Ecommerce Enterprise Scaling Guide $995 (Top Demais)

The Ecommerce
Enterprise Scaling
Guide:
How to Build a +$50M Growth Plan
What got you where you
are won’t get you where
you want to be.
Rationally, we know this.
But the instinctive part of our brains tells us something else:
Facing a hypercompetitive landscape and
“JUST KEEP DOING

ever-more aggressive growth goals, enterprise
retailers find themselves leaning on well-worn
WHAT YOU’VE BEEN

tactics. Particularly those from the days of
Facebook arbitrage and lockdown’s online surge.
DOING. IT WORKED It works … until, somewhere around $50 million

in annual sales, ecommerce brands hit a wall.
BEFORE. WHY Having scaled through product-market fit,

one or two dominant channels, and favorable
WOULDN’T IT WORK conditions … the business plateaus.
AGAIN?”
In the past, the answer was simple: Increase
efficiency. When growth stagnates and efficiency
slips, do whatever it takes to get ROAS up.
Here’s the thing: That won’t work.
The solution to $50M+ growth is so counterintuitive

it simply doesn’t occur to most marketing directors.
You have to embrace crumbling efficiency. Learn to love it. Learn to harness it
wisely and transform it into the fuel that ignites breakthrough growth.
1
The Ecommerce Enterprise Scaling Guide:
The Trap, the Truth &
the Solution
The investors, board, and executive team all agree on this year’s goal:
25% revenue growth year over year (YoY) without negatively affecting
EBITDA or enterprise value.
Exactly how that growth is supposed to happen seems like an afterthought.

The only real consideration? Dollars in, dollars out. Make a positive return on
whatever you spend.
You and your team are incentivized to use ROI-boosting tactics like:
• Pushing more and more of your social budget toward remarketing
• Doing likewise on paid search through branded campaigns
• Inundating your email and SMS lists with one-off sales
In other words, you start spending most of your money advertising to your
existing customers. And, because they already like your product, they’re happy
to buy.
Revenue goes up; ROAS looks better. Leadership, happy
YOU’LL EVENTUALLY
with your performance, asks you to employ the same
strategy again next month. And the next month. And the
RUN OUT OF EXISTING

next.
But those numbers mask a terrible truth. Because you’re

not acquiring new customers, you’ll eventually run out
of existing customers, too. CUSTOMERS
The reason brands at this level succumb to the trap?
Their customer base is large enough that this strategy works for months and
months on end. By the time the finance team notices topline revenue is down,
it’s too late.
Companies that avoid this trap and grow at this critical stage have three
things in common. They …
• Spend 50% or more of paid media spend on new customer acquisition
• Increase customer value over the next 60-180 days to break even
(or better) on every first purchase
• Forecast and set targets to quickly identify when they’re wrong
Nailing this sweet spot can only be done by responsibly evaluating and then
mastering your business’ inputs to better control its outputs.
2
Contents
Part 1. Set a Foundation to Measure & Align on What Matters......................................................4
The Hierarchy of Metrics............................................................................................................................................................................5
Never Judge Performance By a Single Metric
Net-Active Customers...............................................................................................................................................................................12
Fill the Sponge Before You Squeeze It
Three Revenue Layers................................................................................................................................................................................17
Grow Predictable Revenue First
Part 2. Model Cohorts to Multiply Customer Lifetime Value......................................................... 23

Baseline Value............................................................................................................................................................................................... 25
First Order vs. Lifetime
Time to Value................................................................................................................................................................................................. 29
Cash Multiplier > ‘Lifetime’
Cohort Value....................................................................................................................................................................................................31
By Time, Product (SKU), Offer & Beyond
Part 3. Forecast Growth to Map Your Future & Stay on Track...................................................... 36

Step 1: Ecommerce Inputs..................................................................................................................................................................... 39
What Are Your Historical Realities?
Step 2: Financial Projections................................................................................................................................................................ 83
What Can You Forecast Based on Them?
Step 3: Growth Inputs to Outputs.....................................................................................................................................................88
What Needs to Change to Get Where You Want to Go?
3
PART 1.
SET A FOUNDATION TO MEASURE &

ALIGN ON WHAT MATTERS
If a myopic focus on channel-specific metrics — particularly
ROAS — is a recipe for failure, what’s the alternative?
A growth-oriented strategy anchored on three

principles …
1. Never Judge Performance By a Single Metric

2. Fill the Sponge Before You Squeeze It
3. Grow Predictable Revenue First
These principles will help you achieve your fundamental goal

as a marketing director:
Taking the highest CAC possible while remaining

profitable.
PRINCIPLE 1: NEVER JUDGE PERFORMANCE BY A SINGLE METRIC
The Hierarchy of Metrics

ROAS WAS NEVER
For years, ROAS functioned as a proxy for
ecommerce success. If ROAS was good, the
RELIABLE AS A
business was healthy. If it was bad, you were in
trouble.
SINGLE SOURCE OF iOS 14.5 shattered that illusion.
TRUTH, ESPECIALLY Of course, ROAS was never reliable as a single

source of truth, especially for businesses as a
FOR BUSINESSES whole.
AS A WHOLE.
And especially because no single metric ever
could be.
What you need is a hierarchy — a method to understand how each part of your
marketing stack affects the whole.
The value of all data hinges on context; its role in a cast

of inputs. Metrics only matter relative to expectations.
The hierarchy we’ll follow breaks down into four tiers …
1. FINANCIAL 2. BUSINESS 3. CUSTOMER 4. CHANNEL

METRIC METRICS METRICS METRICS
Are your marketing efforts Are your core drivers Are your active customers Are platforms spending your
winning or losing? creating enough value? growing or shrinking? money effectively?
Contribution Margin Order Revenue, Ad New Customers, nCAC, ROAS & Costs
Spend, MER & AOV aMER & Repeat Rate (CPM, CPC, CPA)
5
1. Financial Metric
Are your marketing efforts winning or losing?
Although there is no “one metric to rule them all,” the closest thing we’ve got is
also the only key financial metric: Contribution Margin (CM).
CM is measured as a number, not a percentage.
Contribution Margin (CM) = Net Sales - Cost of Delivery (COD) - Ad Spend

