How a CTC Client Unlocked 40% YoY Growth

[00:00:00] Mike McVerry: When we started with CTC, we went to CTC plus the DTC and marketing team on calls every week.

When you guys are reporting to us, you're not just reporting results in the Slack to the D team, you're also including the designers, the marketers, that provide those assets as well as you, have you guys came with your own internal design team to create assets that you guys knew worked from your own best practices?

I think, I think, and I think that kind of had the that had the effect of challenging our own internal teams to, you know, who we designed things a certain way. And it kind of opened their eyes to a slightly different way of doing things.

And then obviously as results roll in, getting more comfortable kind of with this new paradigm of how we launch creative, both in both in variety and volume.

[00:00:49] Richard Gaffin: This episode of the Ecommerce Playbook is brought to you by Saral. Rising CAC and meta dependence is killing your brand. You're paying more every quarter for the same results, and every algorithm change feels like a punch to the gut. While everyone's fighting over the same expensive ad space, smart brands are building something.

They actually own communities of influencers who create consistent content for them. If you're thinking influencer marketing doesn't work for us. The issue might be your approach. You're playing influencer roulette, sending products to random influencers and hoping they post what works is building a predictable influence system.

That's what ral helps over 250 brands like Vie Solar Wave and REM Beauty, do they give you the strategic support to build this model that actually drives results. Head to getsaral.com/demo to see how this works for your brand.

[00:01:40] Luke Austin: All right folks. Welcome to the Ecommerce Playbook Podcast. It is Luke Austin here as your host today instead of Richard Gaffin for I think the second time in history. I'm joined by a very special guest Mike, who I will let introduce himself, but one of our longstanding customers at Common Thread Collective. We are here to share together a very impressive growth story for Urban Armor Gear. So Mike, why don't you give us some background on yourself. Introduce yourself, your role at UAG? Yeah, tee it up for us.

[00:02:11] Mike McVerry: Sure. My name is Mike McVerry. I'm the SVP of Ecommerce and International Sales at UAG. I've been with them 12 years and for really the last. 16, 18 months, we've been partnering with CTC to really help grow our DTC revenue. Little bit about the brand. We obviously make very rugged phone cases.

They appeal to a really masculine male aesthetic. But we do that because we believe it provides the best possible protection for your device. It's a really interesting space to be in. A lot of people don't really give two thoughts about what's on their phone. That isn't until they drop their phone and they end up with a broken screen or a broken camera or something like that.

So, I've been with the company for quite a long time. From our early days, we were just trying to make a name for ourselves, trying to get people to know who we are. And in fact, I say every day we're trying to do that. But these days you can find us in a lot of the big players, Verizon, AT&T, T-Mobile, as well as we run a very robust DTC business.

[00:03:14] Luke Austin: Awesome. Thanks Mike. And yeah, I appreciate you taking the time to, to chat through a bit of that growth story with, with us today on the podcast. And I think. For, for the folks listening, there are multiple facets of value that I think this episode is going to entail all the way from the DTC growth story, which we're gonna sort of hone on originally.

But then as Mike mentioned, UAG has distribution through other sales channels through retailers, through Amazon. As well. And so there's a whole other level of that. And actually the growth trajectory for the business was sort of like starting on some of those core retail distribution channels. And then the.com growth has sort of come in the midst of that, which is which is, which is unique and novel.

Likely for, for many of those listening. But what we're gonna do is we're gonna start out here

[00:03:57] Mike McVerry: And.

[00:03:57] Luke Austin: story that we're really orienting around, and then we're gonna take a few steps back to the history of the brand. What created the impetus for our partnership together with UAG and then what were some of the key successes that led to this.

But the, the growth story that we've seen is. Over the course of this year, so January through September, 2025, urban Armor gear.com has experienced just north of 40% year over year revenue growth with 43% growth in contribution margin year over year. And in a year like this, in particular, even outside of a year like this, given all the challenges, that is a very strong outcome within this, the space that is an upper percentile outcome in our data set of dot com. two C business growth, 40% rev year over year with 43% growth in contribution margin comparing to the same months of last year. So very impressive growth trajectory. What we're gonna do, is Mike, I I want you to start just sort of teeing it up for us a bit, sharing some background. You already did sort of high level on the company. And brand, but if you could get a bit more in the weeds in terms of prior to CTCA few years ago, the existence of UAG where was the majority of the sales volume come from? What was the, what was the state of the business at that point in time? Prior to this focus on the.com growth?

[00:05:16] Mike McVerry: Or just backing it up a few years, I think you know, we are an omni-channel player and for a long time our DTC sales were just seen as kind of a nice add-on to the company's revenue, to the company's profitability. Obviously for a brand to be able to sell products that MSRP versus going through distribution at a gross level, it looks very good.

