Revitalizing Struggling DTC eComm Brands: A 5-Step Process for Rapid Transformation

As an agency founder - I get to see under the hood of all types of DTC brands - the ones that are struggling and the ones that are thriving. 

If you are in the struggling camp right now - I have broken down some of the common problems and a simple but effective way to diagnose and fix the issues. 

Firstly, let's explore the impact some common problems can have on a struggling DTC eComm brand, because diagnosis is the first step. Once we have diagnosed - we can look at solutions later in the article. 

Image source: Envato elements

Step one: Track your KPIs to diagnose your problem 

Having correct data is essential to know what isn’t working in your business. 

Utilize tools such as Kno Commerce, Mouseflow, and GA4 to figure out where in your funnel the problems like. 

Consider integrating an attribution tool like Triple Whale to gain a comprehensive understanding of user behavior and enhance tracking capabilities.

Step Two: Identify the Most Broken Thing

At this stage you don’t want to get stuck in analysis paralysis - figure out whether your problem is mainly to do with low conversion rate, low average order value or not enough or too expensive traffic. 

Pinpoint the single most significant issue hampering your brand’s growth. Often, one big issue serves as the root cause of various other challenges. By improving this metric, other aspects of your business can fall into place more seamlessly.

Here are the most common issues I see. Identify which one is your biggest issue. 

Low Conversion Rate: The Silent Revenue Drain

Impact: A low conversion rate directly translates to missed revenue opportunities. The hard-earned traffic and marketing investments yield fewer actual customers, affecting the bottom line. A better conversion rate can mean literally millions in extra revenue vs hemorrhaging cash.  Understanding and addressing the factors causing low conversions are critical for sustained growth.

Metrics for success - if you brand is luxury or high ticket you will likely be in the 1%-2% conversion rate range. For low-ticket, food and beverage you want to be 4-6% conversion rate. If you are below these it’s time to get to work! 

High Traffic Cost and Customer Acquisition Cost (CAC): Financial Strain and Sustainability

High CAC puts a significant strain on the financial health of the business. It not only decreases profitability but also limits the ability to invest in other essential areas, hindering overall growth prospects.

Sustainability Concerns: Relying on unsustainable customer acquisition costs can lead to an unreliable business model. Brands may find themselves trapped in a cycle of spending more to acquire customers than those customers bring in over their lifetime value.

Casper the online mattress DTC brand fell foul of unsustainable CAC  this after it’s IPO  and was eventually acquired by a private equity group. 

Low Average Order Value (AOV) or Lifetime Value: Diminishing Customer Value

Low AOV directly impacts immediate revenue from each sale. Focusing solely on low-value transactions may undermine the brand's ability to cover costs and turn a profit.

Diminished Customer Lifetime Value:Failing to maximize the long-term value of each customer, either through larger basket value or better loyalty diminishes the overall health and profitibility of the business 

Step Three: Gather Data to Diagnose The Cause 

To make informed decisions, gather qualitative and quantitative data. 

Conduct a series of customer interviews to understand their pain points, collate post-purchase survey data, and scan and summarize customer reviews. 

This wealth of information will serve as a foundation for crafting targeted solutions.

Step Four: Identify Hypothesis on What is Broken

Analyze the data gathered to identify potential issues. For instance, if a lack of trust is identified, focus on incorporating social proof into your landing page. 

Alternatively, if the landing page isn't resonating, consider adopting a new marketing angle based on customer feedback.

Step Five: Deploy Solution

Once you've formulated a hypothesis, take bold action to deploy a solution. Utilize tools like Replo landing page builder to implement changes swiftly. 

Bring in experts with a track record of fixing the specific issue. 

If you creative isn’t converting - find creative strategy expertise

If your landing page won’t convert - speak to people who have successfully solved this problem for their own or another brand. 

If your AOV is low, find the experts in increasing AOV

Set Key Performance Indicators (KPIs) for success and establish a timeframe for measurement. 

Rinse and Repeat 

If the solution proves effective, proceed to the next significant issue. In the case of failure, revisit step four and refine your approach.

Speed is crucial when revamping struggling DTC eComm brands. Embrace a proactive and strategic approach by focusing on the most broken aspect first, getting the right tools and people for the job, gathering meaningful data, formulating hypotheses, and implementing bold solutions. 

This five-step process, centered on agility and decisive action. Remember, taking big swings to address each problem can often yield better results than small repetitive changes.