
40:00
I think it's really important to have
40:01
that context and that day of week
40:03
like I perpetually see particularly
40:05
brands that run really heavy on like
40:06
lowest costs.
40:07
They just like probably lose their ass on
40:09
certain days with the idea
40:10
like it'll be made up on the weekend.
40:12
And I think that that is a mistake in
40:14
many cases because I'm not sure
40:15
that you're actually creating demand for
40:16
the weekend personally, but I
40:18
think it's important to look at that
40:19
because you know, we have a we have
40:20
a client literally every Friday
40:22
particularly because they're a little
40:23
bit more on like lowest cost right now.
40:26
It's like we're lowering the budgets into
40:27
the weekend because our weekends
40:28
are horrible like horrible and there's no
40:30
evidence that that spending
40:31
through the weekend
40:31
makes the week any better.
40:32
So we always we always pull back and for
40:34
a lot of brands is the opposite
40:35
like I wouldn't be surprised if Saturday
40:38
or Sunday for a lot of brands
40:39
is is like some of the bigger days of the
40:41
the week to a massive degree
40:43
and it's not just it's
40:44
not even just revenue.
40:45
It's a combination of revenue and
40:46
efficiency and getting that day
40:48
of week with efficiencies a little
40:49
trickier to pull but I think it'd be
40:52
really valuable.
40:53
One caveat that I'll throw in here is
40:54
like you launch products on a
40:55
certain day of the week or promos on a
40:57
certain day of the week.
40:58
You got to be careful how you look at
40:58
this because that will throw that off.
41:01
Yeah, so I think it's
41:02
I think it's slept on.
41:04
Yeah, I mean for us like for hollow
41:06
specifically as we've been using
41:08
that example a lot like we lose our ass
41:10
most of the time during the week
41:11
and then make it all back up in tenfold
41:13
on the weekend, right?
41:14
So Mondays are brutal Tuesdays are like
41:16
usually pretty shit and then
41:18
it's just like trickle back up into
41:19
profitability and then just like
41:20
let it rip through the weekend.
41:22
So yeah, the I think the weekend stuff so
41:26
interesting and it varies
41:27
by business.
41:28
I think it's a great thing to track.
41:30
One thing we haven't touched on is like
41:32
ad metrics within meta, which
41:36
I think is which I think is great that we
41:38
haven't really gotten into
41:39
that right because talking about the
41:41
actual financial health of the
41:43
business first and this is a podcast for
41:46
seven to eight finger brand
41:47
owners primarily what metrics are most
41:50
important though to you guys
41:51
when it comes to talking about ad
41:54
creative and what you're looking
41:56
at to know that you've
41:56
had that you have winners.
41:58
Yeah, well, I think what's been
41:59
interesting about this and hopefully
42:01
hopefully the takeaway is if you kind of
42:02
go in order of the way that
42:03
we've talked about this in the podcast,
42:04
you know, you can kind of go
42:05
through the what's most important in
42:08
order because I think the dashboard
42:10
start to change kind of by role.
42:13
So if you are the owner and the media
42:14
buyer, obviously this, you know,
42:16
the media buying
42:16
stuff is relevant for you.
42:18
But what you might be looking at from an
42:20
owner perspective or an agency
42:21
perspective might be different from what
42:23
your day to day everyday
42:24
media buyers looking at.
42:26
So in meta, what we're generally looking
42:28
at is going to be spend and
42:30
purchase conversion value.
42:31
And I think the reason we do that is
42:32
because purchase conversion value
42:34
purchases like everything close closely
42:36
related to the sale.
42:38
Honestly, most of the way in spend and
42:40
the reason that we do that is
42:41
because from what we've seen in the
42:42
analysis that we've run, they
42:44
correlate the heaviest with actual new
42:46
customer revenue, which is
42:48
what we're trying to
42:49
drive purchase purchase.
42:50
If you're depending on your account
42:53
structure is very likely to be
42:54
more heavily correlated than even
42:56
purchase value and purchases.
42:58
And I feel like that's a hill I will
43:00
comfortably die on for now, but
43:01
I'll probably change it at some point.
43:03
So spend purchases purchase conversion
43:06
value and CAC AOB inside of
43:08
the platform how those things are looking
43:10
and then something else
43:11
that we try to pay attention to
43:12
particularly on an ad level is just
43:14
like what does spend velocity look like
43:16
after you launch an ad?
43:17
So something that a report that we keep
43:19
in our creative reporting
43:21
tool is called new ads last 14 days.
43:24
And the reason we do that is when I
43:26
launched an ad, if it starts to
43:27
pick up over the course of the first
43:29
three days, I might be on to
43:30
something and I think that's really worth
43:32
paying attention to because
43:33
usually ads pick up within that first
43:37
couple of days and if they
43:38
don't, they tend to not pick up.