Until, you know, your CFO, your accounting team, your controller, whoever it is starts pulling apart the ad spend, the agency fees, the platform fees, credit card fees, returns, everything that goes into it. And then, and then you start thinking that your DTC business isn't necessarily as profitable as everyone hopes.

So, with that, that was a bit of, that was a bit of our state and, you know, and as a result of not being that profitable or not driving the most revenue in the business, it doesn't necessarily get a lot of attention. Well, it started getting attention through COVID when that, it's hard to say that was five years ago now, but five years ago it started getting a lot more attention when DTC started putting big numbers on the board.

As our retailers were shut down, as consumers were confused as so much revenue transition from in-person to online, it was relatively forced. And then from there it got really fun for a while where, hey, we're putting big numbers on the board for a few years later. Let's spend more, put bigger numbers on the board.

So we did, and even though the numbers went up slightly, what we were finding was our profitability was eroding to the point where we probably just shouldn't have. Maybe we we're better pre COVID with smaller revenue numbers. When you're company's in a situation where you need both, you need top line revenue and need profitability, it kind of puts DC in.

Really tough spot. So about, yeah, 18, 20 months ago we came over to ctc. Ctc, I think it was on the advice of someone who went through your profit system. And we paid at the time what I thought was an exorbitant, exorbitant amount to get us through the profit system. To really lay out the financial plan for our DTC bus business moving forward.

Because with our previous agency it just, they were very good. I, I don't wanna really talk bad on any vendors, especially good ones. They were very good, but it kept falling together. It kept feeling like that we were running into this glass ceiling of we spend more, we can make a little bit more money, but we keep losing money and we can't really get to that next level of growth.

So. Through the, yeah, through the, through the profit system. You know, it really laid out the plan. It laid out the roadmap for us. And it gave, it gave myself and other people in the company, you know, the kind of the substance to back up going to our C-F-O-C-E-O with a move to an agency like CTC.

That would really be kind of a cataclysmic shift in how we were doing things before. And all to say it's been very good so far. And we've been, we've been happy with where we are now. And again, we are growing in a market that is shrinking. We are growing in an economy that is getting tougher. And of course we're very happy about that.

And I, I can't say it's easy every day we're looking at the numbers we're fighting for either better creatives, et cetera. But but we're really happy to be here.

[00:08:23] Luke Austin: Yeah. That's awesome. So yeah, we'll, I, I want to get into sort of that shift and what some of the big changes were in the context of the profit system and the new playbook for the.com business to get to the, the current state, but maybe keeping it in the in the historical look back for, for one more question.

So you, you mentioned that some of the challenges that. Started to create the felt need for you all that a shift was probably necessary, was running into the glass ceiling. With your current approach, the current agency and current. Sort of way that you guys were going about the DTC business, so weren't, weren't able to sort of get out of this an existing level of volume for the business.

And then also that there was a, a, a good amount of revenue that was being sort of propped up and pro unprofitably as well. I imagine through a ad spend being done on, on profitable levels, but the revenue, the revenue wasn't, wasn't consistent in that way. Can you, can you talk through a bit more of what those, what those challenges were at that time?

Like, are, were those two of the core things? There's any, anything else in addition to that that was really leading to the challenges that were making it ch difficult to scale and grow the business?

[00:09:29] Mike McVerry: Yeah, I think a lot of the challenges we were facing was maybe an oversimplification of the relationship between ad spend and gross revenue.

[00:09:39] Luke Austin: Hmm.

[00:09:39] Mike McVerry: Usually when you're coming up near the end of a quarter or an end of a fiscal year, et cetera, and you see a revenue gap, or you see a revenue target if you wanna get to the next level.

It felt like maybe it was a bit lazy in our part, but the easy answer was, well, let's spend a little more, you know, we know we have a certain roas. We know, we know we have a certain marketing efficiency ratio, and let's just throw another hundred thousand dollars at it and hope for the best. You do that a few times and it doesn't work, and you just start kind of banging your head against the wall as your profitability erodes after the fact, and you realize there's kind of a need for a complete revamp or a whole new strategy here.

[00:10:17] Luke Austin: Yeah. And

[00:10:18] Mike McVerry: And

[00:10:18] Luke Austin: at that

[00:10:19] Mike McVerry: at point

[00:10:20] Luke Austin: When

[00:10:20] Mike McVerry: when y'all were looking

[00:10:22] Luke Austin: the business, I think the, some of this comes out

[00:10:25] Mike McVerry: out.

