The Black Friday Cyber Monday Playbook for Profitable DTC Growth
If you think Black Friday Cyber Monday is the moment to swing for the fences on LTV, this episode will change your BFCM playbook.
In this episode of The Free to Grow CFO Podcast, Jon Blair sits down with Dylan Byers, co-founder of Aplo Group and his co-host on the Ecom Scaling Show, to break down how brands should actually think about CAC to LTV during the holiday shopping season. They challenge the common misconception that BFCM is prime time to chase LTV, walk through why shipping and fulfillment costs alone can run 10-20% higher during the holidays and quietly widen your payback period, why gifting customers acquired during this window often carry far worse lifetime value, and why apparel brands especially need to treat BFCM as a profit-realization moment rather than an excuse to acquire even deeper in the red. Jon and Dylan also get into a subscription-only offer strategy for high-LTV brands with low subscribe-and-save take rates, and why every brand, regardless of which growth marketing game they're playing, should set separate new and returning customer profitability targets rather than changing the rules just because it's the holidays.
If you're planning your Black Friday Cyber Monday strategy and want to protect profitability instead of guessing, this one's for you.
Key Takeaways
BFCM is primarily a CAC game, not an LTV game, for most brands — with food/bev and other high-LTV categories being a notable exception.
Regardless of which growth marketing game you play, set separate profitability targets for new and returning customers rather than changing your rules just because it's BFCM.
Holiday shipping and fulfillment costs can run 10-20% higher, which extends payback period even before accounting for deeper discounts.
Transcript
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00:40 Summer Reflections and Holiday Preparations
01:20 Understanding CAC and LTV During BFCM
05:54 Strategies for High LTV Brands
11:39 Navigating Apparel Brand Challenges
16:13 Final Thoughts on Profitability and Offers
Jon Blair (00:40)
Alright, stoked to be back again with my homie, Dylan Byers from the Aplo Group. What's up, Dylan?
Dylan (00:48)
It's good. It's still summer in Canada. I like the seasons, but I like it when summer lasts a long time. So I'm still happy about that. How are you doing Jon?
Jon Blair (00:59)
Man, doing great, just got back from the final summer vacation with my kids to the beach. They start school in a couple days and so still very much summer weather in Austin, Texas but turning into the school fall season so I'm excited. They are, no they're very happy. They're ready to get back with their friends and start learning so.
Dylan (01:16)
Are they happy to be going back to school or unhappy to be going back to school? Let's go. That's good. That's good.
Jon Blair (01:25)
We're excited for the change of the seasons and speaking of change of the seasons, we're talking about the holidays today. Black Friday, Cyber Monday, the holiday shopping season and specifically, I want to pick your brain on how brands can leverage this upcoming sale season, Black Friday, Cyber Monday and beyond to optimize CAC to LTV. I wanna start by talking about
I would love to get your take on like what's the biggest myth or misconception that you see most commonly around how you can leverage, you know, the holidays for CAC to LTV that you think is fundamentally wrong.
Dylan (02:13)
I think that...
In any business, there's two ways to make more money. either acquire customers with more margin or you make them worth more to you on the subsequent orders over time. And I think that BFCM is uniquely a moment where that is really a profit realization moment for most brands. And it is probably not the time of year to like play the LTV game for most companies. I think that even if you're a durable good, there's a lot of value in some cases, depending on your
Jon Blair (02:38)
Mm.
Dylan (02:46)
seasonality of like kind of playing the CAC to LTV game in a month or two before those September-October cohorts can be very valuable compared to other cohorts in the year for many brands.
However, at the end of the day, November and December, you need to be profitable for most businesses. That's not the time to acquire at a loss and wait for the paybacks because in most cases, those November, December cohorts, if you go into your Shopify cohort report dashboard, typically they'll have some of the worst payback periods. Now, that's for like...
the majority of brands, if you're a CPG brand, November is usually like good, like in the second core tile of like effectiveness for most of those kind of like high LTV brands. So you can still play the CAC to LTV game. But for most businesses, I think about in that moment, you're really playing the CAC game. I have like one LTV idea that I think most brands, a lot of brands could use to try to improve LTV in that time of year. But by and large, I think it's a CAC game that's had me here.
Jon Blair (03:51)
It's really interesting. what do you think, what do you think is the biggest opportunity? And maybe we might have to dig a level deeper and talk through the different games, the high LTV game, the apparel game or high SKU count game and the new customer dominant game. like, what do you think is like the biggest opportunity for brands to leverage Black Friday, Cyber Monday time for?
when it comes to CAC to LTV. And I guess let's talk in the context of a high LTV brand. We have a high LTV brand, sells a consumable. We're gonna assume that it's a big part of their strategy is subscription all throughout the year, subscription opt-in. What's the biggest opportunity to optimize CAC to LTV during the Black Friday Cyber Monday for that kind of a brand?
