"...only when the tide goes out do you discover who's been swimming naked."

- Warren Buffet

The DTC eCommerce space is feeling the crunch.

As the tide receded, it became abundantly clear which brands were swimming naked.

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Here’s 3 key fundamentals that these brands ignored:

1^st Ignored Fundamental

They prioritized growth instead of building a Customer-profitable bottom line.

Obviously it's not inherently bad to focus on growth, but it quickly becomes a liability when brands don’t optimize for customer lifetime value first.   

Simply focusing on getting new customers and hoping for long-term profitability to take care of itself with just a few triggered-emails, is naive to say the least. 

If you’re not tracking the profitability of your customer cohorts, you might as well take that sweet VC money to Vegas or Montecarlo.

2^nd Ignored Fundamental

The second ignored fundamental is that Retention takes much more than CRM.

Brands with low retention, even if profitable on first purchase, saw their margins evaporate as soon asCustomer Acquisition Cost skyrocketed.

Nailing Retention requires overarching strategic thinking (…and action!) across several aspects of your brand,

For example:

• Think in terms of “Product journey” for your customers - entry product, 2nd purchase product, etc..

• Think in terms of “meaningful Distribution” - if I can find the exact same products on your brand site as well as on a retailer’s one, why should I ever come back to yours to replenish or expand?

• Think in terms of what CRM insights can inform your Acquisition efforts - like identifying what type of customer is driving higher than average Lifetime Value and tuning your Acquisition efforts to find more of the same.
• ...etc

3^rd Ignored Fundamental

The third ignored fundamental is Keeping Low Reliance on Paid Media.

Relying too much on platforms like Facebook and Instagram makes a business fragile, as any changes in costs, platform, or competition can significantly impact performance - many brands got seriously hurt last year (and are still suffering) because of this.

Investing time and money in grassroots, genuine community-based acquisition may not yield immediate results, but it’ll prove extremely valuable in the long run offering many more opportunities for growth.

Truly successful brands understand that: scaling big starts by focusing first on things that don't scale.

They build a hardworking“customer engine” well before amplifying their message across media.

in conclusion

By keeping these fundamentals at the forefront of your team's mind, you can protect against market volatility and lay solid foundations for real growth.

So, as the tide goes up and down, you won't get caught swimming naked.