[00:10:25] Luke Austin: in the profit system and how we think about four quarter accounting and the GQ score and the diagnostic toolkit. We identify sort of these buckets of strength and opportunity areas as we decompose a brand and some of what some of what the challenges are gonna be as we lean the growth phase growth phase, as well as what some of the strengths are of, of the brand. I know you guys have a, a relatively strong product margin for your category, and then even outside of that relatively strong repeat, repeat customer behavior as well, especially given that it's not a, it's not a consumable, there's not a subscription element, but you, but you have a loyal repeat customer base and then you have.

[00:11:04] Mike McVerry: And you.

[00:11:04] Luke Austin: Sort of baked in product, la product launch marketing calendar with these moments around iPhone and Samsung launches. Right? And so those, those three pillars seem to be some of the initial things we're identifying, but I'm, I'm curious from you and the business's perspective at this point in time, and you're looking at, okay, here's some of the challenges we're running into.

We're hitting

[00:11:24] Mike McVerry: Mm-hmm.

[00:11:25] Luke Austin: there's revenue being propped up. We can't seem to sort of spin our way out of it. What was, what was the shared perspective of here's what we have going for us and here's what we don't have going for us and, and the things that we need to solve. What did, what did you see as the strength areas of the business and some of the challenge areas?

[00:11:41] Mike McVerry: Sure. So some of the strengths are also the weaknesses. Consumer, you know, consumers are, are on a buying cycle with replacing their devices. If you're an Android user, that's typically gonna be in the springtime. It used to be every 24 months. Then it goes out three, six months, four, eight months, and the devices get better.

Similar story for the iOS Apple users, just a different time in September. One of our, you know, that strength had the effect of a weakness, and that's everything in between those two seasons was really a low point for the business. So we, we, we were wondering how do we get people to buy? How, how, how could we offer something to consumers when they don't really need another thing for a thing at this time?

And then on, on the other side, how do we marry that all up with our creative, our marketing? What is our strategy behind that? So, at the same time we, you know, you, you mentioned we enjoy good margins and, and we kind of play in this unique space. The counter to that is we enjoy good margins, but we are also very we're probably a mid to high priced player.

We, we go into this business not wanting to just make it a race to the bottom.

[00:12:48] Luke Austin: Yeah.

[00:12:48] Mike McVerry: O obviously anyone can go on, you know, the big what's that Big Jungle website? Amazon,

[00:12:53] Luke Austin: Yeah.

[00:12:54] Mike McVerry: and find, you know, a relatively similar product, at least. From, you know, it looks similar on the screen for half the price or maybe even more than that is really telling the story to convince consumers our value proposition, why they should, you know, pay a little bit more money upfront for, for a product like ours over just going off one of the no name brands online or potentially, or, or something from a competitor that they're really familiar with.

So, there, there are plenty. There is no shortage of challenges in our business. But, you know, I think by kind of focusing on what we have going for us, and you guys helped us with that a lot focusing on what we have going for us, looking at the and then looking at kind of the troughs of our sales and kind of doing some real brainstorming and reexamining of our model to see, hey, how, how can we fill up these troughs a little more?

We realized we didn't need to make the peaks as big as we thought we had to make them. We just had to make the troughs a little bit less steep, and then the overall number at the end of the year would be better.

[00:14:48] Luke Austin: That's great. Great. Okay. So really, really helpful tee up to this transitional point, the state of the business, not meeting the business expectations or being propped up by, by the COVID effect. Understanding we have some strengths and weaknesses and some of those are shared in our business, and the change needs to be made so

[00:15:07] Mike McVerry: So

[00:15:07] Luke Austin: together. In the profit system, which is the way that we, we start with every brand that we work with. We, I, I go through this four week process profit system that then goes into some, some ongoing partnership based on the opportunity areas that we discover. As you look

[00:15:23] Mike McVerry: you

[00:15:23] Luke Austin: on that point, the profit system and some of the initial weeks. Following what

[00:15:29] Mike McVerry: what were.

[00:15:30] Luke Austin: some of the biggest biggest insights and discussions that were had as a result of that process that you look back and say, the, these were critical things that changed how we approached running the DTC business relative to how we had done that historically.

[00:15:48] Mike McVerry: Yeah, so what the profit system really helped with was a problem that I think I've probably faced for nine or 10 years in my career, and I've never been able to really explain it well. But that is, you know, most, I'm not a finance guy. Most DTC people don't have a financial background. So if I'm relying on my internal finance team, of which they're very talented, they don't have a DTC background.

So even though we kind of wanna get to the same, we're trying to find the same conclusion together, we're approaching it completely different ways. I think I alluded to earlier the pro system. For us, we thought that was gonna be a, I mean, we thought it was a massive expense at the time and just almost turned us off entirely from this whole process of working with you guys.

But I'm very glad we went through it because. We were able to get the results out and show that we were able to get the results out, show it to A CFO, who you know, is very demanding, very challenging, and kind of show them the numbers. And then selfishly on the DDC side, it kind of pointed out that, hey, maybe our previous strategy that we spent hundreds of thousands of dollars and wasn't the right one to go, and we need to pivot and move forward to a new one.