Dylan (04:43)
So I would say in the months leading up to it, you can look at your cohorts and decide if historically the August, September, October cohorts compounded a faster rate in the first three to six months due to BFCM, you could lower your CAC targets perhaps because you could have an expectation for better CAC to lifetime contribution margin. That's like one part of the game. If you're a high LTV brand, I also think you're kind of...
entering a period where most high LTV businesses really excel in quarter one as other advertisers pull back a lot of high LTV Brands are also food and bev so there's often a health angle in many of these cases Which allows for really good to kind of like new year healthier you tailwinds So I do think you actually can still scale ahead of that moment because during that time of year for many brands the return customer revenue is subsidizing
some of the new customer possible losses. That still makes sense on the CAC to LTV basis. I think for most brands, the single most useful thing that I have taken away over time is I think that most brands don't promote hard enough in December, meaning like a lot of brands will run their BFCM.
and then December is not an aggressive enough promotion. If you want to get those Black Friday customers to come back, because for some brands, the cohorts on those customers suck. Like if you're looking at the data, sometimes it's like, yep, they were definitely gifting because they never come back and buy again. Or they do at a very low frequency. So I would say that my biggest recommendation is like,
Jon Blair (06:03)
Mm.
Dylan (06:16)
As you approach that shipping cutoff in December, consider running another promotion that is similar in aggression to BFCM. Or what honestly is sometimes the best is in some cases, it makes sense just to run your Black Friday offer through to your shipping cutoff and just repackage the offer or...
alter it slightly. I think that's how you actually get good November LTV in December is ideally you have enough time to get them to convert again in the same kind of promotional period, but it's really hard to get someone to convert who, for example, just got 35 % off on Black Friday if you're offering them full price or 10 % off on December 15th. It's a lot easier if you offer them the same thing because they've already kind of opted into that price and they're not kicking themselves going like, darn, I should have bought two in November sort of thing.
Jon Blair (06:35)
Mm.
Jon Blair (07:04)
That's interesting. One thing that I was thinking about as you were talking through that is another really important aspect to the kind of like financial analysis side of things is that if we're talking about acquiring this new cohort in the month of November, during the BFCM promotional period, you do need to factor in that that loss that you take on acquiring new customers.
is going to be different at a unit economic level. Not just from the, think the obvious thing is you've got to factor in the impact of the discount, right? Like, or the more aggressive discount. But maybe the less obvious thing is, freight out and ship, like, and fulfillment costs actually usually go up during this time of year. Actually, it starts on the inbound, usually inbound processing is more expensive, and then pick pack and shipping is usually more expensive, and then the actual,
UPS, know, FedEx charges are higher because there's these what are called peak season surcharges. And so you actually need to dial in a holiday specific unit economic analysis to really determine what your loss is gonna be on new customers. And it's gonna be, I think, a bit different than it is the rest of the year because of the heavy promotion, but then also because shipping and fulfillment costs go up somewhat significantly. I mean, it's not uncommon.
for me to see that a brand's shipping and fulfillment costs combined are 10 to 20 % higher during Black Friday Cyber Monday than they are the rest of the year. And so that's important why, because when you talk about the payback period, right, for that loss that you're incurring, you may need to accumulate a bit more LTV to get yourself to break even to cover the fact that the unit economics are slightly different. The other thing that I was thinking about
that I'm curious to get your take on is like, do you see, you know, if you're getting people to opt in to a subscription during Black Friday Cyber Monday, do you typically tend to forecast that there's gonna be higher churn in that particular cohort? Do you tend to see it about the same? Like, I'm curious to see what you typically see there.
Dylan (09:13)
Mm-hmm.
Dylan (09:31)
So, again.
Broad, broad statement, but typically it's not that different as long as the offer is not that different. Meaning like, if you are a business that has no seasonality and you're like a food and bev or like a supplement or something like that, that is like relatively evenly consumed 12 months of the year, not always, but sometimes you'll notice that there's really not that much difference in cohorts. Now there's usually some difference, but it can be genuinely negligible in some cases.
Jon Blair (09:37)
Mm.
Got it.
Dylan (10:02)
So if you're kind of an evergreen offer, it's like 20 % off your first order when you subscribe and save. If you run that in November and the historical support it, there's a good chance it's not gonna be that different. But if you dial the offer up and it's like 40 % off your first order when you subscribe and save.
