Inside the $10M+ Brand Growth Workflow (Real Client Example)

[00:00:00] Taylor Holiday: You can't see it, but we're plus 61% contribution margin. We're 12% ahead of revenue. We're 32% behind on spend, way ahead of on efficiency. Initially, at glance, everything looks awesome, but for me it's triggering in a way that indicates that we are not actually being as attentive as we should be.

[00:00:17] Richard Gaffin: Hey folks. Welcome to the Ecommerce Playbook Podcast. I'm your host, Richard Gaffin, Director of Digital Product Strategy here at Common Thread Collective. And rising to the occasion here is our CEO, Mr. Taylor Holiday joining us again, as he always does. Taylor, what's going on, man?

[00:00:33] Taylor Holiday: Yeah, I was up and down desk, up down, desk up, desk down. I wish I was an all day stander, but I just don't have it in me. I'm too old Richard.

[00:00:40] Richard Gaffin: Yeah. Yeah, same. I, I'm getting there too. I wanna be one of those balance board guys, but I just can't include, incorporate a core workout.

[00:00:47] Taylor Holiday: so that all my podcasts just look like this.

[00:00:49] Richard Gaffin: Yeah, that's right. That's the way to do it. Cool. So, I think we wanna get into today is a little bit of like, something a little bit more practical, maybe a little more tactical as we wanna dive a little bit into our process.

In, in other words, in a specific situation that we run across with a client. What do we do next? What do our people do? What's the system that we use to bring about the opportunity that pre presents itself? So, this is also gonna double as another sort of defend that tweet segment. This is from.

When did you tweet this out? May 8th, which is what, last Thursday when we're recording this. Taylor tweeted this out. You're eight days into May. This is where you stand, what's your next move? And then I shared a screenshot from our platform stats with sort of the numbers. And Taylor, I'll let you kind of walk through the specific numbers we wanna kind of dig into today.

But I think what we wanna do here is answer that question, what is your next move given the situation or given a particular set? Of metrics in a particular situation, what is the next move we make? And then how at CTC do we approach that? So I'll turn it over to you, to Taylor. Kind of walk us through why you tweeted this out and this particular screenshot and which elements are important.

[00:01:53] Taylor Holiday: We're thinking a lot about how to bring to life. What is the actual experience of working with CTC and how does that compare to maybe what you're doing? and this idea of growth strategy is sometimes this amorphous, ambiguous idea, whereas it's much easier to understand like, what does a Facebook media buyer do?

But what is. Profit system, how does it come to life? And so I'm going to try to increase the amount of content that gives practical examples of how we're executing right now today for some customers. that's what this is. This is the kinds of realities we deal with all the time that lead to a corresponding set of actions. So we're gonna try to show off more of these and obviously protecting the anonymity of the brand. So we won't talk at all about who this is, but just about the context for this specific example. So the screenshot I shared. Is outta stat list. This is our data platform. So I got asked a lot, which is another sort of light bulb for me to realize like, man, we don't talk a lot about the stat

[00:02:45] Richard Gaffin: Yeah.

[00:02:46] Taylor Holiday: about the data platform we're building. And what you see is the primary homepage of our data platform that provides data in context to expectation. right away, people assumed a few things when they saw this one. You see a core set of numbers and then you see plus or minus. Every, every data point is either green or red. Green is ahead, red being behind. People assumed it was like a week over week comparison. That's not what it is at all. This is actually performance to expectation against the daily plan of all those numbers for the month of May. So we're looking at May one through seven here, based on the expectation of what we thought May one through seven would be across 60 different metrics.

