Wednesday Digestible - Brand Power & the CAC Conundrum

Hey everyone, 

Time again for another bite to chew on. 

You know one of the toughest things about e-commerce and DTC is just how fast everything moves. 

You’ve got all of the stuff that comes with running a business or building something new. That’s difficult enough. 

And then on top of that, you have the rapid evolution of theory, strategy, tactics, tools, and just the landscape in general.

It’s a lot. But, don’t worry - we’re here to help. 

Today we’re going to share two snacks and a meal - stuff we’ve found recently that made us smarter or think about things a little differently.

On the Menu

• The compounding nature of brand

• Activating unengaged leads on BCFM? Do this.

• The iron law of increasing CAC

Why brand investment matters

Sean succinctly nails the concept of brand value here. 

When you first launch and are looking for product market fit, no one really knows you. 

You have to build trust through things like product quality and customer service. And you basically have to do it one person at a time. 

That’s why direct response and performance marketing are so valuable in DTC, especially before you hit real scale. 

But as you go along and you start to build up brand equity,  that positive awareness and perception compound over time (assuming you’re doing it right!)

A good, strong brand warms up the top of funnel for you. 

When your target audience has built-in awareness, trust, and interest before ever interacting directly with you, it makes the rest of your marketing and sales so much easier. 

One thing we try to keep very clear at Obvi is the distinction between an investment and an expense. 

• Expense → Something that costs you money that you should try to eliminate or minimize if possible.

• Investment → Something that costs money up front but should lead to a return over time. 

Sometimes the distinction is pretty obvious, like investing in R&D or Facebook ads.  

But sometimes brand investment can get caught in that “expense” filter. 

For instance, things like customer service or high-quality packaging can seem like expenses and be de-prioritized. 

This is something to remember as your company grows. Keep finding ways to invest in your brand, even if they’re small, at every step along the way.  

Keep making regular deposits into your brand equity bank and it will help your business survive and thrive long term. 

Don’t forget about deliverability on BFCM

One of the most challenging things about email marketing is all the technical rules around deliverability. 

It’s one thing to think about tactics like offer, subject line, copy, design, and customer segmentation. That should be part of the DNA of your marketing efforts.  

But most founders and operators aren’t spending the time to figure out how email service providers are treating their sends. 

Unfortunately, this is SUPER important because if your message ends up in the spam folder, then all that other stuff is wasted. 

Here are some technical factors to think about when it comes to deliverability:

High Bounce and Complaint Rates

These signal poor list quality and will negatively impact deliverability. 

Usually due to stuff like: 

• Outdated or low-quality email lists

• Purchased email lists

• Sending to unengaged recipients (DING DING)

Low Engagement

If people don’t open, click on, or engage with your emails, it’s bad news. 

Once subscribers consistently don't interact with emails, inbox providers may start filtering them to spam. 

All this goes if you’re sending to an inbox someone doesn’t check anymore, obviously. A ghost email address won’t be opening or clicking your sale offers. 

Content Issues

Sometimes you can get pushed to spam just due to what your content says or looks like. 

Potential issues include:

• Spam trigger words in subject lines

• Excessive punctuation

• All caps text

• Poor text-to-image ratio

• Suspicious URLs

Jimmy’s reminder is a good one heading into the holiday shopping season → 

As you prep your retention strategy, don’t forget that list hygiene matters (and that you probably shouldn’t be reaching too far back into your unengaged segment anyway.) 

The Law of Mom & Pyrrho (here’s why your CAC goes up)

Taylor’s analogy is spot on. 

Within your total addressable market, there are going to be different layers of potential customers. 

Some will be eager early adopters. 

Others will never want your product no matter what you do. 

Here’s another way to think about it →

Say you’ve decided to sell chocolate covered almonds at the county fair. Over the course of the day, about 10,000 people will visit the fairgrounds. 

You set up your stand in a place with decent foot traffic. 

You have only a hand-drawn sign that tells people what you’re selling (chocolate covered almonds) and how much they are ($3 a box). 

And that’s all you’ll need to sell to a percentage of those 10,000 people - a sign and your product…

• Because some of them will love chocolate-covered almonds (and happen to walk by your booth.) 

• Some of them will happen to be hungry when they see you. 

• Some of them will have kids that want candy. 

But as the day goes by, you’ll run out of those people. Because not everyone loves almonds. 

And not everyone will walk by your booth or pay attention to your sign.

They’ll need more convincing. 

So you need to get their attention or give them a better reason to buy.

And then, of course, some segment of the crowd will be allergic to almonds or hate chocolate. 

So if you want to sell more boxes of almonds, you’ll have to increase your investment - another booth, a bigger sign, a promotional offer, etc. 

And you’ll have to weed out the never-buyers as well.  

Taylor’s recommendation?

“New product releases, marketing moments, customer reactivations, they provide you periods of resisting the inevitable force.”

Our recommendation? 

Keep this simple truth in mind as you build. 

You’re talking to different segments of people with different levels of interest and awareness. 

It’s why you need diversity in your approaches, be it ad creative, messaging, or even sales channels. 

Oh, and remember to build your brand (See section 1) →  

Imagine coming back to the fair next year and everyone talking about how your chocolate covered almonds are the best they’ve ever had…

Last few bites…

Interested in a deep dive into the value of brand? → Check out our Podcast on Billion Dollar Branding w/ Preston & Tom of Chubbies shorts:

Tom and Preston sold Chubbies to Solo Stove for 9 figures. During this chat we went over a wide range of topics including:

• ​Creating a brand that resonates with consumers

• Building brand value

• Balancing short-term and long-term marketing strategies

Definitely worth a watch or a listen if you’re looking to build a killer, high-value brand.

Also, Don’t miss our take on the Ghost Energy acquisition → We go over how they used both old and new-school branding strategies to get to their $1 billion exit.

All the best, 

Ron and Ash