Half of DACH eCom is on vacation right now. And there's a good chance some of you are reading this from a plateau in the Alps.

Plateaus are great on vacation.

In a revenue chart, they are one of the most uncomfortable places to be.

So that's today's topic:

Why every growth model has a natural ceiling, and what actually breaks it.

Let’s get into it:

You grew fast for years. Then, things got heavy.

Same team, same channel, same playbook. But every additional million takes more effort than the last five did.

You are not doing something wrong. You are running into a ceiling that almost every brand hits.

Some time ago I pulled the data of 83 eCom brands that crossed €50M in revenue last year.

And 72% of them were seeing this motion:

They grew consistently, and often quite fast, to around €20M. Then growth slowed for 6-18 months.

Only to pick up again all the way to €50M.

What happened in between is always the same thing:

They unlocked a second lever.

Here is why the ceiling shows up:

Getting there is actually a focus problem.

One product that works. One channel that converts. One market that responds.

Execute that combination well, and a higher 8-digit revenue level is very reachable.

But that same focus hits a ceiling at some point. For most brands, that’s right around €20M.

The channel saturates. The addressable audience is largely reached. The product has found most of its buyers in that market.

And the instinct - completely understandable - is to fix what's in front of you. Do more of what has been working.

But that doesn't break the natural ceiling of your current growth model. It just delays the stall. And it's not the most effective way to grow further.

What breaks it is pulling a new, second lever.

There are six available to every eCom brand:

1. Marketing Channel Expansion
Reaching a new audience of your target group that is predominantly active in a different channel (see deep-dive below on how to avoid burning money pulling this lever 👇🏼).

2. Target Group Expansion
Addressing a completely new audience within your existing marketing channel.

3. Distribution Channel Expansion
DTC is one engine. Amazon, retail, or wholesale are others.

4. Geo Expansion
Reaching the same audience in the same channel, but in a new geography.

5. Product Expansion
Adding new products that address an audience your current product does not cater to.

6. Lifetime Value Expansion
Extracting more margin from your customers - by increasing AOV, margins, or how often existing customers buy. All of it drives up CLV. And a higher CLV increases how much you can afford to spend on acquiring a new customer, which lets you scale marketing spend significantly.

Those are the macro growth levers available to you.

You don't need all of them to reach €50M.

One or two at most will be enough.

And what about the other 28% that didn't stall at €20M?

Simple. They built their second macro growth lever while still riding the wave of the first one.

Now, the lever most brands reach for first is a new marketing channel.

It's also where most money gets burned. We’ll look into that below. 👇

When brands fail with a new channel, it's usually not because the channel doesn't work.

It's because they approach diversification the wrong way.

Before we get into the four reasons, one disclaimer:

Most brands try to diversify too early.

If you are doing €5M in revenue and growth has slowed, a new channel is probably not going to fix the issue.

If you haven't reached €20M with the channel that has worked for you, your safest bet is to keep focusing on that channel until you hit its ceiling.

With that out of the way, here are the four issues:

1. Early dopamine hits

When you start a new channel, it often performs great - at least in the reporting the channel itself provides.

Why?

Because in the beginning, the algorithm essentially retargets already-warm audiences.

That's how these algorithms work: always finding the easiest next purchase.

So the early numbers look like channel performance. Mostly, it's your existing demand showing up in a new report.

2. Incorrect resource allocation

Building up a new channel is hard.

Telling the junior on your team they can spend one day per week on it is never going to work.

Before investing in a new channel, commit to a minimum level of resources - people, time, and money - that you will invest no matter what.

And you need to be comfortable with those resources being a complete waste.

If you aren't, you are not at a point where you should be thinking about channel diversification.

3. Setting the wrong target

If you have a blended CAC of €30 on Meta, you can't expect a new channel to reach that level after 3 months.

You spent 4 years optimizing Meta. Why would a new channel be equally optimized after 3 months?

The bigger problem: €30 isn't even the right benchmark. Blended CAC is the wrong comparable.

The right one is your marginal CAC: what you are actually paying for each additional customer on your existing channel.

That number is likely >€50. Otherwise you wouldn't be thinking about diversification in the first place.

4. A drop in the ocean

When brands diversify, they often go for awareness-focused channels.

And here, a multi-touch attribution model won't be able to measure the effect.

At Klar, we also run Marketing Mix Models that can model out this awareness effect.

But even these models need data and fluctuation to work reliably.

If you spend €1M per month and then drop €25K into an awareness channel, it's going to be very tough for any model to pick up on that effect.

So especially with awareness channels, you have two options:

Bottom line is: before you switch on a new channel, ask yourself three questions.

If any of these is a no, you're not diversifying. You're gambling.

In the last issue, I referenced an explanation video of how geo-lift testing works - but the link was broken for some of you, my bad. Here it is again: Geospatial Testing Video.

Given that geo-lift testing came up again today, good timing to catch up on it.