The challenge is acquiring new customers without going net negative on profits.

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Here's the revenue model:

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1. The store’s average order value (AOV) is $90
2. The gross margin is 60% (so $36 is the cost), so they have $54 left to work with.
3. Let’s assume the marketing budget is $1000 and your cost per click is $1.23 (industry average)
4. Your cost to acquire a new customer (CAC) is $41.67, which leaves you with about $12.33 of runway to break even.

This $12.33 is your profit or promotion budget (unless you are OK with losing revenue for the first transaction).

What lever can you pull to profit on the first sale to a new customer, a hardcore “comparison shopper”?

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Acquisition

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Focus on cross/up-sell. Depends on the data you collected - if you don’t have good historical data for recommendations, you’ll use the standard “Frequently bought together” approach, which rarely cuts the mustard.

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Show retargeting ads. CAC is vulnerable to the Ad Networks (see below), and you must be OK with CAC increases. If your conversion rate is standard - 3%, you will need at least 30 clicks ~ $30 to make the first conversion. This is way above the $12.33 runway we have for the campaign.

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Increase conversion rate: So you either focus on discounting to increase the conversion rate, or you can leverage personalization & experimentation to increase lift. The first approach is a crutch as with increased conversions, your gross margins will worsen, and you’ll end up with negative or razor-thin profits.

As you can see from the example below, if your conversion rate improves at at least 20% due to optimizations, your profit increases from $12.33 to $19.52, which you can reinvest into your ad budget/promotions and still keep profitability. The bottom line is that if you focus on improving your conversion rate, you will ultimately generate more revenue and profits - it’s up to you how much you want to reinvest into growth.

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Retention & Monetization:

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Increase lifetime value (LTV). If you do use the approach to break even (or make a low profit) to acquire the customer, you MUST make it for it using a high repurchase rate or robust LTV approach to get to CAC: LTV ratios of 1:3.

Even the most efficient acquisition strategies will fail if your LTV/CAC ratio will stay low - customer retention is ALWAYS the most efficient way to reach profitability.

After the first purchase, your LTV is $90 and CAC $41.67, so 1:2, you need at least an additional order to get to 1:3. In this case, you need to focus on post-purchase upsell and personalized offers to keep engaging the customer so they stay in the loop with your brand.

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Solution? Enter GrowthOS

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With many business leaders at a crossroads, the new direction is clear—precision and efficiency to manage the customer's lifecycle.

High-performance companies are deploying AI-first technology that provides customers the timely marketing they seek, thereby growing LTV sustainably.

The hard truth is that if you don’t create timely marketing moments with your customers, your competitors will.

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GrowthOS components

Sellers & marketers need an elegant GrowthOS that operates on Intent rich User to create timely marketing moments:

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Data integrations & identity resolution

It needs to connect multiple data sources and allow having a unified user profile to enable consistent experience & personalization across any device.

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Timely experiences and an all-in-one marketing suite

Have a range of marketing & sales tools to increase marketing efficiency and provide timely experiences to customers with less operational overhead.

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Growth methodology

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GrowthOS is not just another tool - it is fundamentally a new way to operate your growth operations end-to-end.

We developed a thoroughly researched and industry-backed methodology to empower any business to level up its game in reaching the ultimate goal - growing faster & more profitably.

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1. Discover audiences🔮

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Identify, build, and analyze audiences. Unify customer data across all digital and offline touchpoints and use it to identify your target leads & accounts.

✅ How to →Audiences

Predict user-intent in real time with machine learning. Understand your customers better than ever before with a neural network algorithm that identifies future-purchase intent.

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✅ How to → Predict

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2.Engage customers 💬

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Personalize every interaction to deliver an optimal customer experience at scale across web, mobile and email.

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✅ How to → Personalization

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Set timely, automated triggering events based on real-time behavior to send timely emails and SMS when customers are most likely to engage, like in the event of lifecycle stage change, a lack of activity shown in the past week, and more.

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✅ How to → Journeys

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3.Optimize experiences 💹

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Experiment anywhere on your digital properties with great agility, more confidence, and less risk

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✅ How to → Experiments

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✅ How to → Insights

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Sounds great, but how complex is this?

Launching your GrowthOS motions does not require dozens of spreadsheets, OKR docs, or multiple agencies to figure out your way.

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We created a library of use cases to get inspiration on starting up with GrowthOS on the fly.

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Personalized category upsells →

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Customer lifecycle segmentation →

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Purchase propensity & abandonment →

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Go get em'!

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