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Put together, these 10
Put together, these 10 metrics gives a good idea of the brand’s
– Product Price Market Fit
– Digitally Influenced TG Market Size
– Customer Love
– Pricing Power
– Scope of Future Growth by Increasing Brand Awareness
– Marketing Execution Effectiveness
A ratio of SOS/SOM
A ratio of SOS/SOM less than 1 is ideal. If the number is lower than 1, it means the brand can spend more money to capture more customers
If high, then the brand will need to look at other problems to fix like conversion rates etc
But if it its
But if it its other way around( say total awareness of 50% and market share of 5%), future growth will not be straightforward and brand will hit a ceiling soon
But the metric of
But the metric of Total discounted sales volume /Total sales volume gives a good idea of the brand’s reliance on discounts to drive sales
This number should remain constant/come down as the brand scales
7. Discount Driven SalesEvery
7. Discount Driven Sales
Every brand has Gross Margins calculated basis certain pricing. Discounts on top of the MOP are quite common as a lot of e-commerce is deal driven
Often early adopters are
Often early adopters are more considerate and rate innovative products highly.
But if the monthly ratings remain consistently high with growing scale, it means the products are really good
These metrics should be
These metrics should be useful not just for VCs, but also for founders to track their fundamentals and to ensure they won’t be hitting a growth ceiling without seeing it coming
For the brand in
For the brand in question, if this number is lower or similar to the benchmark( say total awareness of 15% and market share of 5%), it means there is an opportunity to increase market share easily by increasing brand awareness by increasing spends on media
Plot Monthly Data for
Plot Monthly Data for total Media spends across platforms ( Amazon, FB, Google etc) as a percentage of total Net E-commerce Revenue( Marketplaces, D2C etc)
If this remains constant/reduces as the brand scales, it is a positive
Plot Monthly data for
Plot Monthly data for Percentage of Visits in Website which are Organic, and plot monthly brand search volumes on Amazon and Google
If both metrics keep increasing, it is a positive
1. Total Media SpendsMedia
1. Total Media Spends
Media Spends as a % of net revenue is a very hard metric without any assumptions and difficult to manipulate
Commission an online brand
Commission an online brand track to plot the awareness metrics for the core TG defined for all players in the category
From that, calculate the Total Awareness/Market Share metric for each brand
Will this brand hit
Will this brand hit a growth ceiling soon?
Is current growth based on strong brand/product fundamentals?
A VC friend evaluating digital first brands raising Series A/B wanted to look at marketing metrics beyond LTV/CAC to answer these questions
10 metrics that can help
8. Price Increase Absorption
8. Price Increase Absorption History
This is another thing that tells the brand’s pricing power.
Plot the weekly conversion rate data post every price increase
9. Share of Spends/Market
9. Share of Spends/Market Share
Plot the digital media spends for all the players in the category. From this, plot the Share of Spends for the brand.
Since we would have an approximate idea of the brand’s market share, plot the ratio of Share of Spends/Market Share
5. Conversion RatesConversion rates
5. Conversion Rates
Conversion rates trends tell a lot about product-price-market-fit, and about the future scope of growth
Look at monthly trends on conversion rates. With scale, conversion rates should go up on both Amazon and D2C
3. Organic Visits and
3. Organic Visits and Brand Searches
For consumer brands, it is important to reduce their reliance on performance marketing by working on organic acquisition channels and improving brand awareness
Tracking Organic Visits and brand search volumes are good ways to understand this
A lowering conversion rate
A lowering conversion rate often means the in-market audience/core affinity TG is getting exhausted
It is a big red flag if it happens as, it often indicates that future growth by paid media is going to be difficult and expensive
For Eg in a
For Eg in a hypothetical scenario, lets say that the market leader of the category has total awareness of 80% and Market share of 20%
So, the Total Awareness/Market Share Ratio is 4 which becomes a benchmark
10. Total Awareness/Market ShareThe
10. Total Awareness/Market Share
The previous 9 metrics can be easily pulled out from public tools and different Amazon/Google/Analytics reports accessible to the brand
But this metric will require an online brand track
6. RepeatsRepeat purchases are
6. Repeats
Repeat purchases are often the difference between the life and death for CPG brands with AOV on the lower side
Look at monthly data on M1 and M3 repeats depending on the consumption cycle
4. Amazon Reviews and
4. Amazon Reviews and Ratings
At scale, Amazon Reviews and Ratings are very difficult to game and gives a very true picture of quality and customer experience
Rather than overall ratings and reviews, plot the monthly data of ratings
If these numbers keep
If these numbers keep on improving/keeps constant even when the brand moves and scales beyond its early adopters and core affinity TG, it is a big positive as it indicates product market fit at a bigger scale
If the conversion rates
If the conversion rates get back to old levels within few weeks of a price increases, it highlights excellent brand and product strength which will translate to pricing power and better margins in future
2. Advertising driven SalesAt
2. Advertising driven Sales
At early stages, brands rely on pure performance marketing to drive sales
But this reliance should come down as the brand scales
Plot Monthly Data for
Plot Monthly Data for percentage of Sales on e-commerce platforms directly driven by Ecom Ads, and percentage of sales on D2C directly driven by paid media
If both remain constant/reduces as the brand scales, it is a positive