This is really important is that our planning process, what happened ahead of the month is our growth strategy team built a forecast down to the daily level based on the marketing calendar, based on the media plan, based on all the email send schedule, everything is incorporated into the expectation of each day's performance to understand how we're performing relative to that expectation. And then there's a hierarchy to these metrics. The largest centerpiece is about contribution margin. How are we doing in driving contribution margin? You can see the definition of contribution margin there. It it, that is, that is the ultimate scoreboard. And then everything else is sort of an input that ladders up to that primary goal. And so this the, just right away, what we're looking at is you can see contribution margin, order revenue, ad spend, M-E-R-A-O-V orders, returning revenue, new customer revenue, paid revenue, email revenue, A-M-E-R-A-O-V, all the core metrics that you would want that help guide us towards understanding what the next right action is to take.

[00:04:20] Richard Gaffin: Mm-hmm.

[00:04:20] Taylor Holiday: really the point, is that our system defines a path. We want to go after and then allows us to see where we are at on that journey at every moment so that we can decide what, if anything, we need to do next. this is a unique case and it's one I wanna talk about. 'cause I think it gets underappreciated in the conversation of growth strategy and challenges, which is what happens when you're actually winning by a lot. And as is the case most of the time, a lot of these podcasts and content are an outflow of conversations that we're having internally. So this is literally us dialoguing about this example between me and the growth strategist and sharing like, okay, why am I frustrated actually at the result that I see here?

Because the

[00:04:58] Richard Gaffin: Mm-hmm.

[00:04:59] Taylor Holiday: you can't see it, but we're plus 61% contribution margin. We're 12% ahead of revenue. We're 32% behind on spend, way ahead of on efficiency. Initially, at glance, everything looks awesome, but for me it's triggering in a way that indicates that we are not actually being as attentive as we should be.

[00:05:16] Richard Gaffin: Right, and the reason for that being, of course, that being off. Or beating the forecast is in some ways just as bad or troubling or presents an opportunity as being behind the forecast does. And specifically on this one, I mean, I think it's, it's pretty clear given some of the answers to this tweet, kind of what this is showing, at least on the surface level.

But, so just again, to try to paint a picture here that at the top we have contribution margin. This particular brand is 60% ahead on where they would be. So rather I should say the number is like the actual number and then the target to date, right? So for the first seven days of May, they should have been hitting this number or they had expected to, and then the percentage over.

Then we have five metrics. Underneath those, which in some respect are the five metrics that most immediately ladder up to overall contribution margin or revenue ad spend. M-E-R-A-O-V. So back to what I was saying about the responses is that ad spend is clearly behind. So it seems like the issue here is fundamentally they're not spending enough into a massive opportunity.

So talk through that kind of next layer of thought process a little bit.

[00:06:18] Taylor Holiday: That's right. Okay. So what we see is revenues ahead ad spends behind. And to your earlier point, beating a forecast is just as bad as missing one. Maybe not quite as bad, I would put it like,

[00:06:26] Richard Gaffin: Sure.

[00:06:27] Taylor Holiday: it is a problem because e-commerce is really this business that's predicated on the ability to go out and buy inventory at some expected

[00:06:36] Richard Gaffin: Yeah.

[00:06:36] Taylor Holiday: realization at some margin profile.

And to do that repeatedly and consistently. And so there are certainly moments where you drive outsized deficiency and it's okay to capture some of those gains, but the reality is, and, and as a CEO, I'd say over the last three years as my business had the opportunity to be successful, and all of a sudden I've watched our bank

[00:06:55] Richard Gaffin: Mm-hmm.

[00:07:13] Taylor Holiday: to me in my ad spend that's 7, 8, 9, 10, 11, 12 to one, well then I should be redeploying those dollars against that return consistently and not allowing them to send. So when I see that our team is actually 30% behind the spend pace, like we're spent, we're underspending our own plan. And realizing excess efficiency. What it triggers to me is like, wait a second, guys, we're, we're not doing what we said we're going to do on the media side, and we're sort of allowing. Ourselves to realize too short term of benefit that's gonna have a longer term effect. 'cause the other red light I see in this report is that new customer revenue is 4% behind and returning customer revenue is way ahead. So somewhere along the way, I'm realizing an outsized benefit, likely from some sort of returning customer revenue push or incorrect estimation of the early days.