• Net Sales = Gross Sales - Discounts - Returns
• Cost of Delivery (COD) = Product COGS + Variable Costs
• Ad Spend = Every dollar intended to generate online sales
Screenshots taken
from the Growth Map
you’ll build in Part 3.
Why use Cost of Delivery rather

than Cost of Goods Sold?
Your ability to scale ad spend depends on

the business’ ability to support all the costs
associated with increasing sales volume
(variable costs). Product COGS only includes
costs up until the sale.
COD includes post-purchase costs like

shipping, pick-and-pack, payment
processor fees, and more. Anything that
affects your ability to move more units.
6
THE ECOMMERCE Contribution
Margin
1 METRIC
PYRAMID OF SUCCESS
“The Scoreboard”
As marketers, this is our closest proxy
to profit.
Contribution margin is a number, not a

percentage.
As a marketer, CM is your closest proxy for profit. Because marketing efforts

don’t impact an organization’s operational expenses (fixed costs), it’s
unreasonable to hold yourself accountable to something like operating
income.
CM is the scoreboard — the ultimate goal you’re pushing toward. If you’re

hitting your CM target, you’re winning. If you’re not, you’d better figure out what
to do about it quickly.
There may be months where the goal is for this number to be small, zero, or
negative; regardless, it paints the clearest picture of marketing’s contribution
to the business’ value creation.
However, it is not enough to simply track CM month-over-month. Without

further decision-making context, there will be serious consequences for your
ability to produce future profit.
Tracking this number eliminates …
Bulls***
You’re held to a goal that ensures marketing efforts are translating
to real, actual dollars
Product-demand disconnect
CM allows marketing to anticipate inventory issues and operations
to purchase inventory based on demand
7
Margin
1 METRIC
PYRAMID OF SUCCESS Order Revenue,
Ad Spend, MER & AOV
“The Business Metrics”

Understand the generative value of my
marketing at a business level.
All metrics only matter relative to expectation
2. Business Metrics
Are your core drivers creating enough value?
The second tier contains four inputs that drive CM and enable healthy growth.
If CM is losing, this is where you look for the problem.

• Order Revenue = Gross Sales - Discounts before Returns $
• Ad Spend = Every dollar intended to generate online sales
• Marketing Efficiency Ratio (MER) = Order Revenue ÷ Spend
• AOV = Gross Product Revenue ÷ Total Transactions *
$
This ensures that you’re tracking marketing effectiveness, not post-purchase dissatisfaction.
* Provides a window into per-SKU revenue generation. This is especially important for setting per-SKU CAC targets.
Taken together, these metrics give you a snapshot of marketing’s combined

performance, from paid social to email to organic.
Again, this is not enough context to understand the effect of that performance in
the long run. For that, you’ll have to drill down a step further …
8
Margin
1 METRIC
Ad Spend, MER & AOV
“The Customer Metrics” New Customers, nCAC,

Protect future outcomes. aMER & Repeat Rate
Stop squeezing the value out of your existing

customer base to meet an efficiency goal.
3. Customer Metrics
Are your active customers growing or shrinking?
These inputs help determine whether or not your short-term goals are
compromising desired future outcomes:
• New Customers = Total Number of First-Time Orders
• New Customer Acquisition Cost (nCAC) = First-Time Orders ÷ New-
Customer Ad Spend*
• Acquisition Marketing Efficiency Ratio (aMER): New-Customer Revenue ÷
Total Ad Spend
• Repeat Purchase Rate = Total Transactions ÷ Returning Customers
$
New-Customer Ad Spend excludes remarketing to existing customers as well as branded search campaigns.
The purpose of the third tier? Counteracting

the “Shrinking Sponge,” which we’ll explore in
the next section.
As blended numbers, they reveal the composition of your revenue in any given
month as well as protect future outcomes.
If you miss on customer metrics, but win in the tiers above, there will be
consequences in the following months.
9
Margin
1 METRIC
Ad Spend, MER & AOV
“The Channel Metrics” New Customers, nCAC,

Align my measurement with the platform’s aMER & Repeat Rate
optimization.
Historical ROAS ≠ Future ROAS
Return on Ad Spend (ROAS) &
Costs (CPM, CPC, CPA)
4. Channel-Specific Metrics
Are Facebook, Google, etc. spending your money effectively?
In-platform performance comprises the fourth and final

tier. These metrics — namely, ROAS along with costs like
CPM, CPC, and CPA (cost per acquisition) — are, at best, THOSE NUMBERS
proxy metrics.
ARE NOT ACCURATE
PERFORMANCE
They represent poorly what the metrics we’ve just
reviewed represent clearly.
Ironically, most marketing teams treat them as their

North Star.
INDICATORS
Post-iOS14.5, Facebook’s reported ROAS provides an even more
out-of-focus picture. Why should you track it in-platform?
It’s not because those numbers are accurate performance indicators.
It’s because they’re how the platform makes decisions

about how to spend your money.
As such, restrict your measurement to click-only, in-platform ROAS.

• Click-only because other attribution settings are even more unreliable.
• In-platform because Facebook and Google can’t optimize against third-
party attribution
10
The reliability of in-platform data is almost inconsequential.
Facebook and Google have to spend your money based on the data available
to them; and you, in turn, have to make account decisions based on the way
the platforms actually spend your money.
WHY NOT? WHAT

What Does It All Mean?
DANGERS DO THE
The Hierarchy of Metrics gives you a sense of
what you should be measuring.
HIERARCHY OF But if Principle 1 is “Never Judge Performance by

a Single Metric,” the question remains:
METRICS HELP YOU Why not? What dangers do the Hierarchy of
AVOID?
Metrics help you avoid?
Simply put, the Hierarchy aligns your entire marketing team around profit …
forcing every other metric to ladder up into it.
Still, there’s an even more complex and revealing answer …
Coming up ...
The Growth Map you’ll eventually build in

Part 3 will roll up into a 12-month forecast
centered squarely on this exact Hierarchy
of Metrics.
11
PRINCIPLE 2: FILL THE SPONGE BEFORE YOU SQUEEZE IT
Net-Active Customers:
The ‘Shrinking Sponge’
Imagine your customer base as a sponge filled with water.
Without a defined strategy for reaching new customers, brands fall back on
selling more to existing customers. The more aggressive the targets, the more
often and aggressively they squeeze.
But, when companies squeeze the sponge without adding more water — new
customers — each squeeze risks being the last before wringing the sponge dry.
Hence, “The Shrinking Sponge.”
In this metaphor, the “sponge” is active customers —

the key to long-term revenue growth.
NET ACTIVE
January February March April
CUSTOMERS
New Customers
Reactivated Customers
Net Active Customers
Active Customers
Time
Lapsed Customers
Net Active
Customer Rate
“The Shrinking Sponge”
In this metaphor, the “sponge” is active

customers — the key to long-term revenue
growth.
12
While it’s tempting to look at your customer
file as a homogeneous group, that’s a
dangerous illusion. In fact, you’ll need to LOOKING AT YOUR
break your customers into four segments:
•
CUSTOMER FILE AS A
HOMOGENEOUS GROUP IS
Active customers
• Lapsed customers
•
A DANGEROUS ILLUSION
Reactivated customers
• New customers
As we define each, we’ll also build an example of how the sponge grows or shrinks.
Net Active Customers 1. Active Customers

The first is the most important segment: customers still
Active Customers Reactivated Customers
Lapsed Customers New Customers
within your average repurchase window. They’re your
most-valuable, most-predictable source of revenue.
1. Active 200 active customers in Jan.