[00:16:58] Luke Austin: Yeah, so helped, helped to bridge, helped to bridge the marketing and finance connection in that way. Can you, can you share some more, more specifics of. how it how it allowed those conversations or that, that connection to happen. Was it being able to have was it wrapped up in the tooling and us being able to have. Stat list that's built out. And it has our contribution margin. It has the cost, and we have, we have a central place that we can call the source of truth and that, and that is the thing that bridges between marketing and finances. The finance team and your team could point to it and say, yes, contribution margin.

This is what we're after. And that's, that's the bridge. Bridge of it. Was it related to, yeah. What, what were, what were

[00:17:37] Mike McVerry: It was,

[00:17:38] Luke Austin: the specific things that helped, helped to make that bridge connection between market and finance?

[00:17:45] Mike McVerry: it was the ability to show the profitability horizon.

[00:17:49] Luke Austin: Okay.

[00:17:50] Mike McVerry: And have the models show, Hey, we should spend up to this point, but if we wanna maintain profitability, we shouldn't spend a dollar more that point. But I guess that's really half of it, because sometimes you look at those models and say, well, that's fantastic.

Now we know how to maximize contribution margin, but I still don't have the revenue I need,

[00:18:10] Luke Austin: Yes.

[00:18:11] Mike McVerry: or I still don't have, you know, the contribution margin dollars that I need. That kind of came out. Solving the other half kind of came out through working with you guys on an, you know, on an ongoing basis just making our agency of record.

And that comes through the daily chats on Slack, the tight integration with our teams. And we can jump into that a little bit more. 

[00:18:34] Luke Austin: Yeah. Yeah. Okay, great. That's, so the, specifically the, the spending power model or spin a ER model, us being able to see the trade off of. $10,000 more in spend, how much more revenue is that going to lead to? And what's the trade off in terms of contribution margin and us being able to quantify those different investment levels very specifically to be able to then make a collective decision with the marketing and finance teams holding hands against it. Yeah.

[00:19:00] Mike McVerry: I would say we are holding hands that it doesn't always show what we want, right? We, we all want the easy fix. We all, I, I wanna go to you guys and say, Hey, I wanna spend another 200 K to make me a million dollars.

[00:19:11] Luke Austin: Yeah.

[00:19:11] Mike McVerry: You got. And the the, the best thing I'm hoping for is that you guys run it through your models and it comes out and says, yeah, Mike, go ahead and spend the money.

We're good, we're safe. Everyone's gonna be happy. We'll hold hands and sing Kumbaya at the end of the year. But that's, that's just not the case. And a lot of times, you know, I'm going back or I'm going back to my team saying, okay, we're gonna spend 10% more and that's it. And we're not gonna go any further.

And guess what? We're still gonna have a shortfall. But now we know we have to look somewhere else to make up that shortfall, whether it's in our performance marketing, whether it's in our pro, our, our actual product lines, our product planning, and it just kind of forces us back to run a very it forces us back just to run a very good business, rather kind of relying on just the paid component.

[00:20:00] Luke Austin: Yes. Yeah, that's great. So yeah, the language we'll use a lot is. The step one, the first scenario output of the prof system is, this is the scenario of what's most likely to happen. Step two is, okay, what's, what is the thing that we would all like to happen? And then there's some bridge and disconnect between those

[00:20:17] Mike McVerry: Mm-hmm.

[00:20:18] Luke Austin: a very far gap.

It could be a, a narrower gap. But the what is most likely to happen, what we like to happen, and then be able to have clarity on those two is critical. Otherwise. To the first

[00:20:28] Mike McVerry: The first step.

[00:20:29] Luke Austin: likely to happen? I think everyone, everyone listening, everyone who's worked in this space would, would say, yes, CAC increases as spend increases.

There's some relationship. We know there's a degradation in in the acquisition efficiency, What we're we're focused on is trying to give clarity on

[00:20:46] Mike McVerry: On

[00:20:46] Luke Austin: the specific relationship for your specific business is. And every business doesn't have a different, it doesn't have the same degradation of their acquisition efficiency.

So there's, there is a different relationship of $10,000 more spend. And what is the CAC or A MER degradation? Degradation against that, that level, that's important. No, to be able to set the budget from From the outset.

[00:21:06] Mike McVerry: Put into some internal terms. We office

[00:21:09] Luke Austin: Yeah.

[00:21:10] Mike McVerry: finance teams. The profit system is INow just shows a model, like you said, what's likely to happen, what could happen. It is our job as marketers, it is our job as a company and, and essentially you guys, it's our job to all try to break those models. So if the model says we can achieve 15% growth, what else can we do to get that to 20?

