10 Marketing Metrics To Help Identify Whether Your Brand will Hit a Growth Ceiling Soon

Today we see many digital first consumer brands who are doing around 50-100 cr annually. Invariably the question at that stage that grips both founders and VCs is that will this brand hit a growth ceiling soon? New investors coming in starts thinking if current growth based on strong brand/product fundamentals?

If you want to look at marketing metrics beyond LTV/CAC to answer these questions, here are 10 metrics that can help

a)      Total Media Spends

Media Spends as a % of net revenue is a very hard metric without any assumptions and difficult to manipulate

Plot Monthly Data for total Media spends across platforms ( Amazon, Q-com, FB, Google etc) as a percentage of total Net E-commerce Revenue( Marketplaces, D2C etc).

If this remains constant/reduces as the brand scales, it is a positive and means growth ceiling won’t be hit anytime soon

b)      Advertising driven Sales

At early stages, brands rely on pure performance marketing to drive sales. But this reliance should come down as the brand scales

Plot Monthly Data for percentage of Sales on e-commerce platforms directly driven by Ecom Ads, and percentage of sales on D2C directly driven by paid media

If both remain constant/reduces as the brand scales, it is a positive

c)      Organic Visits and Brand Searches

For consumer brands, it is very important to reduce their reliance on performance marketing by working on organic acquisition channels and improving brand awareness.

Organic Visits and brand search volumes are good metrics to understand progress on this front

Plot Monthly data for Percentage of Visits in Website which are Organic, and plot monthly brand search volumes on Amazon, Q-com and Google

If both metrics keep increasing, it is a positive

d)      Amazon Reviews and Ratings

At scale, Amazon Reviews and Ratings are very difficult to game and gives a very true picture of quality and customer experience.

Rather than overall ratings and reviews, plot the monthly data of ratings.

Often early adopters are more considerate and rate innovative products highly. But if the monthly ratings remain consistently high with growing scale, it means the products are really good

e)      Conversion Rates

Conversion rates trends tell a lot about product-price-market-fit, and about the future scope of growth

Look at monthly trends on conversion rates. With scale, conversion rates should go up on Amazon, Q-Com and D2C

A lowering conversion rate often means the in-market audience/core affinity TG is getting exhausted. It is a big red flag if it happens as, it often indicates that future growth by paid media is going to be difficult and expensive

f)        Repeats

Repeat purchases are often the difference between the life and death for CPG brands with AOV on the lower side

Look at monthly data on M1, M3 and M6 repeats depending on the consumption cycle for D2C. Amazon PI also gives the % of repeat sales every month

If these numbers keep on improving/keeps constant even when the brand moves and scales beyond its early adopters and core affinity TG, it is a big positive as it indicates product market price fit at a bigger scale

g)       Discount Driven Sales

Every brand has Gross Margins calculated basis certain pricing. Discounts on top of the MOP are quite common as a lot of e-commerce is deal driven

But the metric of Total discounted sales volume /Total sales volume gives a good idea of the brand’s reliance on discounts to drive sales

This number should remain constant/come down as the brand scales

h)      Price Increase Absorption History

This tells the brand’s pricing power. Strong products/brands often have lower price elasticity. Price increases slightly higher than inflation don’t impact sales volumes for strong brands

Plot the weekly conversion rate data post every price increase. If the conversion rates get back to old levels within few weeks of a price increases, it highlights excellent brand and product strength which will translate to pricing power and better margins in future

i)        Share of Spends/Market Share

Plot the digital media spends for all the players in the category. From this, plot the Share of Spends for the brand.

Since we would have an approximate idea of the brand’s market share, plot the ratio of Share of Spends/Market Share

A ratio of SOS/SOM less than 1 is ideal. If the number is lower than 1, it means the brand can spend more money to capture more customers. If high, then the brand will need to look at other problems to fix like conversion rates etc

j)        Total Awareness/Market Share

The previous 9 metrics can be easily pulled out from public tools and different Amazon/Google/Analytics reports accessible to the brand

But this metric will require an online brand track.

Commission an online brand track to plot the awareness metrics for the core TG defined for all players in the category. From that, calculate the Total Awareness/Market Share metric for each brand.

For Eg in a hypothetical scenario, lets say that the market leader of the category has total awareness of 80% and Market share of 20%. So, the Total Awareness/Market Share Ratio is 4 which becomes a benchmark

For the brand in question, if this number is lower or similar to the benchmark( say total awareness of 15% and market share of 5%), it means there is an opportunity to increase market share easily by increasing brand awareness by increasing spends on media.

But if it its other way around( say total awareness of 50% and market share of 5%), future growth will not be straightforward and brand will hit a ceiling soon

Put together, these 10 metrics gives a good idea of the brand’s

-          Product Price Market Fit

-          Digitally Influenced TG Market Size

-          Customer Love

-          Pricing Power

-          Scope of Future Growth by Increasing Brand Awareness

-          Marketing Execution Effectiveness

These hard metrics will help founders and marketers track their fundamentals and to ensure they won’t be hitting a growth ceiling without seeing it coming