Customers
200
Time
200 active
customers in Jan.
2. Lapsed Customers
These are the customers who have moved beyond the
January
repurchase window. For example, if the average time
between purchases is 90 days, a lapsed customer is
2. Lapsed anybody 25% beyond that period — 120 days.
Customers
200
500 customers lapsed in Jan. from previously active
500 customers Time
lapsed in Jan. from

previously active
3. Reactivated Customers
500 January
This group is composed of previously lapsed
customers that have moved back into “active
3. Reactivated customer” status. Typically, through intentional
Customers 300 remarketing via paid or owned channels — email,
100 lapsed
200
Time
SMS, etc.
customers
reactivated in Jan. 100 lapsed customers reactivated in Jan.
500 January
4. New Customers
4. New 500 New customers are exactly that — first-time
Customers 300 purchasers of your product. They’re by far the most
200 new customers
200
Time
expensive to acquire. But, as we’ll see, not acquiring
were acquired in them is even more expensive.
Jan.
200 new customers were acquired in Jan.
500 January
13
Once you’ve sorted your customer file into these categories, you’re set to
determine Net Active Customers. This metric helps you determine whether or
not your sponge — the number of active customers — is growing or shrinking:
Net Active Customers = Active + New + Reactivated - Lapsed

• >0 = Growth
• <0 = Shrinkage
If this number is greater than zero, you have sponge growth.
Less than zero; shrinkage.
The Short-Term Squeeze

Sponge shrinkage isn’t inherently bad. But it causes
SPONGE
major problems if you’re not keeping an eye on it.
After some digging, the finance team realizes that
SHRINKAGE ISN’T Jan.’s CAC was high, affecting the company’s P&L. As
a result, you’re directed to maximize profitability in Feb.
INHERENTLY BAD. To improve marketing efficiency, you pull back on new

customer acquisition and push toward maximizing
revenue from your existing customer base.
The problem is not necessarily that your sponge

shrunk. It’s that nobody noticed because ROAS and
MER looked fantastic.
January February
Active Customers Calculating Your Net Active Customer Growth
Lapsed Customers
450 Reactivated Customers Using the numbers above:
400 New Customers
Net Active
200 (Active) + 200 (New) + 100 (Reactivated) - 500 (Lapsed) = 0
200 Customer Rate
Active + New + Reactivated - Lapsed = Net Active Customers
Time
You broke even on Net Active Customer growth in January.
At the end of Feb., another 500 customers lapse. Despite the fact
-50 Net Active that you successfully reactivated some customers, your Net Active
Customers Customer base went down 50.
200 (Active) + 50 (New) + 200 (Reactivated) - 500 (Lapsed) = -50
500 Active + New + Reactivated - Lapsed = Net Active Customers

CAC MER
14
As for your P&L? It looked even better. Worse, it will continue to
YOU’LL HAVE look amazing … while your Net Active Customer pool continues
to dwindle.
TO CONVINCE Here’s why this is such an insidious problem: Shrinking the
EVERYONE TO
sponge generates numbers so good that it feels insane to
change course.
TANK EFFICIENCY! But the longer you shrink the sponge, the harder it is to reverse
the damage.
Let’s say you catch the problem in May and identify the core issue. You realize
that the only way to fill the sponge again is to acquire customers via expensive
paid channels.
The more unchecked shrinkage, the more you’ll have to spend to counteract
month-over-month churn.
And that means … you’ll have to convince everyone to tank efficiency!

Good luck.
In all seriousness, though, the point of this guide is to give you the tools to
convince your team to align around efficiency degradation. Because …
Even though short-term profitability might be

adversely affected, future profit is contingent on the
growth of your active customer file.
NET ACTIVE CUSTOMERS

January February March April
New Customers
Reactivated Customers
Active Customers
Net Active Customers
Lapsed Customers
Time
Net Active
Customer Rate
“The Shrinking Sponge”
Future profit is contingent on the growth of

your active customer file.
15
The question your organization needs to ask itself is:
“In what window of time do we need to maximize profit?”
The answer may look different depending on the specifics of your goals.
However, the answer is definitely not …
“Always, all the time, no matter what.”
Unfortunately, that’s the mindset most businesses instinctively adopt. Short-

term goals pitted against long-term expectations.
How do you counteract this

knee-jerk mindset?
By building accurate forecasts that
demonstrate how short-term losses lead to
long-term wins.
The Growth Map you’ll build in Part 3 roots

itself in both new and existing customers.
Your ability to aggressively acquire the
former depends on the stability of the latter.
16
PRINCIPLE 3: GROW PREDICTABLE REVENUE FIRST
Three Revenue Layers

An accurate forecast is not about
THE USEFULNESS OF ANY guessing what will happen. It’s about

creating a map of what should happen.
FORECAST COMES FROM Or rather, what is most likely to happen.
HOW MUCH IT’S WEIGHTED

The usefulness of any forecast
comes from how much it’s weighted
IN PREDICTABILITY.
in predictability. Not all revenue is
equally predictable.
Picture your customer base as a “layer cake” made of three tiers that gradually
increase in size.
🎂• Top Layer
New customers from paid channels comprise your smallest, most volatile tier
🎂• Middle Layer
Owned audiences reachable through “free” channels like email, SMS, SEO,
and organic social media
🎂• Bottom Layer
Existing customers (repeat purchasers) form the base, the foundational tier
upon which the other rest
The further you move up the cake, the less predictable

the revenue becomes.
The strength of your bottom layer allows you to accept more volatility on the
higher layers.
17
Layer Cake as a Metaphor
for Ecommerce Revenue
Top Layer: Most volatile, especially
during peak seasons
Data full of unknowns like CPMs, conversion rates,
and how customers will respond to your offer.
Predict the amount of money you’re going to Paid Acquisition
spend, and calculate the CAC on that spend.
New Customers
Middle Layer: Where you can reach

non-customers for free
Data driven from your organic strategy, not
subject to the volatility of CPMs or the ad market. Owned Audiences
Predictions come from channel-by-channel
Email, SMS, Organic Search & Social
based on the number of organic views and
revenue per view.
Bottom Layer: Most predictable

base for forecasting
Data you already have, and it can be
extremely accurate in predicting future Existing Customers
revenue. Use a cohort of your previous Cohort LTV
weeks, months, and quarters.
Variability in Revenue
Less Variable More Variable
18
Top Layer: Paid Acquisition
In the ecommerce world, paid acquisition primarily happens in two places —
Facebook and Google.
It’s the most unpredictable source of revenue because …