What can we do to get that to 25 sometime goes by and now the model recess, and now we're able to achieve 25% growth. Okay, how do we get to 30? How do we get to 35?

[00:21:42] Luke Austin: Yep. Build the model, break the model. Yeah. That's, that's great. Okay, so, so it, the model, get the cost integrated. We all have a clear level view of contribution, margin, revenue, and the trade-offs, and helps us to identify the right budget allocation at that point in time. Great. So the model helps to give clarity that through that process.

Now we get into some of the, the months following that and really the months over the course of this year, right, which is what we're all most interested in, is now we have a model, we have confidence in where, how much we're spending and what we're invested into. We're gonna go try and beat the model right now.

We're gonna go, go try to break the model to the upside. So after the initial process of the integration, building up the models, getting clarity on these levels, moving into the things that we've done to help break the model collectively. On the media side, you guys, the launch you guys are looking at, what do you see as. Being as, as being the things would've been the most impactful things in terms of helping to break the model to the upside,

[00:22:41] Mike McVerry: Mm-hmm.

[00:22:42] Luke Austin: the outcome.

[00:22:43] Mike McVerry: I, I mean, so the initial model or any initial model is gonna be, is gonna have a look back window. It's gonna measure what we did the past 12 months, the past 18, 24, whatever, whatever you say your model up as

[00:22:54] Luke Austin: Yep.

[00:22:55] Mike McVerry: in order to break that model, you can't do the same thing. Right. So

[00:23:00] Luke Austin: Hm.

[00:23:00] Mike McVerry: I, I, I think the biggest, the biggest start, this wasn't the be all end all, but the biggest start in the right direction to start breaking that model was the, the integration between CTC as an agency and our internal design teams.

Our design team kind of works as a hybrid design and marketing team. And then on my side of the house, we have just the DTCs team. Historically, it was always let the DTC team do their thing. Marketing, you know, supports them. So we put requests in, they'll provide the assets. When we started with CTC, we went to CTC plus the DTC and marketing team on calls every week.

When you guys are reporting to us, you're not just reporting results in the Slack to the D team, you're also including the designers, the marketers, that provide those assets as well as you, have you guys came with your own internal design team to create assets that you guys knew worked from your own best practices?

I think, I think, and I think that kind of had the that had the effect of challenging our own internal teams to, you know, who we designed things a certain way. We have our own processes and we have very similar outputs or outcomes. And it kind of opened their eyes to a slightly different way of doing things.

And then obviously as results roll in, getting more comfortable kind of with this new paradigm of how we launch creative, both in both in variety and volume.

[00:24:23] Luke Austin: Yes. Yeah, yeah, for sure. So yeah, I think the, the progression terms of the main, the main opportunities is, yeah, one, build the model, understand what the optimal budget allocation is for that point in time. Step two, getting the paid media channels it to be set up in, in a way that allows for when we push incremental spend and create a volume, it allows for a more incremental out.

Come through those campaigns. So, some, some of the simple, more simple

[00:24:50] Mike McVerry: More simple, practically like

[00:24:52] Luke Austin: click optimization on

[00:24:54] Mike McVerry: on meta 

[00:24:55] Luke Austin: cost control,

[00:24:56] Mike McVerry: tructure

[00:24:56] Luke Austin: some of

[00:24:57] Mike McVerry: Tructure

[00:24:57] Luke Austin: structure

[00:24:58] Mike McVerry: structure on Google,

[00:24:59] Luke Austin: non-brand versus brand

[00:25:00] Mike McVerry: brand structure

[00:25:01] Luke Austin: I think this is more, more

[00:25:03] Mike McVerry: more

[00:25:04] Luke Austin: for.

[00:25:04] Mike McVerry: for.

[00:25:06] Luke Austin: Then it might be for other brands because of how broad of a distribution you guys have with Amazon and with the retailers, is getting the the platforms to be able to optimize towards the most incremental outcome for the dotcom business versus. It, it's a lot easier in that ecosystem for the platform to optimize against some credit that's gonna come through, through Amazon or one of the retailers or other places. So having the, the media campaigns aligned with that most incremental setup, but then, and then going to what you just brought up, which is the creative volume and diversity that that's able to really drive it for.

So I, I I pulled some numbers with the team. And in Q2 of 2025 we launched 342 ads collectively, Q2 of 2024 89 ads per launch collectively. So it's about a 3.8 x increase in creative volume. Be

[00:25:56] Mike McVerry: our slow season. Q2, our slow.