But new customer revenue is too high on efficiency. low on revenue, and that means I could be creating a future revenue, returning customer revenue problem. And I certainly don't wanna be in that scenario when I have that margin to play with.

[00:08:15] Richard Gaffin: Right. Also it, it looks like. This is related, but paid revenue and paid orders are also significantly behind, like 30%, 37%. Although email revenue is also behind, so I don't really know how to judge that. But the idea being then that new, new customer acquisition is slowing down in some way, the sponge is being squeezed and this potentially signals a problem several months down the road if new up customer acquisition doesn't catch back up.

Does that make sense?

[00:08:39] Taylor Holiday: maybe not even a problem as much as it a chance to continue to win in the future,

[00:08:43] Richard Gaffin: Yeah, sure.

[00:08:44] Taylor Holiday: we're right on the new customer revenue. It's not like there's a huge gap. It's like a very small gap. And the efficiency's so good that like we're not talking about creating a massive problem here, but what we are likely saying is that, hey, somewhere along the way we may.

See that returning customer revenue get a little softer. And so we don't want to sacrifice that if we don't have to. When we have the opportunity to go out and get much more new customer revenue right away using that excess margin to build up that customer file,

[00:09:10] Richard Gaffin: Mm-hmm.

[00:09:11] Taylor Holiday: up that future revenue, to grow the brand where possible.

And that, again, I wouldn't be saying that if the trade-off was deploying capital into a loss, like then sitting in the checking account at a 0% rate of return might actually be better. Looking at the ad accounts, I've got a paid media opportunity that's running at like an eight to one I oas. And so it's like with that available to me, I certainly do want to step on the gas and fuel that increased growth into into the future.

I.

[00:09:39] Richard Gaffin: Yeah. Okay. So let's talk about then stepping on the gas 'cause. 'cause to kind of double back to what we were saying before, it seems that the clear, easy answer to this is they just need to bump spend they need to turn up the volume, acquire new customers. There's 65% of MER so obviously there's some efficiency to give there that could be used better deployed for scale.

So. Let's talk about or maybe complicate that a little bit. Like what, what do you feel like the next steps are here?

[00:10:02] Taylor Holiday: So what happens in many cases here is that if I go look, what actually happens is that the Facebook I roas goal is actually slightly behind the media buyer's expectation. Okay? So this is a very common thing where, this is where the growth strategist really plays the most critical role I. Okay, because a media buyer is going to receive a goal in this case for this brand. Let's set aside how high this is and whether that's the right or wrong thing to do for them. Our models would say that this is the right point, is that they have a goal of a nine to one Facebook IROS. Okay. That's on a seven day click with a factor based on their incrementality test results. Okay? Now, if I look month to date, what I see is that the Facebook IROS is sitting at 8.3. okay. The media buyer in a silo would look at that and go, oh, okay. I have an efficiency problem. I am probably not going to rush out and increase my spend against that goal. And in fact, that's sort of what's happening here is that isn't a lot of obvious places to go out and generate an increase against that nine to one. this is where our growth strategist has to hold the tension for the team. have to say, okay, wait a second. We began the month. to one goal. Okay? But what we found is a few things. We had some organic demand generated that propped up our A MER, our new customer acquisition efficiency, and we're getting stronger than expected, returning customer revenue off of a product launch as well. So given that reality, what then would I do in the ad account and where are there individual campaigns breaking out of the just overall platform result to make sure that I'm maximizing every available opportunity, and would I be willing to potentially push into some of the areas? That are maybe at an eight to one?

Well, yes. 'cause that's still gonna generate positive incremental contribution, even though it's not the nine to one goal. And I'm gonna have to communicate with the customer about those desired actions and why they're good for the business so that we can drive to the best overall business result.

[00:11:59] Richard Gaffin: All right. Where's the IROs goal? At

[00:12:03] Taylor Holiday: If you hit the little, if you go scroll down

[00:12:07] Richard Gaffin: Uhhuh?

