Omnichannel Growth for 8 & 9-Figure Brands | Co-Founder & CIO of Avenue Z | Founder of The Snow Agency (acq.) | Orthodontist | Veteran
Does this Revenue curve look familiar to you? This DTC trend is one that's been engrained in my head. Here's what I call "The DTC Lifecycle Paradigm": - Revenue GROWTH - Revenue PLATEAU - Revenue DECLINE (b/c of major hit to NEW cust acquisition) Can't tell you how often I come across this now. - GROWTH - Early innings of a brand's lifecycle is EASY. But only for so long. It becomes difficult to sustain growth. This is where data, attention to detail, & scrutiny are more important than ever. Yet this is where most brands actually fail... but failure is actually just dormant & rears it's ugly head further down the road. They scaled without the proper foundation! - PLATEAU - So many have been blindsided by a revenue plateau & have no idea why. They were pompous on the ride up & didn't scale thoughtfully. Everything seemed to be going right. Attention to detail sorely lacked across ad account setup, naming conventions, analytics. The 2 MOST COMMON points on the X-axis that mark the plateau: 1. COVID Peak Euphoria 2. AI/ML Ad Tech Adoption (Performance Max and Advantage+ Shopping) 👉 COVID Peak Euphoria (2021) Brands that peaked in '21 are likely either A) dead or B) walking zombies (trying to stay alive and live off returning customer revenue). Their customer base heavily skewed towards the "impulse purchasers" w/ a temporary increase in discretionary budgets. These brands over-ordered inventory based on inflated sales projections and put themselves in a tight spot. 👉 AI/ML Ad Tech Adoption (PMAX and ASC) Actually the most common trigger I've seen lately. Brands leaned heavily into these black boxes w/o understanding how/when to utilize them. This caused algos to go after "the lowest hanging fruit" w/o guardrails. Meta's ASC is really the main culprit. The brand most likely didn't define their audience segments in the ad account (New, Engaged, Existing), didn't use existing customer budget caps, had no analytic scrutiny of their numbers, and when 💩 hit the fan, they didn't have the infrastructure or data flexibility to uncover what went wrong and WHY. Ads were likely going to a tiny segment of the funnel that were most likely to convert in the defined attribution window, whether they were incremental or not. This nuked new customer acquisition for brands. - DECLINE - Once the decline hits, the brand panics. Rather than identify the root of the issue, they cut back ad spend! This accelerates the decline. NEW customer acquisition growth takes a MUCH LARGER hit than EXISTING customer growth. Existing customer revenue is keeping the lights on. BUT- w/o new customers coming in, existing customer revenue starts declining & the brand has absolutely no idea what to do. Don't wait until this point to seek help. Often at this point, many don't even have the data/infra required to pinpoint major issues. It's a much longer journey back up. If you don't have a proper handle on your data or customer acquisition, reach out to experts.
Fancy ad tools are great, but don't forget the basics - know your customers and track everything
It's like a roadmap to anticipate and manage the ups and downs of business
we see this all too often!
In your experience, what are some effective strategies for brands to sustain growth and avoid the revenue plateau?
That new customer acquisition cost years after a brand's been in business can really hit hard to some ad accounts
The plateau is one of the most difficult aspects for most brands to beat unfortunately.
Great breakdown of the DTC lifecycle paradigm! It's crucial to manage growth thoughtfully and be prepared for plateaus and declines.Reach out to experts before it's too late.
Starting a DTC brand is exciting, but keeping it growing takes real work
Absolutely resonates with the ups and downs of DTC growth! It's all about laying a solid foundation early on and staying agile with data. Insightful breakdown!
Drinkbrez.com Structured.agency Konstantkreative.com Wearelucyd.com
4wThose who partied too hard during the good times often miss why things slow down. Focus on details