[00:25:58] Luke Austin: Yes. And Q3 is gonna be even higher. Talk, talk to us, you, you gave some background on like the, our, our creative offerings and that being a supplement to your internal teams. Talk to us about how, painful that has been in terms of the, like, the muscle around creative production and creative volume and really putting the focus there versus the focus on, Hey, we're just gonna try to increase ad spend to get to the goal, you know, which is part of it, but like the creative volume output, like it, it requires a lot of energy.

For sure. What, what has that journey been like for you and the business?

[00:26:33] Mike McVerry: I mean, it certainly, it certainly takes a lot of energy, especially towards our teams and the people who are, you know, the hands on keyboard with the stuff in your teams

[00:26:42] Luke Austin: Yeah.

[00:26:42] Mike McVerry: day, right? In, in any sort of creative environment. There's just different creative opinions and there's, there's always that tension that kind of boils up and we see something that maybe you guys created and we don't love it,

[00:26:54] Luke Austin: Yeah.

[00:26:55] Mike McVerry: but if we run with it.

We know there's a good chance it will perform. So, it, it, instead of just fighting back and forth, I think the magic happens when people start talking. People on both sides start talking and they start understanding. Why, you know, kind of the results behind why things are performing. And the next thing you know, we start kind of following you guys and creating some of those assets with our internal teams in the way that we would like to do it.

And guess what? Now we're getting similar results, keeping brand integrity not, not stepping too far outside of our comfort zone, but getting the results we need. And then similar to right on the other side, once your team, once your creative team seems the way we like things done, they start creating that way.

And the whole thing just kind of starts building up on itself. Until you, you know, now it feels like we're running very efficiently and very effectively in all our meetings. So, you know, but, but, but like I said, that the, that was just kind of the first, I guess the first opportunity or the first step that we took and that that's that alone, none of this alone gets you to 40%, but that already started giving us a lot more confidence when we saw the results of some of those early numbers coming in.

[00:28:04] Luke Austin: Yes. Yeah, for sure. Okay. And. With, with that, if you could share with, share with us some of the other bigger lever levers that have been pulled to help lead to the south 40% in top line, 43% in contribution margin year over year.

[00:28:18] Mike McVerry: Mm-hmm.

[00:28:18] Luke Austin: The modeling, the budget allocation, the ad account structures, the creative volume, all being important, but there's a whole other layer of things going on as well in terms of new launches, the marketing calendar messaging that you guys have gone into new audiences and angles to try to bring across the product in diff in different ways.

Talk to us about some of the other levers that have been pulled to be able to lead to this sort of a, a business outcome.

[00:28:41] Mike McVerry: Sure, I mean, ear, ear, early on there was some multivariate testing. I think we did some geo holdback tests just to see what the effect of our DTC spend was on channels like Amazon other places where you could measure it because obviously those. Those other channels also require a pretty substantial monthly capital investment for advertising as well.

And if we can drive more results on DTC and also have the same effect on Amazon, it helps us better allocate better allocate our budgets. But other, other more simpler examples I think of is just, you know, campaign structure. This is not gonna apply to every brand, but for a brand our age or that's been around this long, just making sure you clean up the new to brand versus branded traffic, especially in Google.

[00:29:26] Luke Austin: Yep.

[00:29:27] Mike McVerry: Having your team and our team on a shared marketing calendar in a way where it wasn't, it wasn't that we were sharing our marketing calendar with you and you guys were just, you know, checking it and following it and lockstep, but you, your team really felt like an extension of our team. They, there are certain instances questions come up where I'm like, oh, wow.

They, they are, they understand our marketing calendar better than we do. Like something shifts. As calendars change, as timelines change, they're not just like saying, oh, okay, change whatever. They're like, okay, well this is gonna be the impacts down the road. So what can we fill in now and how, what do we have to reshuffle a month from now tho?

Those sorts of things. That, that really just felt like a staff extension on our side where our team, you know, got 30 or 40% bigger and having that brain power and experience obviously leads to better results. And then more recently, I mean, as we, as we keep. Break. I, I, I, I guess I should say, as we keep hitting new levels of success, having different problems that your team has seen as, as brands scale and being able to kind of get ahead of them.

One of them being probably started about six months ago when we do big launches. Your team blew the whistle and started saying, Hey guys, we're running outta inventory on some very high performing. Campaigns here.

[00:30:45] Luke Austin: Hmm.

[00:30:45] Mike McVerry: You know, in, in five years, that wasn't really an issue, but we'd run out of inventory, but it wasn't because of under forecasting.

[00:30:52] Luke Austin: Yeah.

[00:30:53] Mike McVerry: now we're, you know, we started having that problem. So that's still one of the current ones we're trying to solve. Like, Hey, how do we now, now we have to almost take our models and stats and say, okay, how do we make sure we get the inventory to support this this likely case scenario? And then how much more inventory can we get to.