• Costs rise and fall due to factors outside your control
• Plus, new customers are a harder sell than existing customers
These are cold, hard facts.
But it gets worse. As your business gets bigger and bigger, reaching further
afield from your original target audience, it becomes harder and harder to sell
into new audiences.
They become more and more expensive.
Translation? Your paid social CAC will always go up as you grow.
You’ll still have to forecast spend and CAC. But that forecast is highly unlikely
to be accurate. If you’re relying on your paid media team to hit their targets to
survive next month, you’re in trouble.
It’s no wonder that media buyers are sorely tempted to move budgets toward
remarketing, especially if their job is merely to “get the same (or better) CAC as
last month.”
Since revenue from paid acquisition is both necessary and unreliable, you
have to build a base of reliable revenue to support it.
19
Middle Layer: Owned Audiences
An owned audience is any channel where you can reach non-customers for free:
• Email and SMS
• Organic social
• Organic search
Without the unpredictability of ad costs, forecasting revenue from owned

channels is far easier than paid.
Essentially, divide your sends, shares, and keywords by revenue from email +
SMS, organic social, and organic search.
Take the resulting average revenue per send and multiply it by the number of
planned sends in the month you’re forecasting. Voila! You have a rough sense
of how much revenue to expect from this tier.
As long as your channel groupings are tightly constructed and your UTMs
managed with discipline, send more, share more, rank more … earn more.
By combining Google Analytics and your ecommerce platform, Statlas lets you
easily track channel performance.
Owned audiences underwrite New Customer Acquisition Cost (nCAC) and

provide a more reliable stream of revenue than paid.
By themselves, however, they don’t have the reach of the top layer nor the
revenue stability of the bottom layer …
20
Bottom Layer: Existing Customers
Finally, we have the foundation. This tier corresponds to the sponge we discussed
in Principle 2.
Existing customer revenue is predictable. Not only because active customers

purchase more frequently, but because you have years of data on when, how
many, and how often.
Let’s take a simplistic example that will be unpacked in full during Part 3,
when you construct your Growth Map.
Say you’re forecasting revenue for November.

Revenue Forecasting:
Start by looking at the amount of new-customer
revenue you acquired in August: $100k. Next, look Aug. Sept. Oct.
at the amount of revenue those same customers $100k $30k $15k

produced in September and October. Usually,
something like this:
At this rate of retention, you can predict with a high degree of certainty that this
cohort will return $8k in Nov. We’ll get into the specifics of why a little later.
Assume you also made $100k in new revenue during Sept. and Oct.
That means new customers from Sept. will reliably

provide $15k in Nov., and Oct.’s first-time buyers will
Revenue Forecasting:
provide $30k. Add it all up, and you can reasonably
forecast at least $53k in Nov. revenue without relying Aug. Sept. Oct. Forecast
on any other tier than the bottom.
$100k $30k $15k $8k
Knowing the amount of money you’ll make from existing $100k $30k $15k
customers is as close to a sure thing as you’ll get in $100k $30k
ecommerce. The bigger that sure thing is … the more
volatility — and money — you can commit at the top.
Avoiding the “Ecommerce Upside-Down Cake”
The revenue layer cake works because building on a solid, Paid Acquisition
predictable foundation minimizes volatility while you expand
the top layer with new customers.
However, many businesses make their cake upside-down,

pouring themselves into the most volatile portions of revenue
Owned Audiences
generation without reliable targets supporting them from the
bottom up.
Obviously, your business is exposed to a great deal more risk if

Existing Customers
the bulk of your revenue is subject to uncontrollable volatility.
21
Part 1 Recap
Ecommerce success relies on three core principles:
Principle 1: Never Judge Performance by a Single Metric

Instead, use a hierarchy of interconnected metrics.
Principle 2: Fill the Sponge Before You Squeeze It

Avoid shrinking your base of active customers in pursuit of short-term
profitability.
Principle 3: Grow Predictable Revenue First

Protect yourself from the volatility of acquisition by building a layer of reliable
revenue.
HOW DO YOU MAP THAT LAYER OF RELIABLE REVENUE?

Now that we’ve got the core philosophy down, we can go deeper on the secret
sauce of ecommerce growth: modeling cohort-specific lifetime value.
22
PART 2.
MODEL COHORTS TO MULTIPLY

CUSTOMER LIFETIME VALUE
Let’s quickly return to your main goal:
Taking the highest CAC possible while remaining

profitable.
To do so, you need to front increasing CAC with predictable

revenue from your existing customers.
And to do that, you must reliably model the timeframe over

which existing customer value is realized.
WHEN ATTEMPTING TO UNDERSTAND LIFETIME VALUE (LTV)
Most Businesses Make

Three Key Mistakes
First, thinking purely in terms of first-
AFTER ALL, A “LIFETIME” order profitability. Second, measuring

LTV without a specific timeframe. After
IS A LONG TIME TO WAIT all, a “lifetime” is a long time to wait to

realize value. Third, calculating AOV,
TO REALIZE VALUE. LTV, and CAC without respect to SKU,

customer, or offer.
Forecasting existing-customer revenue goes much deeper than simple LTV. To

get an accurate sense of how much a new customer is worth in the long run,
you’ll need to know their …
1. Baseline Value: First Order vs. Lifetime
2. Time to Value: Cash Multiplier > Lifetime
3. Cohort Value: By Product (SKU), Offer & Beyond
24
Baseline Value:
First Order vs. Lifetime
Hot take: First-order profitability is not inherently good. It’s not bad either.
Whether or not it matters depends on your capitalization.
The key to understanding the true value of a customer is …
First-order Contribution Margin, not AOV, and how the

same customer’s CM improves over time.
Thinking in terms of AOV to CAC feels natural.
Let’s use a real example from our skincare brand, Bambu Earth.
• AOV: $88
• COD: $20
• CAC: $75
• First-Order CM: -$7
$88
First Order Contribution Margin:
Numbers from Bambu Earth
First-order value is $88 with a CAC of $75, $20
for $13 in net revenue. A 1.17 AOV:CAC ratio.
However, since Cost of Delivery (COD) on
that purchase is $20, we’ve actually lost $7!
Real Dollars
The habit of overlooking COD runs rampant

in ecommerce marketing.
When the sole financial metric in your

hierarchy is real dollars … you can’t overlook - $7
real costs.
$75
AOV COGS CAC First-Order CM
25
Set to AOV Statlas tracks these factors historically in its Variable Costs: Contribution Margin by SKU Report (above);
📊
your Growth Map allows you to project them (below)
26
The intuitive solution to this “problem”?
Try and decrease CAC — emphasis on try. As we saw in Revenue Layers,

decreasing CAC is very difficult and unpredictable.
The actual solution is … increasing CAC.
The “problem” is only a problem if you don’t know what that same customer
will be worth in the future.
Again, let’s use a real example from Bambu Earth.