43:40
So spend velocity is another thing that
43:42
we'll pay attention to.
43:44
Did you steal that spend
43:45
velocity from me, Brad?
43:46
No, I've got a screen check.
43:48
Let's go back on my Twitter.
43:49
There's screenshots.
43:50
There's screenshots.
43:51
So no, I think you've coined the term a
43:54
little bit more recently.
43:55
No, it's fine.
43:56
I'll take I'll take all the credit.
44:00
No, that's weirdly enough.
44:01
That's been something that we've been
44:03
been, jeez, repeating myself
44:05
been paying way more attention
44:06
to is that spend or that spend
44:08
velocity.
44:08
It's absolutely crucial when you're
44:11
trying to find breakout winners
44:12
in your account when you're
44:13
seeing an ad go live and even if
44:15
performance isn't where you need to be
44:16
but meta is just like eating
44:18
spend and do it to then go make decisions
44:20
off of okay, like how
44:21
do I change the hook?
44:22
How do I change some part of the body
44:23
that needs to be swapped
44:24
out?
44:24
That's probably the biggest one which we
44:26
pull through motion.
44:27
We don't pull it through
44:28
directly through ads manager.
44:29
But yeah, other than that
44:30
spot on with Brad nothing else.
44:31
I'm looking at I'm not
44:32
looking at hold rate.
44:33
I'm not looking at thumb stop not looking
44:34
at impression conversion
44:35
right now.
44:35
Like that stuff.
44:36
It's basically just
44:37
spend purchases and bras.
44:39
Yeah, something that I want to transition
44:40
to and this will be like
44:41
a quick thing to close out from a
44:42
creative perspective is like how
44:44
your categorical spend changes over time.
44:48
So I mean by that is like if you can
44:49
start to lump your ads into
44:50
different themes like okay, my spend is
44:52
going into this age demo
44:54
or this pillar or this angle or this
44:56
persona or whatever over time
44:58
it might start to change.
44:59
I just did this report
45:00
for a client year-to-date.
45:01
It was insane like how much it changed
45:03
and like intuitively when
45:04
you map it to the marketing calendar and
45:05
you think about the seasonality
45:06
like it makes sense.
45:08
But once you start to see it tied with
45:09
spend and efficiency numbers,
45:11
yeah, that might be a whole episode on
45:12
zone because it's it's kind
45:13
of cracked.
45:14
That's an interesting idea.
45:15
I think I mean spend velocity trademark.
45:18
Stack stock is a is a huge
45:20
new, you know way to look at it.
45:22
And I think that's true.
45:23
And I think a lot of people I think a lot
45:24
of us are shifting in
45:25
that direction as we start to look at ads
45:26
because it gives a clear
45:29
signal and it's also the way that meta
45:30
thinks I think it more closely
45:31
mirrors the way that meta thinks about
45:32
things which is helpful.
45:35
I you know, we're still obviously looking
45:37
for awesome at least early
45:39
reads because a lot of the accounts and
45:41
audits that we see some of
45:43
these people are
45:44
smaller spenders account.
45:46
So we're we sort of have to rely at some
45:47
degree on click-through
45:48
rate, hold rate, hook rate, thumb stop
45:50
ratio to have an early assessment
45:52
because we're not going to have spend
45:54
velocity is not something
45:55
that we can achieve because we just don't
45:56
have the capital to be
45:57
able to deploy to
45:58
like get a real read on.
45:59
So we have to look at these early
46:00
indicators to say like, okay,
46:02
actually this seems to be better, right?
46:04
Whatever the thumb stop ratio or whatever
46:06
that we should lean into
46:07
this a little bit more.
46:08
Lynn, it's and because we have a lot of
46:11
our brands and members are
46:13
running big accounts, but we also have a
46:16
group in the United Kingdom
46:17
of and the EU of like smaller spending
46:20
accounts that are saying sub
46:21
50,000 a month and sometimes are even sub
46:24
20,000 a month and it's
46:25
like that's a different
46:26
ballgame for a lot of those folks.
46:28
So yeah, interesting.
46:29
So I mean, I think ultimately wrapping
46:32
all this together dashboard
46:34
best practices, right?
46:35
I think it's supposed to accomplish like
46:37
any dashboard slash let's
46:39
check what dashboard is not report, but a
46:42
report would hopefully
46:43
accomplish this as well.
46:45
Is the business healthy?
46:47
Are you acquiring customers profitably
46:49
and are you retaining customers
46:51
efficiently and are you
46:52
avoiding like vanity metrics?
46:55
What other things need to be
46:56
accomplished in every dashboard?
