Are You Paying Too Much to Acquire Customers?

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Welcome to this issue of The DTC Insider newsletter. 👋

We'll deliver the latest growth marketing news and trends in the DTC space straight to your inbox.

Topics we’ll cover today:

💠 Are You Paying Too Much to Acquire Customers?

💠 Site Links on Meta Ads 🔥

💠 From NFL Grit to Brain Health Businessman

Are You Paying Too Much to Acquire Customers?

Don't have a clear answer to this?

Then I'd suggest you keep reading 👇

It's no surprise that the most successful DTC brands know their numbers.

That helps them understand

➝ Which efforts to double down on

➝ And which ones to reduce or cut

If you're like any other business, you want to make money. Right?

And for that, you need to know whether you should be doubling down...

...or reducing/cutting your spend on certain channels/campaigns/products.

For that, 2 metrics are typically overlooked:

➝ LTV/CAC

➝ CAC Payback Period

Why are they overlooked?

I think it's mainly because many brands don't know the value of any of these 2 metrics.

Let's change that now:

LTV: how much your customers spend over time (ie. 3, 6, or 12 months).

CAC: the cost to acquire a customer (if you don't have any formula, start here: total marketing spend / number of new customers).

So, if we acquire a customer for $50 and our 6-month LTV is $150, then we know our LTV/CAC is $150/$50 = 3.

It's said that an ideal LTV/CAC ratio should be at least 3, but of course, it varies from brand ot brand.

This means that we're getting a 3x return on our investment.

How is this different from ROAS?

To start off, CAC includes more costs other than the amount spent on ads.

And second, it's the return on our investment over time, not immediately.

How can we know when we'll break even?

For that, we'll introduce something called CAC Payback Period.

What's that?

It's the time it takes for a new customer to pay back their acquisition costs (LTV >= CAC).

Following our previous example:

➝ If we spent $50 to acquire a customer

➝ And they spent $30 on the first order

➝ Then $25 on the second one in month #2

We'd break even in month #2: $30 + $25 = $55, and $55 > $50 (CAC).

Makes sense?

While this is a good approach, a more accurate way to measure whether or not you're break-even, is by replacing the LTV for the Accumulated sales margin per customer in the previous calculation.

Now, in case you're thinking:

"Brian...how on earth can I come up with this data without spending too many hours?"

No worries, I know your time is valuable, so I have a solution for you.

I found this tool that helps me and my team at BSR Digital crunch these numbers and many more in a matter of minutes.

Take a look at this report:

You can easily find the LTV, CAC, LTV/CAC ratio, and the CAC Payback Period (green lines).

If you'd like to know how to have this info for your business, reply to this email and I'll be happy to guide you.

Btw: I'm not affiliated with this tool. I just want to spread the word to help brands save time and perform better.

If you know anything about Google Ads, you know you can include site links in your ads.

Well, now you can do the same with Meta ads.

Site links basically enable you to add multiple landing pages to your ads.

As you can see in the above image, they will appear as horizontally scrollable display labels under the main hero image or video.

Here are the steps to add these to your ads:

  1. Go to the Ads Manager.

  2. Click + Create.

  3. Select either Traffic, EngagementLeads or Sales as your ad objective.

  4. If you selected Sales as your ad objective, toggle off Use a catalog at the campaign level. Skip this step if you selected other ad objectives.

  5. At the campaign level, complete the campaign details, A/B test and Advantage campaign budget sections, if needed. Then, click Next.

  6. In the conversion section, select Website as your conversion location.

  7. At the ad set level, complete the budget & schedule, audience controls and placements sections.

  8. At the ad level, go to Identity and select the Facebook Page and/or Instagram account to represent your ad.

  9. Go to Ad sources and enter a website URL to automatically add information like site links to your ad.

I think this is a great feature, as sometimes this was done through carousels.

(ie. having multiple cards to feature multiple collections.)

And now you can do it this way, much cleaner.

Would you use them?

From NFL Grit to Brain Health Businessman

In this episode of The DTC Insider podcast, Brian Roisentul sits down with Andrew Sendejo, a retired 12-year NFL player who is disrupting the brain health space at BrainTree Nutrition.

During the interview, he said something very surprising to me about his weekly routine as an NFL player...

They train every day, but not in the way I thought...

They work out doing the morning.

But after lunch...

They are in meetings and studying for the rest of the day! 🤯

And it doesn't stop there...

Tune in to learn more about what we discussed:

👉 His background as an NFL Player
👉 Transition to Business Owner
👉 Why He Thinks Amazon is The Wild West of Online Retail
👉 Lessons Learned from Approaching the 100th Retailer
👉 Scaling Up by 800% in 2024
👉 How To Maintain Quality Amidst Competition
👉 Managing Influencer Impact
👉 Expanding Beyond Texas and National Retail Strategies

🎧 Tune in to our latest episode: https://thedtcinsider.com/c/podcast

Want to check out more podcast episodes?

Here are some of the top-listened episodes:

💎 Give Up Your Stuff, Not Your Dream with Jules Weldon and Stacey Pierce

Work for a DTC Brand?

Do you own or work for a DTC brand and are feeling a bit stuck in your brand's growth journey?

At BSR Digital, we've been in the trenches with DTC brands since 2013, helping them break through barriers and soar to new heights.

If you're ready to shake things up and turbocharge your growth, let's chat!

Book a discovery call with us, and let's brainstorm some game-changing ideas together.

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