[00:12:08] Taylor Holiday: The channel level. So see where it says channel

[00:12:10] Richard Gaffin: Yeah. Yeah.

[00:12:11] Taylor Holiday: there's,

[00:12:11] Richard Gaffin: Oh, IROs. Okay.

[00:12:12] Taylor Holiday: If you

[00:12:13] Richard Gaffin: Yeah. Yeah.

[00:12:13] Taylor Holiday: and go to I Oass, you'll see I Oass acquisition only goal. And

[00:12:19] Richard Gaffin: Gotcha. Gotcha. Of nine. Yeah.

[00:12:21] Taylor Holiday: is you're actually getting performance outta your retention campaigns. And that's part of what's driving some of this returning customer revenue is like

[00:12:29] Richard Gaffin: Mm-hmm.

[00:12:30] Taylor Holiday: retention on, on, spend in meta is actually better than you thought, and your

[00:12:35] Richard Gaffin: Right.

[00:12:35] Taylor Holiday: is a little bit softer than you thought. And so, that's what's holding back that aggressive. The overall spend is that the slight gap in the efficiency of new customer acquisition on paid media is signaling to the paid media buyer to not go be really, really aggressive in that moment.

[00:12:50] Richard Gaffin: Mm-hmm.

[00:12:50] Taylor Holiday: But this is where like that really holistic interaction between

[00:12:54] Richard Gaffin: Right.

[00:12:54] Taylor Holiday: everything that's happening for the business becomes really important to look at.

[00:12:57] Richard Gaffin: Okay. Well one, one thing that might be an interesting route to go down is, like you had mentioned at the end there that one of the growth strategists jobs and the job of like, let's say the cmo, whoever's running this, the operation, one of their jobs is to make the case to the leadership team or to the client in our case for why you should start kind of pulling some of these levers, right?

So talk through like how that conversation goes. They're sort of convincing somebody to take, to pull back on efficiency, to pull back in these areas where they're really like overshooting, I guess,

[00:13:30] Taylor Holiday: Yeah. So, the, the push and pull is, is the hardest lever to get everybody in sync around. And then

[00:13:38] Richard Gaffin: right?

[00:13:38] Taylor Holiday: mean to push and pull?

[00:13:40] Richard Gaffin: Yeah.

[00:13:41] Taylor Holiday: 'cause what one of the things that we're really after fighting in our ecosystem is really trying to off this hamster wheel of bid adjustments relative to yesterday's

[00:13:49] Richard Gaffin: Yeah.

[00:13:49] Taylor Holiday: and more, just get really clear that. Hey this is like sort of a root change to the efficiency expectation of new customer acquisition for this month where we might go, okay, hey, our I RRA s goal on acquisition only when we started this month was five to one. Right? And we're actually willing now to see that come down to. 4.2 to one.

So update your bids in accordance with that newly adjusted I oas goal. And so I think that root change would lead to then bid updates across the board that you could track as you go throughout the month to see where you land and where the growth opportunity continues to be. There's also like an idea that if you're this far ahead, like, and this is a really novel case. To also make some reinvestment into higher funnel actions that we know have a more latent payback period. So things like YouTube or alternative bidding optimization on meta TV, podcasts, things that we know till up future soil to help that we may say, Hey, I. We're, we're $180,000 ahead of our contribution margin goal for this month.

I'd like to take $50,000 of that, so not go ahead and grow the bank account somewhat, but I wanna take $50,000 and I wanna reinvest it into top of funnel ahead of next month's. Moment in this really cool way on YouTube, as an example. And

[00:15:09] Richard Gaffin: Hmm.

[00:15:10] Taylor Holiday: that's where the person in charge of the growth is having both a short and long-term horizon view all the time, and really is it supposed to be in that dance, understanding what they have coming, understand the likelihood that it persists, understand what big expectations are coming, and really making this constant permutation or change to the plan relative to your present state.