• 60-Day LTV: $130
• COD: $27
• CAC: $75
• 60-Day CM: $28
Now, we’re sitting at a 1.73 LTV:CAC … with a +$35 swing in CM.
Depending on our profitability goals, Bambu Earth can spend up to $28 more
on new customer acquisition while still breaking even.
If you have the capitalization to take a loss on your first order, it’s mission-
critical to consider this possibility:
You’re winning even though it looks like you’re losing.
$130
60-Day LTV Contribution Margin:
Numbers from Bambu Earth
Fast-forward 60 days. Bambu Earth’s $27
customers will have spent an additional $42

each, bringing LTV to $130.
Total COD increases to $27 … but CAC

Real Dollars
is still $75, because we’ve already acquired

the customer. $28
$75
Revenue COGS CAC LTV
27
Set to LTV Statlas’s Contribution Margin by SKU Report (above); the 📊 Growth Map’s 60-Day LTV and 1-Year LTV (below)
28
Time to Value:
Cash Multiplier > LTV
Traditional LTV is a vanity metric. It tells you that people are coming back at
some vague point in the future.
Cash Multiplier (CAM) is a much more useful existing-customer metric. CAM

restricts LTV to a specific time window, shifting your perspective from …
How much value does my customer produce in total?
To actionable and forecast-worth insights:
How much value will my customer yield in the next 60 days? Then, over the
next year?
Answering those questions allows you to ask another:
What is the maximum window of time in which I must be profitable?
Lots of businesses’ answer is, “Always! We should never not be profitable.”

But that’s rarely the case.
Success versus failure hinges on opening your profit window as wide as possible.
The wider the window, the higher the acceptable CAC. The higher your CAC, the
better set you’ll be for future growth through new customer acquisition.
What’s a good CAM? As a general principle, focus on

the 30:100 Rule — aim to increase your LTV by 30% in
60 days and by 100% in a year.
1 Year
+100%
Initial Purchase AOV
60 Days will only make up
+30% 50%
Customer LTV Of total Customer LTV
Customer LTV
29
Statlas’ LTV Dashboard puts both 60-day CAM & 1-year LTV front and center
If a customer’s LTV increases by 30% within 60 days, then you know your product
quickly found a place on their shelf or in their life.
If LTV goes up by 100% within a year, you’re pulling the right levers to
continually provide value. Far more than the initial amount of money they
paid you.
Even better — if you hit 30:100, first-order AOV will only be 50% of each
customer’s LTV. Over time, you’ll stack increasingly valuable cohorts on top
of each other.
30
Cohort Value:
By Time, Product (SKU),
Offer & Beyond
Aggregate CAM gives you a sense of the timeframe in which losing shifts to
winning. It doesn’t give you the tools to do anything about it.
To accurately model lifetime value, you have to understand cohort-specific

cash multiplier.
There are four key cohort breakdowns:

• By SKU: Which first-purchase products create more LTV?
• By month: How does seasonality affect LTV?
• By channel: What sources result in the highest LTV?
• By offer: How do first-purchase discounts impact LTV?
Modeling LTV this way provides you with the greatest gift of all …
Actionable information on how to increase your CAM.
For instance, of the top ten products sold by Bambu Earth last year, only two
are Mini Kits.
31
And yet, of the top-ten LTV generating products …
eight are Mini Kits.
When we first noticed this discrepancy in August 2019, it revealed an intriguing

possibility.
Our ad account was struggling, and we were finding it impossible to win on

first-order CAC. But if we started running ads to the Mini Kits, that same poor
CAC could transform from a major first-order loss to a net-positive outcome
over the next 60 days.
Why a Transformation in
Outcome?
Because people who bought Mini Kits — a
low-AOV, small-format skincare sampler
— came back in droves to repurchase the
larger versions of their favorite products.
We shifted our Facebook strategy drastically.

Ads featuring the Mini Kits drove to a quiz
landing page that allowed customers to
build their own kit.
32
THE TWIST?
In the 12 months before the shift, we were making a paltry
$9,980 a month on average. We loved the business, but
ROAS DIDN’T
we were preparing to shut it down.
IMPROVE, BUT
After the shift, average monthly revenue skyrocketed to
$262,358. In 2020, it jumped to $381,626.
REVENUE DID. Over the last year, $446,532 … with an all-time high last
month of $807,416.
Bambu Earth: Sales Over Time

Total Sales
Bambu Earth: Sales Over Time

Spend Total Sales Facebook ROAS
33
The strategies suggested by cohort-specific 60-day
CAM look different for every brand. For example …
Customers that purchase in Dec. compared to Nov. are more valuable to me in

the long run.
I should push harder on customer acquisition after Black Friday.
Customers from Google search buy less over a 60-day period even though
they’re cheaper to acquire.
I should allocate the bulk of my budget elsewhere.
Customers with a 10% discount on their first purchase buy more over the next
six months than full-price customers.
I should prioritize that offer in my ad creative and look for other ways to
incentive deal hunters.
34
Part 2 Recap
Maximizing existing-customer revenue hinges on three timeframe-based values:
Baseline Value: First Order vs. Lifetime

Focus on first-order Contribution Margin, rather than AOV, coupled with
60-day LTV.
Time to Value: Cash Multiplier > Lifetime

Determine the maximum window of time for profitability — the wider, the better.
Cohort Value: By Product (SKU), Offer & Beyond

Break down your customer file into first-order month, first-order SKU,
acquisition channel, and initial-offer cohorts.
HOW DO YOU FORECAST FUTURE REVENUE?

Once you have an understanding of the levers affecting existing-customer LTV,
the road to predictable revenue growth becomes clear.
And every road trip needs a good map.
35
PART 3.
FORECAST GROWTH TO MAP YOUR

FUTURE & STAY ON TRACK
With the what and who in place, Growth Maps are the how.
Your forecast — dollar by dollar, customer by customer,

month by month. Three steps will guide us …
1. Step 1: Ecommerce Inputs

What Are Your Historical Realities?
2. Step 2: Financial Projections
What Can You Forecast Based on Them?
3. Step 3: Growth Inputs
What Inputs Need to Be Changed to Alter Your Outputs?
How to Build Your Own
Growth Map
In this walkthrough, we’ll be forecasting for June onward using anonymized
data from a fashion brand that generated just under $43M in online revenue
last year.
Each step will direct you to one of two places, either a …
📊 Growth Map : Sheet and Tab

Where we’ll walk through what to enter and how the inputs create outputs.
Or, you’ll be guided into …
37
Statlas : Reports
Where we’ll show you all the settings necessary to extract the
right information ⤵
1. Report: Revenue
2. Dashboard: MER Report
3. View by Timeframe: Monthly
4. Timeframe Start: Jan 2021
5. Timeframe End: Last completed month
Where we’ll walk through what to enter and how the inputs
38
WHAT ARE YOUR HISTORICAL REALITIES?
Step 1: Ecommerce Inputs