Support a potential, you know, this blows through the roof and, you know, breaks all new records. So, but again, all these problems that we are solving together is how you run a good business. And this is, you know, how you achieve just double digit percentage growth year over year. Not just it's, it's not, like I said, it's not what we, we've been doing for a few years.

Well, let's see if we can throw more money at digital ads. It's the entire, it's the entire ecosystem.

[00:31:33] Luke Austin: Yes, for sure. Yeah. And one, one thing that, you all that you really exemp exemplify and linear your team and the rest of your team as well, is how much of a two eight street the partnership is. There, is there, what I'll say is like in the profit system, the initial deliverable, like, the mostly grunt works on us, right?

Like to be able to deliver that thing and show, show you what you can do and, and we have to make that case. After that point, we have a very specific obligation and responsibility as well. But it's a collab, it's a collaboration and it works best when, when we are more of an extension of the team and are

[00:32:05] Mike McVerry: Mm-hmm.

[00:32:06] Luke Austin: buy in and collaborate that way. And so, yeah, thank you for that environment that you've fostered within your team, within our team to lead to that level of productivity. 'cause that's, it's absolutely necessary. It's a two way street. I couldn't, I couldn't agree more on, on that note. 

[00:32:19] Mike McVerry: So if a 

[00:32:21] Luke Austin: if, if someone

[00:32:22] Mike McVerry: if someone in your shoes.

[00:32:23] Luke Austin: And this was prior, when you're considering doing the profit system with CTC, let's say, right, this is a big financial investment, all the other considerations, what would

[00:32:32] Mike McVerry: What would

[00:32:33] Luke Austin: Two

[00:32:33] Mike McVerry: two pieces

[00:32:34] Luke Austin: of feedback you'd share with them?

One, about

[00:32:37] Mike McVerry: working

[00:32:38] Luke Austin: Two things you should know about working with CTC, like a very positive

[00:32:42] Mike McVerry: positive,

[00:32:42] Luke Austin: a

[00:32:42] Mike McVerry: a more critical.

[00:32:43] Luke Austin: of feedback of this is what you should know heading into it. Positive and, and critical. Be, be direct as you can and we can always edit it out so, you know. Don't, don't, yeah.

[00:32:53] Mike McVerry: Yeah. Take. Okay, take seven. Here we go. No. Very positive. I mean, you, you guys truly are very quickly became an extension of our team. Now, I don't know if that's because you have years of experience in our industry. I really don't think you do. I think I attribute it to, I mean, you have data scientists on your team.

Those guys can read the data. Tell us about our business in ways that we know from just, you know, living that experience, not, not so much in the data and, and kind of aligning both sides on there. That was extremely positive for us. I will say this. I don't know if it's critical or it's yeah, I, I, yeah.

I, I don't know if this is critical, so take this, this, for what it's worth, I don't know that every company is ready for CT CI think if we, even we had approached you five years ago, I don't think we would've been ready as a company in the right, you know, not in, in the right space. Because you will need, you will need internal resources.

Who can support a very high performing business to be able to make the changes, to be able to adapt in time with the speed necessary based on the information you guys are getting us. Otherwise, you know, if, if anyone came to you and they don't have their supply chain figured out, or they don't have their logistics,

[00:34:06] Luke Austin: Yeah.

[00:34:06] Mike McVerry: their pricing, I think it would make it challenging to work with CTC and you guys would probably be equally frustrated.

You know, I, I, I, I have friends and friends and family with businesses and they, they always wanna know, you know, who do I recommend? And I always say CTC, but with the caveat that not, I don't think every company is necessarily ready for you guys.

[00:34:27] Luke Austin: Yeah.

[00:34:28] Mike McVerry: that would be my critical component.

[00:34:29] Luke Austin: That's fair. No appreciate that. So, taking, taking a couple steps back here, the the context that set up the conversation. Looking at the glass ceiling, not knowing where we can invest dollars to be able to create growth. And what's fascinating, I was, I was looking I was looking earlier today and connecting with Amar, so for those listening amar's, the, the growth strategist on this account, sort of, quarterbacks team.

And then we, we do the rest of the execution on, on paid media side. And, and it's creative as

[00:34:58] Mike McVerry: Well, but looking at is

[00:35:00] Luke Austin: our and A MER over the course of this year, compared to last year, have have not improved and in, and in a lot of actually worse, like have, have actually degraded.

So those like sort of core efficiency metrics that are very DTC oriented M-E-R-M-E-R most time period's pretty consistent. They haven't improved though. Like those, those numbers haven't gotten better. What's increased is the ad spend volume. Leading to higher contribution margin dollars and higher revenue dollars as a result.

While the efficiency, those efficiency metrics have sort of stayed consistent I think this was. This is a, this is a journey that at some point is, is quite challenging, especially for larger orgs to be able to orient around when you have an ACOs or an add to sales or an MER metric that sort of governs the budget allocation.