46:58
You know, I mean for us, I will say that
47:00
creating a routine around
47:03
and ritual around a dashboard for the
47:06
business with our clients
47:07
was the most effective thing that we did.
47:09
We're going to look at
47:10
this together at this time.
47:13
This is when I will be looking at it and
47:14
this is when we're going
47:15
to be having a conversation about it and
47:17
it just became an atomic
47:19
habit that we really instilled with our
47:20
clients make sure the conversation
47:22
was taking place properly because
47:24
otherwise it was a scatter shot.
47:26
Did you see this?
47:26
Did you see this?
47:27
Did you see this and it did not it didn't
47:29
create us like synergistic
47:31
conversation really?
47:33
It was just all over the place.
47:34
So what else do you guys think?
47:35
I think that's a great point.
47:36
Like I think having a cadence for when
47:37
you look at it and why you're
47:38
looking at those things is really
47:40
valuable because you probably don't
47:41
want to freak out on
47:41
just a one-day thing.
47:43
Now, there's some caveats to that.
47:44
But as you start to notice some trends,
47:45
particularly if you have
47:46
a forecast and you're off forecasting,
47:47
you're consistently off
47:48
forecast for several days, then that
47:50
becomes the okay, what else do
47:52
I need to dig deeper into and maybe
47:55
that's another episode that
47:55
we can do which is like actually going
47:57
through a dashboard and
47:58
like okay, this was off track.
48:00
So this is what we did next and I think
48:02
just going through those
48:02
order of operations.
48:03
But yeah, having a cadence for reviewing
48:05
it with like an intent
48:06
of why you're reviewing
48:07
it super valuable for us.
48:08
It's daily weekly
48:10
monthly quarterly yearly.
48:12
It's kind of the way that we look at some
48:14
really this entire thing
48:15
not just like specific metrics, but all
48:17
the metrics that we just
48:18
mentioned.
48:19
Yeah, no notes.
48:20
I mean the only other one that I feel
48:21
like is like a slept on in
48:23
in Ads Manager metric that I look at that
48:26
a lot of people do is
48:27
cost-per-edit card
48:28
depending on your brand.
48:29
There's a very good chance that you can
48:31
correlate the cost-per-edit
48:32
card in Facebook to cost-per-purchase
48:34
even better than cost-per-edit
48:35
check out.
48:36
So if that's something that you're like
48:38
not spending that much
48:38
money and you're trying to figure out
48:40
okay, they're leading
48:40
indicators that are you know, showing
48:42
promise sometimes cost-per-
48:44
edit card can be a great one for you to
48:45
look at especially if
48:46
your volumes not there.
48:47
So I wanted to throw that one out there
48:48
and well through our
48:50
tens of listeners out there.
48:51
Thank you as always for taking for
48:52
listening and we are grateful
48:54
for you.
48:54
If you have feedback or thoughts always
48:56
let us know Andrew at
48:57
foxwell digital.com and I'll get it to
48:59
the guys on the team.
49:01
Gentlemen good to be with you.
49:02
Thanks everybody else.
49:11
The only way that we grow this podcast is
49:13
by you sharing it with
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your friends.
49:15
Honestly, like reviews kind of don't
49:17
really mean anything too
49:17
much anymore.
49:18
They're really meaningful, but they don't
49:20
do a lot for the growth
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49:21
And so sharing YouTube links sharing
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Apple, whatever we call it under the
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49:34
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49:35
Yeah, please go check us out
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49:38
We'd love to see it and then subscribe
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49:42
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49:45
So please say
49:46
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49:48
Thank you everyone.
49:49
Thanks for listening.
49:50
Honestly.
49:58
This episode is brought to you by the Fox
50:00
will founders membership
50:01
that Andrew and his wife Gracie run.
50:03
It has been absolutely pivotal for not
50:06
just the Homestead team,
50:07
but the easy Street Brands team.
50:09
We've had I don't even know how many
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there that are part of our ecosystem.
50:13
But when it comes to anything from
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learning ads to understanding
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It's been absolutely useful
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So definitely would recommend it for
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50:31
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incredible things about it is you can
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You can pin your favorite
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There's there's some ballers in there.
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They just give like the benefit of
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51:00
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51:03
Yeah, I mean, I think the biggest
51:04
resource to me too is like
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the events that you know, Foxwell
51:07
founders does they've been
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able to do some even in
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getting people together
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in person and able to have really just
51:16
like honest conversations
51:17
of what's going on was working for them
51:18
now, you know, where
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they're at their business and knowing
51:21
that there's going to
51:22
be like Brad said some real
51:23
killers in the space in this
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that can help and are willing to
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51:29
So that's been a huge part
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51:32
And the applications are now open if
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51:37
Yeah,
51:37
foxwellfounders.com go check it out.
51:39
Go play.