DTC Basics: What DTC marketing metrics to measure and learn from for business success
eMarketer’s forecast, predicts that “eCommerce sales will reach $151.20 billion in 2022, an increase of 16.9%” over trading in 2021. This illustrates (in the US at least) how DTC challenger brands have successfully managed to challenge and disrupt the traditional retail industry.
Any business, whether it is brick-and-mortar or online-only, needs to track marketing metrics to gauge the effectiveness of its marketing activities. By measuring the right marketing metrics, you can make data-driven decisions that will help your business grow.
DTC businesses are no exception – in fact, due to their unique challenges and marketing strategies, they need to pay even closer attention to this. As they are more dependent on their campaigns are successful and profitable.
We will discuss the key metrics to measure as well as how to learn from them to create sustainable growth.
- What is DTC, and how does it differ from D2C?
- Different types of marketing metrics
- How to measure marketing metrics for your business
- Key marketing metrics to measure for your DTC marketing
- How to learn from your marketing metrics to improve your business
- The benefits of using marketing metrics
What is DTC? And how does it differ from D2C?
DTC marketing is a type of direct marketing that focuses on developing relationships with customers and selling straight to them. The main between DTC and D2C is that DTC does not involve intermediaries, such as distributors or retailers.
D2C marketing is similar to DTC marketing in that it involves a direct relationship with customers; however, the key difference is that D2C marketing also includes the use of digital channels to reach and engage customers, but the final sale occurs through the use of intermediaries such as distributors or retailers.
Here are some popular DTC brands that may ring a bell:
Papier – A personalised stationery platform selling diaries, wedding invites, greeting cards, notebooks, and even photo books. They have already raised $15 million in funding since their launch.
Nothing – A headphone manufacturer selling stripped-down and carbon-neutral headphones for £99. They’ve been much hyped in the industry, and raised $1.5 million in March 2021 in just 54 seconds! This was part of their first equity crowdfunding round.
Huel – A nutritionally complete meal replacement powder, that provides all the vitamins and minerals that your body needs to function. They have raised over $70 million in funding.
Paynter Jackets – Who take iconic jacket styles and re-make them using the best materials they can find. All their jackets are made to order, in limited edition batches, or drops. The benefit of operating this way is that none of the clothes they produce goes to waste as they are pre-bought by consumers before production.
Bloom & Wild – Who is a flower delivery company that has raised over $102m million in funding. Customers can order fresh flowers online and have them delivered straight to their door.
Gousto – A recipe box delivery service that sends you all the ingredients you need to cook delicious recipes at home, with step-by-step instructions. They have raised over $230 million in funding.
Different types of marketing metrics
There are two main types of marketing metrics to measure:
Operational marketing metric
Operational marketing metrics track the day-to-day activities of your marketing team. These metrics help you to understand whether your marketing team is working efficiently and effectively.
Some examples of operational marketing metrics include:
- Number of leads generated
- Number of website visitors
- Number of social media followers
- Number of email subscribers
- Number of marketing collateral pieces produced
Performance marketing metric
Performance marketing metrics, on the other hand, are used to track the success of your marketing campaigns. These metrics help you to understand whether your marketing campaigns are achieving their objectives. Also whether they are providing a positive return on investment (ROI).
Metrics are also usually split into two different types of indicators:
Leading indicators are measures that predict future performance. They show whether your marketing activities are likely to result in sales or other desired outcomes.
Some common leading indicators include; website traffic, social media engagement, and email list growth.
Lagging indicators are measures that reflect past performance. They show if your marketing activities have resulted in sales or other desired outcomes.
Common lagging indicators include sales revenue, conversion rate, and customer lifetime value.
How to measure marketing metrics for your business
Before measuring marketing metrics, you first need to identify your goals. What are you trying to achieve with your marketing activities? Once you know your goals, you can identify the appropriate metrics to measure.
For example, if your goal is to increase brand awareness, you could measure metrics such as website traffic, social media reach, and email list growth. Or, if your goal is to increase sales, you could measure metrics such as conversion rate, average order value, and customer lifetime value.
Once you know which metrics to measure, you need to decide how you will collect the data. There are many tools available to help you track marketing metrics, such as; Google Analytics, Mixpanel, Google Data Studio, and Adobe Experience Cloud.
