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DTC Faceoff: Organic Vs Paid Marketing

dtc-faceoff:-organic-vs-paid-marketing

Doing marketing for a DTC brand is hard.

That's why we asked two industry experts with contrary opinions to give us their thoughts.

One is hyper-pro paid marketing, and the other has a slightly different opinion.

Imagine a friend of yours is about to become a full-time ecommerce entrepreneur. What would you recommend to her?

Michael:

Be prepared to reinvest every single dollar of profit back into acquiring new customers for years to come. Of course, you should have a salary, but be prepared not to take any profit.

As the following article mentions perfectly, you are trying to acquire repeat buyers for your brand in the long run. Acquiring a customer is expensive, but if you are running a solid business that delivers results and has happy customers who keep coming back, your business will know tremendous growth.

However, you also have competitors who are looking to acquire those exact same customers. If there is something that has become very apparent in our industry over the last few years it’s this:

“The brand that is willing to pay more to acquire a customer, will win.”

Michael De Boek

Paid Traffic Specialist, Prominence Agency

Of course, that does not mean that you should become unprofitable, but if you have a healthy customer lifetime value, being able to tolerate a higher cost of acquiring a new customer will give you a huge advantage over your competitors that want to cash out their profits early.

Jake:

Take the scrappiest path possible to $15k / month in revenue:

  • Use an out-of-the-box Shopify template
  • Create an organic following on 1 key channel
  • Build an email / SMS list

“Don’t spend on paid media until you’ve hit $15k / month organically.”

Jake Abrams

Founder, Odyssey

Great, your friend made the leap, quit her job, and is ready to scale! In your opinion, which three things should she focus on?

Michael:

“If you could only focus on three things, I would advise putting your focus here:

1. Build your customer lifetime value

So many e-commerce brands are obsessed with customer acquisition, which I completely understand, but building long-lasting relationships with returning customers is the #1 key to success.

2. Invest in customer acquisition

As I mentioned before, customer acquisition can be expensive, but this is the only way to really grow and scale your business. The best e-commerce brands take a loss on a customer’s first purchase because they know they make it up with their lifetime value.

3. Start building social proof from the start

I cannot state enough how important social proof is. With 90%+ of consumers looking for reviews on your website and testimonials on social media, it’s more important than ever to make sure your customers become your advocates. We use Loox with a lot of our clients and the lift in conversion is impressive, to say the least!

“We use Loox with a lot of our clients and the lift in conversion is impressive, to say the least!”

Michael De Boek

Paid Traffic Specialist, Prominence Agency

Your customers are your best salespeople!”

Jake:

If you break down any ecommerce business, there are 3 core pillars:

  1. Product
  2. Customer Experience
  3. Marketing

To sustainably grow an ecommerce business, you need to build a strong foundation and create a halo effect for your business using these three pillars. 

1. Create a product that solves a significant problem. 

You need a high-quality and differentiated product that solves a real problem, ideally with a high AOV (over $75). If you’re not differentiated on product, everything else you do will be more difficult and expensive (returns, referrals, customer tickets, marketing, etc.). 

So actually spend the time to make a product that solves a real problem in a way that other “solutions” have failed to do. The problem has to be significant, especially in this economy. 

2. Prioritize the customer experience. 

“Biggest mistake I’ve seen new DTC brands make is that they don’t prioritize customer support. Too many chase shiny objects, like custom / beautiful Shopify websites, expensive content, and other things.”

Jake Abrams

Founder, Odyssey

In reality, the experience of your first 10,000 customers will make or break you.

Build a customer support system that blows the mind of your customers:

  • Responses in 15 minutes or less
  • Perfect shipping notifications
  • Easy returns
  • Ask for product reviews and learn from the feedback

These things are so much more important than a pretty website design. 

3. Build a sustainable marketing engine. 

You cannot build an ecom business using only transactional marketing. Keep your MER to 20% or less, and use that as the limiting factor for growth. This will force you to create sustainable growth systems: like word-of-mouth, SEO, email / SMS flows, organic social, etc.

Paid is a critical part of your marketing operation, and you need the right partners to run it efficiently. But it cannot be your only growth lever.

Tim Kock

Tim has a puppy called Rosa. (He also does marketing at Loox).

Special thanks to our friends at Loox for their insights on this topic.
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