BONUS EPISODE: Ecom Scaling Show: NC-ROAS, aMER, LTV? Why Marketing Metrics Are Misleading (Ep. 11)
Episode Summary
Welcome to the Ecom Scaling Show, brought to you by Free To Grow CFO and Aplo Group! Join hosts Jon Blair (Founder, Free to Grow CFO) and Dylan Byers (Co-founder, Aplo Group) as we dive into the crucial—yet often missing—link between marketing and finance in DTC e-commerce.
In Episode 11, Jon and Dylan jump into the (almost) endless list of e-commerce acronyms and metrics. They emphasize the importance of clarifying the definition of metrics like NC-ROAS, LTV, and CAC to ensure clear communication within teams. The discussion covers the different types of ROAS, the significance of customer acquisition costs, and how to measure lifetime value accurately. Learn why it’s crucial to separate new customer and returning customer contribution margins and how these metrics can impact decision-making and profitability.
Key Takeaways
Clarity in metric definitions fosters better decision-making in e-commerce.
Defining gross margin versus contribution margin is essential for accurate financial analysis.
LTV should be measured in contribution margin dollars, not just revenue.
Episode Links
Free To Grow CFO: https://freetogrowcfo.com/
Aplo Group: https://www.aplogroup.com/
Jon Blair on Linkedin: / jonathon-albert-blair
Dylan Byers on Linkedin: / dylan-byers-046010149
Transcript
~~~
00:00 ROAS Terminology
02:05 Defining ROAS and Its Variants
08:04 Marketing Efficiency Ratio (MER) Explained
16:16 Gross Margin and Variable Costs in E-commerce
20:57 Understanding Incremental Impact in E-commerce
21:58 Contribution Margin: Dollars vs. Percentage
23:36 Balancing Ad Spend and Profit Margins
25:01 Importance of Financial Forecasting
27:27 New vs. Returning Customer Contribution Margin
35:21 Customer Acquisition Cost (CAC) and Lifetime Value (LTV)
43:55 Summary and Key Takeaways