How we think about it shifting to, we're gonna look at contribution margin and we're gonna index against that. And actually we're willing to take a lower MER to be able to drive that, drive that outcome. How, how was that journey for you all especially in the context of marketing, marketing versus finance team, the, the battle royale.

Like what what, what did it require to be able to cross that threshold into this new way of looking at the budget allocation and what's gonna lead to the business outcome?

[00:36:18] Mike McVerry: That's a, that's a big question. There's a lot of information to unpack there. I think when. Organizations are focused too much on any single metric. They forget that what makes things very successful isn't one plus one equals two. It's the interplay between marketing, product, inventory, supply chain demand, creating that demand.

[00:36:40] Luke Austin: Yep.

[00:36:41] Mike McVerry: Macroeconomic factors, et cetera. And, and if you're making large decisions off one single metric, you're probably not, yeah, you're making the best decision for that metric, like MERR, but a ER, but you're not making the best decision for the business given all the, all the potential factors there.

So I mean, anyone who's not looking at, in the term, you know, within the sphere of lifetime value returning customers, you're gonna be, you're gonna make bad decisions based off that

[00:37:11] Luke Austin: Yeah.

[00:37:11] Mike McVerry: you're not gonna get the whole picture and you're kind of gonna be lost in how you ever find profitability in what you're doing.

So,

[00:37:21] Luke Austin: Yeah.

[00:37:21] Mike McVerry: know, lifetime, lifetime value metrics have been extremely useful to, you know, our executive team so they could kind of see, kind of a long term, big picture of what we're doing. The other thing is, like you said, we have not pro improved A-A-M-E-R or MER since working with you guys, but what, what we are seeing in the realms of lifetime values, we're seeing new customer growth.

[00:37:44] Luke Austin: Yeah.

[00:37:45] Mike McVerry: It's, you know, return, customer rate improving. So it's very easy to see for for the financial folks and the who need to see how this in the next six months, 12 months, 18 months.

[00:37:59] Luke Austin: Yeah, yeah, yeah. It's a, it's a good way, it's a good way to frame it like that. folks are looking to improve M-E-R-A-M-E-R, they, they, that's probably not something we're gonna be helpful with or, or recommend. It, it may be a byproduct, but getting clarity on contribution margin and how to impact the contribution margin outcome over

[00:38:17] Mike McVerry: Mm-hmm.

[00:38:18] Luke Austin: timeframe is, is, is the main thing that we're gonna serve.

And, and is the thing that ties together all of the, all of those inputs, like you said, right. To be able to orient, orient around.

[00:38:27] Mike McVerry: So,

[00:38:28] Luke Austin: sorry, go ahead, Mike.

[00:38:30] Mike McVerry: so, Anmar knows this, but I was challenged by my finance team. You know, companies have all these reasons for different things, but I was challenged with my team like, Hey, Mike, what if we needed to throw in a few more, you know, millions of dollars of revenue this year? What would it take? You know, I said, well, I can give you a really big number, but let's go to CD, C and see what they say.

You know, gave you guys some time. It took about a week or so to get your analysis done, and you came back and got on a team with, got on a call with myself, our executive team, and I, I just trust you guys. I didn't have any pre-meet or anything like this, and Anmar pretty much told the higher ups that we cannot get to these numbers.

You know, we cannot even get to these numbers in a way that you would like, or even, even remotely like. And it was one of the most refreshing things that I had seen, because what we, what he was really saying was, we just can't get to these numbers just by purely spending more. And then it, you know, then, then since that meeting has then trickled down, okay, well what can we do?

Where, what did the model show us? What didn't it show us? What was a, what was that model? What were those models, assumptions? And then how do we go break that? So that's gonna be the fun. I don't know if that's a follow up to this call, but that's gonna be the fun next four months of the year. See how that plays out for us.

[00:39:49] Luke Austin: I like that. I think we should absolutely do that. December, January. Let's hop back on and let's, let's see how much, how much of the model we are able to break and, and build on this trajectory. Yeah. 'cause 40% growth, top line revenue year, every year, 43% contribution margin. That's it. It's a remarkable outcome, especially in this moment.

So, Mike, hats off to you and the team. We're grateful for the partnership together. Any, anything you'd wanna leave leave any of the listeners with before we wrap up here?

[00:40:17] Mike McVerry: No, I think that, that might have to wait till part two here.

[00:40:20] Luke Austin: Sounds good. We'll keep 'em, we'll keep 'em hanging. Alright folks, well thank you for taking the time to listen to the E-Commerce Playbook podcast. We'll see you with Mike in January-ish. And we're just gonna put ourselves on the hook for it. So, talk soon.