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On this episode of the podcast, Richard chats with Luke Austin, Directory of Growth Strategy at CTC about part 2 of our growth methodology: how to build a forecasting model that ladders up to your business goals and provides clear marching orders for your creative and paid media efforts.

⁠Show Notes:
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[00:00:00] Richard Gaffin: Hey folks. Welcome to the e-Commerce Playbook podcast. I'm your host, Richard Gaffin, director of Digital Product Strategy here at CTC, and I'm joined today once again by Luke Austin, who's the Director of Growth Strategy here at CTC. Luke. What's going on, man?

[00:00:15] Luke Austin: We're deep in it. 

November, Black Friday, Cyber Monday is right around the corner. 

But it's an exciting time simultaneously doing BFCM planning, execution 2024 planning, and forecasts. BuT this is, this is what we're made for.

[00:00:29] Richard Gaffin: Yeah. Well, we appreciate you sort of coming out of the trenches for a little bit to talk to us here because Yeah, it is that weird time where you have to think about the biggest time of the year and then also do all of your prep for next year as well. So if everybody's been listening to, or listening to last week's episode, we we started part one. Or last week rather, was part one of a five part series where we're talking through CTCs profit system, which is essentially the operating system that we put into place to create a predictable, profitable, profitable growth for our clients. And what we're sort of hoping to do with this series is talk you guys through exactly the types of things that you can put into place to help create a similar profit or predictable, a system for predictable profitability, let's put it that way. And of course. We are happy to do that for you as well, and you can get in touch with us about that if you want to. But in the meantime, we're moving on from part one where we talked with Taylor about setting your main business objective. How do you figure out what you want to do with your business?

How do you get clear on that so that it can serve as a directive for the rest of the team and something to execute towards. Now we're moving on to part two. Which the title of part two we're calling Model the Possibilities and Choose Your Path. And so this is kind of where you, your day-to-Day sort of lives here, Luke, right?

Like sitting down looking at a client and looking at their business and thinking through how can we build a model and then how can we execute against that model and then develop more granular KPIs across a number of different metrics. So Luke, why don't you talk to us a little bit about what, maybe start at the very beginning when a client comes on board. I. And you have to think about, um, developing a growth plan for them. What's, what's the next step after you've sort of established what their business objective is?

[00:02:13] Luke Austin: So I would say we actually take a different approach from the beginning. So the team of growth strategist that I oversee, we, we don't start by asking . What the client's goal is, understanding the business objective is, is crucial as Taylor walked through, but what we're trying to do is based on the business data and performance, inform what the business objective should be based on what time window the brand is wanting to realize or maximize their profitability.

Within all of, all of the, this conversation around defining the business objective really comes down to . What time period are you wanting to maximize profitability within? Is it next month? We want the most cash in the bank and maximize our profit dollars for you know, the end of 2024. Is it? In a year from now we're trying to go through an acquisition.

And so we want to maximize our 2024 p and l to maximize the profitability in that timeframe. So I would say that's the core question that we want to understand and get clear on with clients. But then I. What we'll do is take that indication of the time window we're trying to maximize profitability in, and build our system around that, rather than having our system informed by some sort of revenue goal or efficiency metric or year over year growth number, whatever it might be

[00:03:33] Richard Gaffin: Right. So it's about the first step then is essentially about translating whatever the business objective is into the language of profitability over time, essentially. So

whatever your objective happens to be, let's say it's a certain revenue goal or whatever what does that mean in terms of the amount of profitability that you're looking for over window of time. Does that

[00:03:52] Luke Austin: Exactly. Yep. And that's the . As honest and transparent we can be together with our partners early on about that conversation. It's most helpful for everyone, for us, for us to help inform every p and l line item in the context of that business objective. And then for us to be aligned with the client on the decisions we're making on a day-to-Day basis that build towards that.

And we, we get, we get really clear about what this looks like with certain clients. Like I mentioned, it's . I'm trying to sell my brand by the end of 2024, so I'm trying to maximize my TTM ebitda at that point in November or December of next year. That's the goal that we're maximizing against other brands.

It is . We have, you know, a credit line through a bank that's gonna give us really good good rates on capital to be able to invest in the business. But we need to show three months of consistent efficiency in terms of a cost and CAC in order to access that. The, the business objectives.

Objectives can be widely variable, but it's . The clearer we can get on those conversations 

and the more honest we can have those conversa conversations early on, is really what we press for, because we can be the best partners then once we have that context.

[00:04:59] Richard Gaffin: Gotcha. Okay. So let's talk about what happens after that sort of profitability window has been established, let's say, and,

and maybe another way of framing that would be to say, to jump to the end. We, we, we've talked about, Taylor's talked about a lot on this podcast, that the final step, the thing that we put into place for our, our clients is a very specific, forecast that holds every dollar accountable every day and tracks 35 key metrics against very specific targets that you can sort of look at every day to see if you're on or you're, you're on pace or off pace rather. So how do we get from what we've just talked about, that profitability window to getting to a place where we can start to actually build and execute against the plan.

[00:05:40] Luke Austin: Yeah, that's great. So for those listening as well, we're gonna be sharing some visuals here. So, we'll have those up as we walk through some of the pieces of our system and what they look like. But to, to your point, Richard, what you just said, what we're getting to essentially what, what can be like a very tangible output of the system that we're building is our status daily email.

So it's an email delivered into your inbox every day or even more frequently, if you like. That shows performance against target for all 35 plus of those key metrics. So this is an example of one of those, November 1st through six of 2023, where we can see we're 4% ahead of contribution margin.

We're 3% behind revenue pacing. We're ahead of spend behind MER. So total business metrics. We can see the performance by day, and then we can dive into our customer cohort level metrics for returning customers, returning revenue, returning orders, return rate new revenue, AMER, weighted cac, et cetera.

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