It is reasonable to assume that the customer who had 40 % off their first order, who then went to full price or like some like lower discount for subscription or recurring, like five, 10, 15 % off, whatever, may have a higher churn rate because there might be more sticker shock on that renewal. So if that's true, you have to do some, like, I guess...
There's ways to look at historicals, but sometimes you have to make an educated guess at what you think that increased churn might be and factor that into your CAC targets. So yeah, as long as the offer is the same, it's probably like reasonably stable. If it's different, have to factor that into your target setting.
Jon Blair (10:46)
Yeah.
Jon Blair (10:58)
Yeah, that's interesting. One, my suggestion from the finance side of the house is to run a sensitivity analysis, right? Like we have this tool that we built where we can do a, effectively like a payback, a cohort payback, you know, scenario analysis where you can decide, you've got the inputs to effectively say if CAC goes up by X percent and LTV goes down by
you know, Y percent? Like, what is the payback period look like? And so, it's not necessarily a prediction exercise, it's more of a what if exercise, but you can go ahead and say like, well, let's say that 40 % off, you know, subscription opt-in offer versus our evergreen 20%, let's say that that means LTV is gonna go down by 25 % from historicals. And then you can look and see at a given CAC, what is your payback period?
And so then it becomes a game of like you're placing a bet and you're saying like, well, I feel like that it's reasonably probable that we're gonna do at least this on LTV at this CAC and then you place your bet and you go for it. But I guess the point that I'm making is that whether you're talking about forecasting the actual acquisition unit economics as they live differently in the BFCM time of year,
or you're looking at potentially adjusting your LTV expectations because you are, you know, putting out a more aggressive subscription opt-in offer, you need to have a, you're ultimately placing a bet on that cohort of customers that you're acquiring during November, December. And you got to make sure that you feel comfortable, that you're not overextending yourself to acquire this big tranche of new customers that has a longer payback period than you usually have the rest of the year without understanding if you can actually float that.
cash flow wise.
Dylan (12:54)
Yeah, my favorite offer for some high LTV brands during VFCM is...
something along the lines of the following. If you're a high LTV brand that has like sub 40 % sub and save take rates, like most consumable products can get somewhere between 50 to 80 % take rates in my experience, still a broad range. If you're already at 60, the incremental improvements you can make might be hard, but if you're like 10, 20, 30 % and you have a product that people can come back and consume.
It's probably that you don't have, it's probably that you have not optimized the offer to get higher seven save rates. And when that is true, what I like to run is basically just take whatever historical discounts you've ran and get a bigger one to subscribe and make the offer for Black Friday subscription only. One of the downsides of consumable product businesses are that if you just give a blanket discount, there can sometimes be like,
Jon Blair (13:46)
Mm.
Dylan (13:54)
like pantry stocking or if it's not food, it's not always applicable, but like people just bulk buy and then they like take next month off ordering because they bought like two months work of products in this hypothetical. So if you're going to give offers to like consumable products or replenishable products, it really often only makes sense to make them be subscription based. Otherwise you're just pulling future revenue forward, which unless you have like a dire cashflow reason to do. Hello there. It's maybe not worth it.
Jon Blair (14:24)
Did you just he found the key for the door and unlocked it give me give me one second
Dylan (14:27)
Smart kid, smart guy.
Jon Blair (14:43)
And he has the key, I need you to get it from
Sorry about that.
Jon Blair (14:55)
Sorry about that dude. We should be fine to just pick it up from here. So I was gonna ask you about, I wanna switch gears, okay. So I wanna switch gears really quick to talking about the apparel brand game as it relates to CAC to LTV. It's not that I wanna ignore the new customer dominant game. There is a playbook for BFCM, but I really wanna talk about the opportunity, like how to think about acquiring customers versus trying to drive LTV.
Dylan (14:57)
Yeah, yeah, all good.
Jon Blair (15:25)
And I think the apparel, I was talking to an apparel brand founder the other day, and there's this interesting thing in my opinion with that game where it's like, yes, you want to acquire, you for sure want to acquire new customers during BFCM, but part of the way that the apparel game works, generally speaking, is that there's this 12, 24, 36 month LTV that you accumulate much slower than the subscription or high LTV game.
And you need to realize a good amount of that during the holidays to pay for your future breakeven, your historical and future breakeven-ish new customer acquisition that tends to exist in this game. So you can't, you can't, you can't ignore that. How do you, what's your advice on how to think about balancing the acquiring new customers in the apparel game versus also trying to drive the very important LTV?
during this time of year.