Key marketing metrics to measure for your DTC marketing
There is a multitude of marketing metrics to measure for your DTC business, but we have distilled down the key metrics that we recommend you track for your business:
- Conversion Rate
- Average Order Value (AOV)
- Customer Acquisition Cost per Channel (CAC)
- Customer Lifetime Value (LTV)
- Churn Rate
- Net Promoter Score
Conversion Rate (CR)
How many prospects are converting to paying customers expressed as a percentage. This is a useful metric to understand whether you are reaching the right type of users. Also how efficiently your app or website is at converting warm prospects. A low conversion rate would indicate a problem with your channels, targeting, and messaging. Or possibly an issue with your landing pages, product pages, and checkout process.
Average Order Value (AOV)
The average amount of money each paying customer spends. This is a key metric to monitor, as it will indicate whether you can upsell and cross-sell your products and services effectively. If your AOV is low, it can be an indication that you need to work on your product offering or pricing strategy.
Customer Acquisition Cost per Channel (CAC)
The average amount of money you spend to acquire a new customer through each marketing channel. This is a key metric to monitor as it will help you to understand the efficiency of your marketing mix. If your CAC is too high, it can be an indication that you need to revisit your marketing strategy or allocate your resources more efficiently.
Customer Lifetime Value (LTV)
The average amount of money a customer spends with your company over their lifetime. This is a critical metric to monitor as it will help you to understand the profitability of your customer base. Also, it helps you understand how much you can afford to spend to acquire a new customer. If your LTV is too low, it can be an indication that you need to work on your product offering or pricing strategy.
The percentage of customers who stop using your product or service within a given period, usually monthly. This is a key metric to monitor as it will help you to understand the health of your business. If your churn rate is too high, it can be an indication that you need to work on your retention strategy or product development.
Net Promoter Score (NPS)
A measure of customer satisfaction is calculated by asking customers how likely they are to recommend your product or service to a friend or colleague. This is an essential metric to track over time, as it will help you to understand the health of your business. Also whether your marketing programme is having a positive impact on consumers.
If your NPS score is too low, it can be an indication that you need to work on your customer service or that you are marketing too much in some areas.
There are many other marketing metrics to measure, but these are the most important metrics that we believe will help you to understand the effectiveness of your DTC marketing. By tracking these metrics, you will be able to make better data-driven decisions that will help your business grow.
How to learn from your marketing metrics to improve your business
Once you have collected data on your marketing metrics, it is important to analyse the data and look for trends.
What do the data tell you about your marketing activities? Are there any areas that need improvement?
For example, if you notice that your website traffic is declining, you could try a variety of different strategies to increase it. This might mean, writing blog posts, creating social media content, or running ads. Another example might be If you notice that your conversion rate is low, you could try different marketing strategies to increase it. This might involve testing discounts, including free shipping, or focusing on conversion rate optimisation.
The benefits of using marketing metrics
Marketing metrics are an incredibly valuable tool for all businesses, but particularly important for DTC businesses. Without proper measurement, it can be difficult to determine the success of your marketing efforts and whether or not you should continue allocating resources to different activities.
Some benefits of measuring marketing metrics include:
– Improved decision making: By measuring marketing metrics, you can make informed decisions about where to allocate resources.
– Greater understanding of what works and what doesn’t: Measuring marketing metrics will help you understand this. This information can then be used to make changes to your marketing strategy and tactics.
– Increased accountability: Measuring marketing metrics can help you hold yourself and your team accountable for your marketing activities.
– Improved ROI and LTV: By measuring marketing metrics, will force you to focus on your ROI and LTV. This in turn will my your business more profitable and will put you in a better position to grow your business or raise funding.
– Increased customer satisfaction: By measuring marketing metrics, you can increase customer satisfaction by making changes to your marketing strategy based on customer feedback. It will also help to make your business more customer-centric.
To sum up, it is imperative to measure at least a few key marketing metrics to run a successful DTC marketing programme. Without proper measurement, it is near impossible to understand what activity is leading to growth and profitability. By measuring the right marketing metrics, you can also make the right data-driven decisions that will help your business grow in the long term.