What do all these words have in common?
They’re buzzwords. Love them or hate them, they get thrown around a lot and even the most anti-jargonists among us have probably used them at one point or another. It happens. It’s not your fault. As with any business, D2C brands have their own jargon that builds up over time and can distract teams from what really matters.
As a founder, CEO or owner, you need to be confident that you're cutting through the jargon and focussing on the metrics that drive real growth in your business. Measuring things like open rate or average CPA might make perfect sense to your Marketing team but leave Operations, Finance and the Board asking 'so what?' - ouch. There's a reason why many Marketing teams feel they're not on the same page (sorry) as the rest of the business. And it's also why CMOs have the shortest tenure of any Board role.
But what metrics really do matter?
That’s one of the biggest questions the leaders of direct brands should be asking.
How can you make sure your teams are tracking the right metrics (and in the right way)? Are you confident that the Board is making decisions and prioritising their actions based on data? Or are you being led by emotion?
As a leader, it’s your job to make the decisions that are right for the business. Ultimately, the customer is your responsibility. That means it’s your job to guide your teams to take actions that will encourage your customers to behave in a certain way. Put simply, you want more customers to buy from you, and more frequently.
At its heart, retail is a simple business. It’s data that makes it complex.
Imagine this scenario: The Marketing team says the open rate on your Nursery email campaigns has increased tenfold since August. Great! That means that customers who have already bought at least once are becoming more engaged than before and the email campaign is doing its job. Right?
Yes, more customers are opening your emails. Yes, that means they’re engaged. Well, maybe. It’s definitely a good sign. But before you go investing more time and resources into email, ask the team a few more questions: Are those customers clicking anything in those emails? Are they converting as a result? Are they spending more? Are you showing them products that are relevant to them? Are they shopping in stores (if you have them) as a result of that email? Can your team prove that email is actually doing its job? These are the questions you need to be able to answer.
This might sound like an anti-email tirade – it’s not! Email’s a great and cost-effective marketing channel when used correctly. This example could equally be applied to Paid Search, Paid Social, Direct Mail or any other marketing channel so don’t turn off your ESP just yet!
What I’m getting at is the danger of measuring vanity metrics.
Open rate is a vanity metric. And, incidentally, it’s a metric that is becoming even less relevant thanks to Apple’s iOS 15. Apple users now have the option of not sharing that information with marketers so if you’re currently using open rate as a core metric… It’s time to rethink that.
But what should you measure instead?
The problem facing most brands is the tsunami of data they’re collecting every single day. Every channel is clamouring to prove that it works. After all, Facebook wants you to keep spending more in your Facebook campaigns so it will take credit for as many sales as it can. Google is similar. The big players give your teams free, easy-to-use analytics because they want you to believe their version of events. You don’t need a tinfoil hat to see why that might not be the best thing for your business.
You need to be able to ask the right questions of your customer data. To learn more about the core metrics you should be measuring (and how to use them to drive the correct actions at Board level), join one of our regular Teach-In sessions for D2C brand leaders – click here to learn more.
As a brand, you’re constantly fighting to recruit new customers, retain existing ones, and keep ahead of your competitors, as well as juggling your supply chain, warehouse and internal teams. Your attention is already being pulled in a thousand different directions and vanity metrics will only distract you from the real growth lever in your business: your customer.
Focus on metrics that really matter: customer lifetime value, acquisition rate, retention rate and cost per acquisition and retention are the ones that will make a difference to your financial performance.
(And when it comes to email campaigns, track clicks and purchases instead of opens. They’re much better indications of effectiveness and customer engagement.)
If you’d like to learn more about how to measure the important metrics and how to ensure your Board has the information it needs to make the best decisions for your business, join a private Teach-In for the leaders of direct-to-consumer brands. You’ll come away with a crystal-clear understanding of the main measures and metrics that will impact on your performance and be able to bridge the gap between Marketing and Finance once and for all.
Teach-In places are limited and reserved for the leadership of established direct-to-consumer brands. more2 Ltd. reserves the right to refuse admission.
Have a question? Get in touch!