Dylan (16:23)
Yeah, so clothing and apparel is interesting because the LTV of one brand to another can vary dramatically. But I'm going to kind of treat this as like a run of the mill, like average clothing and apparel brand. And I would say that in that scenario, you have like solid LTV, but it's not phenomenal. And it might be good enough to allow you to acquire it like break even-ish like you often say.
And if that's the case during the FCM, you definitely want to use that as like a profit accumulation moment on the return customer side. And that influxes, you don't want to like then take a new customer loss and have returned customer just subsidize it to break even for most brands. That's going to be a very profitable moment of the year. So I would definitely say that. And that might then require you slightly increasing your new customer ROAS targets, which might already be true due to the fact that it's a paid.
a steeper discount moment. So I would say that that's a, for that category, it's definitely a profit realization moment and not like a let's acquire even more customers that are at even bigger loss. It doesn't mean you have to like be super profitable on new customer, especially if you still have solid LTV for those cohorts, but clothing and apparel is tricky and that a lot of those...
Jon Blair (17:21)
Mm.
Dylan (17:40)
new customers during that time of year can sometimes be gifting customers and gifting customers often have like way worse lifetime value than people purchasing for themselves, say in March.
Jon Blair (17:52)
That's interesting. So would you recommend going back to like previous cohorts, go back and look at previous cohorts that were acquired in say November of previous years and seeing how that LTV looks compared to, I'll call it an average month.
Dylan (18:08)
Yeah, 100%.
Jon Blair (18:11)
That's interesting. That's super interesting. But the point is, I think this is the takeaway that I want everyone to leave with here, is that regardless of what game you're playing, new customer dominant game, the apparel game, or high LTV subscription game, you should be setting parameters around what you're trying to achieve profitability wise from both new customers and returning customers separately.
You can definitely and should definitely forecast the combined and blended impact, right? Of each of those, but you don't measure the success and performance of, of new customers and returning customers from a profitability standpoint, like in the same way, it's a separate analysis and you should be saying during this Black Friday, Cyber Monday, my goal is to get this out of new customers. And my goal is to get this out of returning and it all ties back to that growth marketing game.
playbook that Dylan and I are always talking about, which is understand that ultimately the LTV profile and the unit economics of your product category and your customers are going to dictate which game you're playing and you've got to set up the new and returning customer profitability targets and parameters in alignment with that game. And in reality, to some degree, Black Friday Cyber Cyber Monday or the holidays, it's just like a
bigger moment of the same thing you should have been doing all year round. Like, yes, there are certainly some, there's definitely opportunity to magnify different areas within your strategy, but ultimately, new and returning customers, they have to play the profitability role they've played all year round. So don't go changing those rules just because it's Black Friday Cyber Monday. That's what I want everyone to hear. So any final thoughts you have on this topic, Dylan?
Dylan (20:06)
Yeah, my biggest final thought on this topic is that...
If you're a brand that's going to run a wildly different offer, like I think there's a lot of brands that don't take the time to set up their variable costs properly in a tracking software, be it triple whale or another competitor. And, you know, may just kind of run like a blended, like, this is my 37 % variable costs or whatever. when discounts are changing the percentages that you were talking about on like shipping and logistics, Jon I think that like a five, like, you know, five point
swing on your variable expenses can have like huge impacts to your end outcome if you are only forecasting to be 8 % profitable or whatever arbitrary number you want to assign. So if the offer is fundamentally changing and the unit economics are fundamentally changing and it's hard to say for sure exactly how much in some cases depending on what product gets purchased because different products may have different discounts like blended averages can be your friend sometimes for simplicity but in some cases we're you know
you're making a really big bet during a key moment, you just have to have the infrastructure in place to sometimes track this stuff daily. And I've seen like, I've seen that go wrong when you, you know, realize, I should be tracking this daily. And you should try to like build the plane as you're falling a little bit for lack of a better analogy, like make sure you have your financial data in place and you know, easily tracking day by day, far before you need it during that critical time of year. That's the single biggest recommendation I have.
Jon Blair (21:38)
I love it. Well, I appreciate you coming on Dylan and chatting through this. If anyone's interested in going deeper on this topic, we have a great episode on our other podcast that Dylan and I host, Ecom Scaling Show, where we go even deeper on strategies for Black Friday, Cyber Monday. And if you're looking for any growth marketing help, definitely hit up the guys at the Aplo Group. Dylan, thanks again for coming on and I look forward to having you on soon.
Dylan (22:05)
Thank you, Jon.