Hierarchy: 12 Months & “This Month”
Begin in the very first tab — 📊
Hierarchy: 12 Months — by selecting the
current month in D1. This will change all the other months across every tab
for a rolling 12-month period.
Duplicating your completed Growth Map lets you build different forecasts
for the same period by changing various inputs.
Alternatively, by duplicating the original Template, you can create new

forecasts on a quarterly or annual basis.
Skip over 📊 Monthly Model and jump to …
39
Projections (Cohort): Take One
📊 Projections (Cohort) is where the bulk of the ecommerce action takes place,
starting with (1) Customers: Total and (2) Customers: Returning Last Month.
All the cells have been color-coded.
Dark-colored cells with white text — like Blue and Red below — are the only
cells you’ll need to edit manually.
Cell B8 should always display the month

prior to the start of your projection.
For example, if you’re projecting for Jun.

onward, B8 will display May.
40
Customers: Total
How many total customers did you start
with last month?
Apply the following Statlas settings …
1. Report: LTV
2. Dashboard: New Vs Returning Overview
5. Timeframe End: End of the month prior
to cell B8
If you’re projecting for June onward, select April as your end date and enter
Total Orders as Customers: Total.
The further back you set your start date in Statlas’ New Vs Returning
Overview, the more Total Orders (i.e., past customers) you’ll see.
Jan 2021 gives most brands the right Customers: Total against which to
set retention rates. If you have a greater than one-year return rate — for
a vertical like high-AOV home furnishings — push back the start date as
needed.
41
Customers: Returning Last
Month
How many of your total customers
returned last month?
Apply the following Statlas settings …
1. Report: LTV
5. Timeframe End: End of last month in
cell B8
Essentially, move the date selector forward one month from your last
pull. Enter the most recently completed month’s Returning Orders
as Customers: Returning Last Month.
42
Dividing these two inputs — Customers: Total ÷ Customers: Returning
Last Month — and then multiplying them by the Past Customer Retention
(%-Selector) will calculate the percentage and number of Past Customers.
Adjust Past Customer Retention (%-Selector) as needed.
As you do, the percentage and number of Past Customers will likewise
adjust; although 90%–80% are typical.
43
Future Customers & LTV Tab
How many of your future customers will come back?
📊 The LTV Tab powers Future Customers and their MoM Cohort Retention
rates in the Projections (Cohort) Tab.
In the LTV Tab, you’ll find the start date and end date for 24 months
corresponding to the month you’re forecasting.
The end date should always be set two months in the past to allow for a full
60-day LTV lookback. The start date, 24 months behind the end date.
44
Lifetime Value: Incremental
What are your customers predictably
worth compared to their first purchase?
To fill this tab, you’ll use the first of six copy

and pastes from Statlas …
1. Report: LTV
2. Dashboard: Revenue Over Time
3. View by Timeframe: Incremental
4. Timeframe Start: 25 completed
📊
months ago LTV A1
5. Timeframe End: 2 completed months
📊
ago LTV B1
Copy and paste the data into A4. Then, “Split text to columns.”
45
In Row 3, the LTV Tab will populate:
• First-Order AOV
• Incremental revenue for Months 1–6
• 1 Year Total customer revenue
• 3-6 Month LTV Increase %
• 6+ Month LTV Increase %
• Lifetime LTV Increase %
It will also conditionally color all applicable values below Row 3 — to help
you identify high and low outliers caused by:
• Seasonal product changes
• Product or variant launches
• Holidays and events (i.e., peaks)
Non-color-coded cells indicate that those customers’ full value has yet to
be realized.
46
Future Customers & Customers Tab
To complete Future Customers,
go to the📊 Customers Tab.
Customers: New & Returning

How many of your future customers will
be new versus returning?
Return to Statlas for your second copy and

paste …
1. Report: LTV
Paste the data into 📊 Customers

Tab A2 and “Split text to columns”:
47
This time, three columns will populate and color-code themselves:
• New Customers
• Returning Customers
• Total Mo. Customers
These columns will simultaneously be sent to the CAC Tab, which we’ll cover shortly.
Collapse the grouped columns for easier viewing.
48
The rows for Customers: Total & Customers: Returning Last Month
should now be completely filled.
📊 In the Projections (Cohort) Tab, check two calculations against last year’s
actuals from Statlas’ LTV Dashboard — set to the same date range as your LTV Tab.
1. CAM: 60-Day LTV
2. 1-Year LTV
The delta between the sources should be less than 5%. If either number
exceeds that difference, return to the start of Future Customers & LTV Tab
and double-check your settings at each step.
49
Ad Spend, Paid & Organic
The final automations in 📊 Projections (Cohort) come from the CAC Tab.
Go past the CAC Tab and into 📊 CAC (Paste) …
50
Customer Acquisition Costs
How much do new customers cost to
acquire?
Back to Statlas for our third copy and paste …
1. Report: Visitors
2. Dashboard: Customer Acquisition Costs
Note: Statlas excludes campaigns with “Brand, Retention,

Reactivation” from this report.
Paste the data into A2 and “Split

text to columns.”
Marketing Efficiency Ratio

How efficient are your marketing efforts?
For the fourth copy and paste …
1. Report: Revenue
2. Dashboard: MER Report
51
Paste into 📊 MER (Paste) Tab, cell A2, and “Split text to columns.”
Unlike the other datasets, the MER Report will paste from newest to oldest; no need to sort it though, the rest of the Growth
Map’s formulas are set up to account for that.
Ad Spend: New, Paid New Customers, Organic as a % of Paid, and Ad Spend:

Total have all jumped into your Projections (Cohort) Tab.
How are they calculated? Through the CAC Tab …
52
CAC: Four Groups
By combining inputs from the Customers, CAC (Paste), and MER (Paste) Tabs,
the 📊
CAC Tab calculates four groups:
1. Orders: Total & New
2. Ad Spend & Revenue
3. CAC & Paid-to-Organic
4. AOV: New vs Returning
53
Orders: Total & New
Total Orders, Total Paid Orders, and New Orders are pulled in from the
other Tabs. Total Organic Orders equals Total Orders minus Total Paid
Orders. To determine New Paid versus New Organic …
• New Paid Orders = New Orders x (Total Paid Orders ÷ Total Orders)$
• New Organic Orders = New Orders x (Total Organic Orders ÷ Total Orders)*
$
Paid orders’ percent of total orders
* Organic orders’ percent of total orders
This way, New Paid Orders + New Organic Orders always equals New Orders.
And, we can apply those allocations into the future.
54
Ad Spend & Revenue
Ad Spend: New, New Order Revenue, Ad Spend: Total, and Total Order
Revenue are all pure imports from previous Tabs.
Above Ad Spend: New is your median spend. While above Ad Spend: Total,
is the percent difference between New versus Total.
Both of those numbers — as well as MoM monthly ad spend — have been

sent to the Projections (Cohort) Tab.
55
CAC & Paid-to-Organic
The customer acquisition formulas are straightforward:
• CAC = Ad Spend: Total ÷ Total Orders
• nCAC = Ad Spend: Total ÷ New Orders
To calculate the ongoing relationship between New Paid and New Organic
Orders we’ll use:
• New Paid % of New Orders = New Paid Orders ÷ New Orders
• Organic as % of Paid: New = New Organic Orders ÷ New Paid Orders
56
To illustrate, in Jan 2021:
New Paid % of New Orders
• Of 5,712 New Orders, 2,946 were Paid
• 2,946 ÷ 5,712 = 51.57%
Organic as % of Paid: New

