eCom Unity #17 - Low-AOV Customers & Long User Journeys: What Brands Miss

Deep-Dive | Calculating Your AOV Profit Threshold

One thing I noticed quite frequently in brands’ data, is that orders from lower AOV buckets are often killing profitability.

What’s my take here?

You need to force your customers to spend more.

And I built a calculator to prove: more orders are not always better.

Your CLV/CAC ratio might look fine on average, but low-order-value customers often have terrible retention. I see brands where 40% of first orders don’t even break even after a year.

Why sell to those people?

Sure, any positive contribution margin seems better than none.

But forcing a higher minimum spend will not cost you every order. And the impact on your bottom line can be huge.

My calculator lets you model how setting a minimum order value affects:

• Short-term revenue & profitability

• Long-term profitability

• Marketing efficiency

You can open the model below and I’m explaining how it works and some more background & advice in the video linked:

Deep-Dive | User Journeys Are Longer Than You Think

45 days from the first touchpoint to conversion? That’s not uncommon.

User journeys are often much longer and more complex than eCom brands think.

Now granted, these 45 days are from a brand with an >1k AOV.

However, as the screenshots below show, even for cheaper products, average user journeys last 1-2 weeks and involve more than 5 touchpoints.

And even here, a large share of journeys are 1-2 months long.

Now with that reality in mind, there are a few things that eCom brands should work on.

#1 Build an in-depth customer understanding

Do qualitative research to understand

• What the questions were that people needed answered

• What external sources they used to research you

• Which other competitors they looked at

That’s the foundation of everything that follows.

#2 Creative Diversity

Based on the results from step one, build creatives that also cater specifically to the needs of people who are already in the consideration stage.

These likely won’t be great to attract new audiences.

But are going to make sure that you are converting potential customers a lot more efficiently

#3 Scaling Budgets Correctly

Not all channels and campaigns are created equal.

Some a great to create awareness and demand, some can amplify it and others can capture it.

What you need is an attribution that not only captures the journey.

But also understand the incremental impact of each stage.

That’s exactly what we are focusing on with our attribution at Klar.

#4 Factor in the lagging event of marketing spend

Every additional dollar you spend today, will not drive immediate results but will have a lagging effect over time.

This is less of an issue if you ramp up the budget continuously but can become an issue if you scale quickly.

By modelling out this effect (I shared a model for doing that before last year’s BFCM), you can more accurately assess your marketing efficiency as you scale.

#5 Off-Page Trust

Step one will likely show you that customers do research about you on other platforms.

Type in your brand name and “brand name reviews” into Google and YouTube and see what comes up.

And then work towards making sure that the results people see here put you in the best possible light.

Klar Corner | Inventory & A/B Testing Reports

Last week, the team released two completely new reports for all Klar Pulse users:

• Inventory Report: as your inventory isn’t just stock but tied up capital, this report shows you exactly how much, how fast it’s moving, and when you might run out. It lets you analyze your inventory by several dimensions, checking into units sold, stock levels & values, sales velocities and stock coverage

• A/B Testing Report: measure how your A/B experiments impact sales and long-term CLV by breaking down their performances from project level to individual variations, tracking new & repeat customers, revenue & margins, and CLVs.

We plan on building out more functionality on the inventory report throughout the year so feel free to share what you'd like to see here.

Thank you for reading :)

I am on a mission to help eCom brands build better, more profitable businesses. If you missed any past issues, you can catch up on all of them here.

I have built one 8-figure and one 9-figure eCom brand in the past and with Klar, I work with over 700 eCom brands today.

If you have specific questions you would like me to cover next, just reply to this email.

Have a great week.

Max ✌️

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