Building High-Growth Profitable D2C Businesses (Part 7)

Retention and Growth – 2

D2C Founder: Is there a framework which brings all these growth marketing ideas together?

Yes. And this is how it looks:

Hotline and Properties are at the heart of a D2C business. Marketplaces provide an initial sales channel, while acquisition needs to be targeted to minimise AdWaste.

Here are a couple of graphics which take a customer-centric view of the journey and the various interventions that marketers can make:

D2C Founder: How will I know if I am succeeding? Is there a North Star Metric?

While there are many numbers that can be tracked, the most important number is Earned Growth, which “is the accounting-based counterpart for the Net Promoter Score. It reinforces the effectiveness of NPS and provides the organizations that use it with a clear, data-driven connection between customer success, repeat and expanded purchases, word-of-mouth recommendations, a positive company culture, and business results.”

Here is an explainer in “Net Promoter 3.0” in Harvard Business Review: “Earned growth has two elements. The first is the back-for-more component captured by a battle-tested statistic called net revenue retention (NRR), which is used in several industries, most notably software-as-a-service (SaaS). Once you have organized revenues by customer, you can determine your NRR. Simply tally this year’s revenues from customers who were with you last year, divide that amount by last year’s total revenues, and express that figure as a percentage. The second component is earned new customers (ENC). It is the percentage of spending from new customers you’ve earned through referrals (as opposed to bought through promotional channels).  To determine your earned growth rate, add NRR and ENC together and then subtract 100%.”

Published by

Rajesh Jain

An Entrepreneur based in Mumbai, India.