• Of 2,946 Paid Orders, an additional 2,766 were Organic
• 2,766 ÷ 2,946 = 93.91%
57
By calculating weighted averages of each — against Ad Spend: New —
you’re able to set a baseline and predict the future allocation of New Paid
and New Organic Orders (i.e., customers):
58
AOV: New vs Returning
New customers may or may not purchase the same dollar value as existing
customers. If you assume they’re one-for-one, you run the risk of overestimating
first-purchase AOV and overestimating aMER as well as ROAS.
To control for that mistake …
• AOV: Returning vs Total = %-Difference between AOV: Total & AOV: Returning
• AOV: New vs Total = %-Difference between AOV: Total & AOV: New
Above each column are weighted averages against Total Orders that will be
applied in the Projections (Cohort) Tab.
59
Projections (Cohort): Take Two
Having filled in the five subsequent Tabs,📊Projections (Cohort) now needs
manual entries. Collapse the top Rows. We’ll begin with AOV and nCAC.
Average Order Value

How do your AOVs change over time and
seasonally?
Below the bold AOV, there are seven

different timeframes. To find them …
1. Report: Revenue
2. Dashboard: Sales Dashboard
3. View by Timeframe: —
4. Timeframe Start: —
5. Timeframe End: —
60
One by one, select each timeframe and record its AOV in the matching
Blue Cell …
Repeat that process until all seven AOV cells have been entered:
1. Last Month: $272
2. Last Quarter: $270
3. Last 120 Days: $271
4. Last Year: $255
5. Last Nov: $374
6. Last Dec: $285
7. This Month: $276
61
Unless Last Month shows a significant difference from Last Quarter
and Last 120 Days — for seasonal or product reasons — enter it as your
non-holiday AOV. MoM AOV above it will be applied to AOV: Returning
and AOV: New.
At the far right of Projections (Cohort) AOV: Blended gets calculated by combing
returning and new AOVs; AOV: Blended also appears in Hierarchy 12: Months
62
Paid CAC
How do your CACs change over time and
seasonally?
Just like AOV, below the bold nCAC are

seven timeframes to pull from:
1. Report: Revenue
Follow the same process of setting each data range within Statlas’
Sales Dashboard and recording Cost of New Customer (nCAC) in the
corresponding Red Cells …
1. Last Month: $39.48
2. Last Quarter: $32.48
3. Last 120 Days: $35.16
4. Last Year: $33.79
5. Last Nov: $36.65
6. Last Dec: $57.49
7. This Month: $49.64
63
Enter nCAC as the highest — or between the two highest — nCAC values
(excluding holiday months).
When you do, the entirety of the 📊 Projections (Cohort) Tab will fill!
Remember, your goal is to front the highest CAC

possible while remaining profitable.
This number isn’t so much a target as it is a reality — the cost you have to
anticipate in order to win.
64
Holidays & “Peaks”
Notice that Nov and Dec contain more multi-colored dark cells with white text
than the other months. These are conditionally-formatted reminders that will
follow Nov and Dec no matter what month you set your Growth Map to start.
Reminders to do what? To alter those numbers manually and double-check

them against your historicals.
Interestingly, for the brand we’re using:

• AOV increases in Nov and Dec
• CAC also increases in Dec
• But, in Nov, CAC drops
65
Be sure to also check the CAC Tab for exact AOV: Returning and AOV: New.
Those are the numbers you should enter:
• Nov — AOV: Returning = $413
• Nov — AOV: New = $339
• Dec — AOV: Returning = $280
• Dec — AOV: New = $289
Nov’s decrease is nCAC even more apparent in the CAC Tab when you
compare it to a massive increase in spend:
66
Because of that, let’s reduce Paid CAC for Nov to $39.00 but
increase it in Dec to $58.00. We’ll increase AOV slightly higher
than our previous bullets to reflect an increasing AOV overall … FOLLOW THE SAME
• Nov — AOV: Returning = $415
LOGIC IN YOUR
GROWTH MAP.
• Nov — AOV: New = $340
• Dec — AOV: Returning = $285
• Dec — AOV: New = $290
Holidays also affect returning customer rates, new customer retention, and
organic shoppers. Typically …
• Organic customers show up in droves
• More of your existing customers come back
• And, newly acquired customers spend less over time
Use the Gray Cells under Organic as % of Paid: New and Returning “Peak”
to account for the first two; Blue Cells under Retention Change for the third.
67
Adjusting Organic as % of Paid: New
above or below the baseline will affect
Organic New Customers accordingly
Increasing Returning “Peak” to

100% will double only the number of
returning customers that month
A negative percentage in Retention

Change will reduce the number
of returning customers from
that specific month’s Total New
Customers on into the future
68
Organic as % of Paid
In the📊 CAC Tab, verify if Nov and
Dec see an increase or a reduction
in Organic as % of Paid: New.
For our sample, they’re both up.
Selecting the weighted average

at the top and Nov shows an
average of 227%.
Doing the same with Dec shows

228%.
As such, let’s increase Nov and

Dec to 230% as a reasonable lift
compared to the other months.
69
Look for additional outliers in your CAC Tab.
In ours, nCAC and Organic as % of Paid: New drop during Mar of 2021 and
2022 despite a sizable increase in Ad Spend. That’s because, in Mar, the brand
runs an annual event — a “Peak” outside of Q4.
nCAC & Organic as % of Paid:

Outliers
nCAC down to $30 and Organic as

% of Paid 98% in Mar 2022.
To reflect this sort of event,

check the box in Column A of the
📊 Projections (Cohort) Tab.
Your cells for AOV, Ad Spend,

nCAC, Organic as % of Paid,
Returning “Peak”, and Retention
Change will all turn dark with
white text and need updating.
In Statlas and the previous Tabs, examine your metrics

for any “Peak” months.
70
AOV: Outliers
Do non-holiday “Peaks” affect your AOV?
Check each of your outlier months in Statlas

and compare that to your baseline AOV …
1. Report: Revenue
4. Timeframe Start: Peak Month Start
(Mar 1 2022)
5. Timeframe End: Peak Month End
(Mar 31 2022)
Statlas AOV up to $277 in Mar 2022;

2023 predictions drawn from the
📊 CAC Tab AOV: Returning $283
AOV: New $272
LTV: Outliers
📊 LTV Tab down by -7.5% in Dec

and -11.3% in Mar.
71
Returning “Peak”: Outliers
📊 Customers Tab — using a

percent-change formula against
the four non-holiday months
before and after — Nov up 136%,
Dec up 74%, and Mar up 163%
Collect your own Holidays & “Peaks”
To summarize using the outliers above in the order they appear within
Projections (Cohort) …
AOV nCAC Returning “Peak”

