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