[00:15:31] Richard Gaffin: Right. So then talking about balancing the short term versus the long term, like one of the responses that I think was an interesting semi pushback here was when user responded so much unanswered that no one should answer this, how does supply look? Tariffs are gonna stall new supply over the next three to 12 months.

And, and so of course a lot of the questions are about inventory, I suppose, but like. Yeah. Where, what's what, how does that get balanced or incorporated into this discussion?

[00:15:56] Taylor Holiday: totally. So I think that in our world, our growth strategists should have intimate working knowledge of those issues with the customer. Are they tariff impacted? What is the inventory position? What happens if I push and pull? Because that's that whoever that was, and I think somebody. I think respondent and I said the right response is more questions to this, to

[00:16:14] Richard Gaffin: Yeah. Yeah. Yeah.

[00:16:15] Taylor Holiday: this.

Right? Because of course if you have no inventory, then you shouldn't just scale up your

[00:16:19] Richard Gaffin: Right.

[00:16:19] Taylor Holiday: Like, so absolutely the relationship between the balance sheet health. And if we, when we did our tariff relief plan for all of our customers, we basically said, we wanna help you to identify. This sort of XY matrix of how much inventory on hand, what's your cash position, what's your level of tariff impact?

And therefore we can decide how offensive or if we need to margin, maximize, or if we need to be defensive. Like what is the strategy for your individual business relative to the surrounding dynamics on top of the issue. So there's a, there's an underlying base level assumption that your growth strategist has absolute intimate working knowledge of all of those issues in the recommendations that they're making to you as a partner.

[00:16:57] Richard Gaffin: Right. Okay. So I, I think like moving forward, we're probably gonna try to do this a little bit more of actually going through some specific numbers. And I, I kinda like the idea of saying like, Hey, here's a set of data. Tell me what this means and tell me what's going to happen because of it. But, so this is of course a scenario where.

Everything's going pretty well. And I, I know we don't have an example necessarily to pull up right now, but maybe talk through a little bit of how the process works on the growth strategy side when this situation is reversed, when there's clear issues. Yeah. When there's, there's, let's say, big opportunities to not fail.

[00:17:31] Taylor Holiday: So again, what the system helps me to identify is where is the gap? So like I'm looking at a brand right now that's $30,000 behind their contribution margin goal. And it's because they're basically right on their revenue goal, but they've overspent by 11%. So that, that, that is like in many ways what are the simpler problems to

[00:17:51] Richard Gaffin: Mm-hmm.

[00:17:52] Taylor Holiday: that, hey, we had a media budget, we've overspent early, which I actually like to do 'cause it's way

[00:17:57] Richard Gaffin: Mm-hmm.

[00:17:57] Taylor Holiday: back and take the access margin than it is to try and scale up towards the end of the month. So we'll tend to try and help our people over emphasize demand creation early in the month. But I go look through all of the inputs. Okay, where's the inefficiency coming from? Is it Google? Is it meta? Is it returning customers? Is it email? Like what? What's soft? Against that? Why hasn't that demand created like purely incremental revenue?

Because there's some level of inefficiency, and in this case, oh, look at that. My A MER is behind by about 10%, so my new customer acquisition efficiency is trailing, and I can go find, okay, what channel is that inefficiency coming out of? Let's go to, it's right now it's Google is inefficient in its pursuit of non-brand or categorical campaigns.

Okay, let's go figure out which one it is. I'm looking through it right now. biggest gap is that I have a standard shopping non-brand campaign that is overspending as well as a demand gen for YouTube shorts that I'm gonna go back and look at and go, okay. Those are my two most inefficient campaigns across all my media mix right now. I'm over budget a little bit. Can I compress those down, allow the other stuff to continue and pick up that small bit of marginal gain as I go through the next 20 days of the month?

[00:19:08] Richard Gaffin: Mm-hmm.

