How?
In ecom, every ad £ matters. Our work with Maison de Fashion has been centred around one key metric: aMER. Focusing on this guarantees profitability, and here's how it works.
What's aMER?
It's simple:
New Customer Revenue ÷ Total Ad Spend = aMER.
This tells you how efficiently you’re turning ads into cash with new customers.
Why It’s Essential:
aMER isn't just a number; it's a guide. It’s a key indicator in telling us when to go full throttle and when to pull back spend.
This gives us the blended aMER, but doesn’t answer the question: at what point does my next pound spent on ads become unprofitable? 🤔
To go deeper it’s important to understand your Marginal aMER. 📝
Marginal acquired revenue ÷ Marginal ad spend = Marginal aMER
In order to scale Maison de Fashion, we outlined benchmarks for aMER and Marginal aMER.
This allowed us to scale paid social campaigns optimised around new customer acquisition - ensuring profitability for Maison.
We tested HUNDREDS of creatives, analysing data from Motion using engagement metrics like CTR, Thumbstop Ratio and Hold Ratio. Linked through to the aMER and Marginal aMER targets that we’ve set, this allowed us to acquire new customers quickly and sustainably.
Creative Testing Process:
Create, test, analyse, iterate, repeat - that's our process. We feed the data that we get in Motion back to the content team. It's a constantly ever-improving cycle of content, optimising around engagement metrics.
Role of Engagement Metrics:
CTR gives a great indication of how poignant the ad is; people wanted to see what the products were all about - CTR good? Then so is the offer right. Thumbstop we aimed for 30%+ and Hold ratio we like to benchmark at 20%+, striving for above these metrics. Key learnings were that flatlays with logos were strong and longer form UGC were winners.
Key Challenges:
Ensuring we were testing enough content and generating a frequent stream of content was a challenge. We overcame this by embedding our agency within Maison de Fashion's in-house team.
Essential Tools and Technologies:
- Triple Whale: Essential for full view attribution and ecom growth tool.
- Motion: Essential to get data on creative performance.
- Swap Commerce: A Shopify app that processes returns, driving additional revenue.
- Klaviyo: to separate and analyse customer cohorts
Scaling Paid Social Campaigns:
We started broad and found winning concepts within the creative. We cycled new ads in on a weekly basis, making use of Advantage + with small spend on retargeting budget. Paid social was focused on new customers.
Integrating Other Marketing Channels:
We also managed the retention side of the business for Maison de Fashion. By pushing SMS and Email campaigns through Klaviyo, we engaged with customers effectively. This involved A/B testing different designs and product focuses. We segmented our list heavily, looking after our VIPs.
By increasing the lifetime value of Maison de Fashion’s customers, we were able to adjust our new customer acquisition targets.
Klaviyo also provides us with the customer cohort analysis that allows our performance teams to segment different customers - providing us with an accurate breakdown of the financial contribution of each cohort.
This allows us to manipulate our CAC:LTV Ratio:
Understanding the Customer Acquisition Cost (CAC) to Lifetime Value (LTV) ratio is crucial for a DTC to grow profitably. Knowing the value of a customer over a specific period enables brands to set clear acquisition targets and allocate budgets properly.
👗 Here’s how to calculate your CAC:LTV Ratio
→ On average, a customer makes 3 purchases within a 90 day period.
→ During this time, their Average Order Value (AOV) is £40.
→ This results in a 90 day customer Lifetime Value (LTV) of £120.
→ With a gross margin of 70%, the brand earns £84 from each customer over a year.
→ Therefore, the brand could allocate up to £83 for acquiring a customer and still maintain profitability.
This data should influence how your brand structures your campaigns, particularly in your acquisition channels (Paid Search + Paid Social), to ensure profitability.
So many brands overlook this.
What’s the benchmark? 1:3
If a customer is worth 3x what you paid to acquire them over a 90 day period, then you’re able to reinvest the profit into other areas and scale the new customer acquisition.
Advice for Other Ecom Stores:
- Focus on aMER: It’s essential for profitability.
- Test Creatives Vigorously: Create, test, analyse, iterate, repeat.
- Use the Right Tools: Tools like Triple Whale and Motion are game-changers.
- Integrate Retention Strategies: Use email and SMS marketing effectively.
Customer Success Stories:
Maison de Fashion saw a significant boost in their revenue and customer base. Their team praised our collaborative approach and the seamless integration of our strategies with their in-house efforts.
Measuring Success Beyond Revenue:
We measured overall success and ROI by tracking customer retention rates, lifetime value, and engagement metrics. These insights helped us refine our strategies and continue driving growth for Maison de Fashion.
In ecom, profit is king. For Maison de Fashion, we can spend freely provided we’re below that benchmark CAC - ensuring we’re driving aMER.
The result? £10M+ in Paid Social sales!
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