[00:19:09] Taylor Holiday: like, but it's all there. The mastery of the information. I don't work on this brand. I just literally pulled this up as we're on the podcast, but because I can see every metrics performance expectation month to date, I can very quickly identify and diagnose the problem and action against it thoughtfully to get back to where we're trying to go.

[00:19:25] Richard Gaffin: No, I love that. And that was a great demo of how kind of our workflow flow brings that idea of the hierarchy of metrics to life. As you said, you saw, saw that there was an issue with acquisition. You were able to go down to the next level, see that it was a Google issue, specifically a non-branded issue.

And that's kind of what this provides and what the status platform provides and our workflow provides, which is there's one goal contribution margin. The, the causes of that being over or under could be one of these five things, which is, let's say revenue spend, M-E-R-A-O-V orders. The cause of those being over and under may be one set of, you know, I don't know, what is this, 15 things, the causes of those being over and under laddered, then down to channel specific metrics.

And this program gives us the ability to to kind of walk through that workflow very easily so you can kind of trace these different paths and then figure out exactly what the next move should be. It helps you ask the questions that need to be asked when you see that there's an overall issue.

[00:20:15] Taylor Holiday: That's right and, and the beautiful thing is, my expectation is built really intimately connected to their marketing

[00:20:20] Richard Gaffin: Yeah.

[00:20:21] Taylor Holiday: So the first part of the planning process is plan every moment. Of the month, what drops do we have? What product releases, what promotions, the entire email, SSMS schedule and all of those inputs actually affect the daily expectations.

[00:20:33] Richard Gaffin: Mm-hmm.

[00:20:33] Taylor Holiday: it's not like I'm gonna ever go and discover and be like, oh, there was an email that didn't get sent. Like,

[00:20:38] Richard Gaffin: Mm-hmm.

[00:20:39] Taylor Holiday: Every day, every input is gonna be clear. And even before we started this podcast, we were gonna go through an example and what we found was like, Hey, one of our growth judges. It wasn't dialed in on the email and SMS expectation, and so there's appearing to be this gap that didn't really exist.

It needed to be resolved, and clarity of the expectations needed to be reset to identify what the right action is. So this level of clarity about what are we planning to do everything that we as a marketing department exist to do? are we doing against those things? It is literally like the operating backbone of an entire growth team so that everybody can see every day, what's my job?

How do I fit within the

[00:21:14] Richard Gaffin: Mm.

[00:21:14] Taylor Holiday: the broader team? How do I execute against it, and how can we all look at it the same thing every day and go, we're winning, we're losing, we're winning, we're losing. Okay? In light of that, what do we do? And

[00:21:22] Richard Gaffin: Yeah.

[00:21:23] Taylor Holiday: Here to create.

[00:21:24] Richard Gaffin: Exactly. So obviously if you want that type of clarity, if you want the exact what's going on with your business revealed in this specific way, you know who to talk to. Common thread code.com. Hit that hire us button. We would love to chat more about doing this for your business. Taylor, is there anything else you want to hit on this or any last pieces of advice?

[00:21:43] Taylor Holiday: No, but what, like, I, I'm gonna, we're gonna keep trying to find these case study examples, so

[00:21:48] Richard Gaffin: Mm-hmm.

[00:21:48] Taylor Holiday: to hear from you all. Is that helpful? Do you like the specifics of the tactical? Do you like when we zoom out can we show you more? Of the specific functions and settings, what is the, how does this information sit in terms of these practical case studies of what's happening right now in May for different brands of different types?

Sometimes I feel like they can be too niche, but I think the response is people really like to see the information and the data of real world examples that are happening,

[00:22:09] Richard Gaffin: Mm-hmm.

[00:22:10] Taylor Holiday: in our, in our universe. So feedback is really helpful. Appreciate you all.

[00:22:14] Richard Gaffin: Cool. All right everyone, take care. We will talk to you next week. Bye.