• Nov Returning = $415 • Nov = $39.00 • Nov = 136%
• Nov New = $340 • Dec = $58.00 • Dec = 74%
• Dec Returning = $285 • Mar = $32.00 • Mar = 170% *
• Dec New = $290
Organic as % of Paid: New Retention Change
• Mar Returning = $283
• Nov = 230% • Nov = No change
• Mar New = $272
• Dec = 230% • Dec = -7.5%
• Mar = 98% • Mar = -11.3%
* Mar projection slightly higher than historical.
72
ROAS: Return on Ad Spend
To round out your ecommerce inputs, the final element is in-platform ad
performance. Although large brands advertise on a multiplicity of channels
— Bing, TikTok, Snap, Pinterest, etc. — the bulk of spend still takes place on
Facebook and Google.
Why wait until the end to set ad targets? Two reasons.
First, that’s where they appear in the Hierarchy of Metrics. It’s about discipline in
ordering what truly matters to the health of a business.
Second, because setting ROAS requires orienting and rooting it in another

metric — new customer acquisition (aMER).
Facebook Performance
How does 1-Day-Click Facebook ROAS
correlate to aMER?
Set Statlas to the following for your fifth copy

and paste …
1. Report: Visitors
2. Dashboard: Facebook Overview V2
4. Timeframe Start: Jan 1 2021
5. Timeframe End: Last Completed Month
(May 31 2022)
Then select Parameters …
6. Click Attribution: 1 Day

7. View Attribution: Off
73
Paste into 📊 Facebook (Paste) Tab, cell A2, and “Split text to columns.”
Google Performance
How does Non-Brand Google ROAS
correlate to aMER?
For the sixth and final copy and paste …
1. Report: Visitors
2. Dashboard: Google Ads Core Metrics
4. Timeframe Start: Jan 1 2021
5. Timeframe End: Last Completed Month
(May 31 2022)
6. Parameters: Non-Brand.
74
Paste into 📊 Google (Paste) Tab, cell A2, and “Split text to columns.”
Together, your historical Facebook and Google performance will be combined

MoM with Projections (Cohort) — namely, aMER — to set in-platform targets in
the 📊
ROAS Tab and 📊
Hierarchy of Metrics: 12 Months.
How? Dividing Facebook ROAS: 1-Day by aMER and

Google ROAS by aMER gives you Facebook and Google
to aMER percentages.
75
Using real numbers from our example in Jun:
Facebook ROAS to aMER
• Facebook ROAS: 1-Day = 1.39
• aMER = 6.87
• 1.39 ÷ 6.87 = 20.16%
Google ROAS to aMER

• Google ROAS = 7.19
• aMER = 6.87
• 7.19 ÷ 6.87 = 104.64%
76
Multiplying projected aMER by those percentages yields monthly targets for
each channel:
77
Hierarchy: 12 Months
Before wrapping up the ecommerce entries, one last check …
Head all the way to the 📊

Hierarchy: 12 Months Tab. There you’ll find everything
filled in except the costs needed to calculate Contribution Margin.
Statlas vs Growth Map

Do your actuals line up with your
projections?
Check your 📊
Hierarchy: 12 Months
against Statlas for the same date range
YoY — one year back from your Growth
Map’s start and end …
1. Report: Revenue
4. Timeframe Start: Growth Map Start
(Jun 1 2021)
5. Timeframe End: Growth Map End
(May 31 2022)
Any substantial differences — particularly in Order Revenue (Sales), MER, and

aMER — can be eliminated with two steps …
78
First, delete any non-YoY months from 📊 CAC.
This is particularly important if iOS 14.5 hit your business hard: increasing CAC,
nCAC, and Organic as % of Paid: New.
Removing non-YoY months will align your ad spend and all calculations based
on it; namely, new paid and organic customers
Second, adjust three cells in 📊 Projections (Cohort): AOV and nCAC.

Because we favored recency over historical breadth, your Growth Map AOV is
likely higher than Statlas and your nCAC is likely lower.
Edit them in a trial-and-error fashion until their outputs — on the Hierarchy: 12

Months Tab — fall in line with your historical actuals.
79
Keep in mind, Hierarchy: 12 Months is based on weight averages of the entire
year. Having hard entered your outliers (Holidays & “Peaks”), those months will
stay the same.
Likewise, adjust your Past Customers Retention Rate Change while keeping
an eye on how that alters the totals in Hierarchy: 12 Months.
In the example, an AOV of $235 in the Projections (Cohort) Tab works out to
$271 in Hierarchy: 12 Months and an nCAC of $33.00 equals $36.52.
80
Paired with a Past Customers Retention Rate Change of 97%, our Hierarchy:
12 Months‘ Order Revenue, Ad Spend, MER, AOV, nCAC, and aMER match
Statlas nearly identically.
Adjust your AOV, nCAC, and Retention Rate Change in

Projections (Cohort) until they match your actuals with
Hierarchy: 12 Months with Statlas.
The moment you complete your final check — validating your Growth Map
inputs can be aligned with last year’s numbers — undo those changes.
Literally “undo” them with command + Z until all the months reappear in the
📊 CAC tab. Or …
81
Drag your most recent remaining month up to the top.
Then reenter AOV and nCAC in Projection (Cohort)
Your ecommerce inputs are done. It’s time for the money!
82
WHAT CAN YOU FORECAST BASED ON YOUR INPUTS?
Step 2: Financial Projections

The 📊Monthly Model Tab is essentially a marketing-centric P&L (Profit &
Loss Statement). In it, you’ll record all the various costs associated with
getting your product from nonexistent into your customers’ hands.
Cost of Delivery
What’s your historical COD?
In Statlas, COD corresponds closest to the

Contribution Margin report …
1. Report: Variable Costs

2. Dashboard: Contribution Margin by SKU
3. View by Timeframe: Last 6 Months
6. Chart Display: AOV +
+
Find “Chart Display” as an additional dropdown option
within this Contribution Margin by SKU dashboard.
83
If you’ve set costs (particularly COGS) in your ecommerce platform, Statlas
will automatically pull them by dollar value and percentage rate.
Alternatively, you can edit them in Statlas or enter them into 📊 Monthly Model.
For the rest of this section, these numbers should come

directly from your finances.
Once again, the only cells you need to fill in are Blue and Red.
Note: Red cells should be entered as negative numbers.
Unit Cost of Delivery (COD)

Begin with Unit COD. Each value corresponds to the blended costs of a
single sale — i.e., unit costs as a percentage of AOV.
Enter negative percentages for …

• Unit Product COGS
• Unit Packaging
• Forward Shipping
• Merchant Fees
• Customer Service (Fully Loaded)
• Fulfillment Expense (Fully Loaded)
84
Those percentages will be applied
directly to your MoM blended AOV
as dollar amounts.
Returns
Next, enter your average Return
Rate. Number of Returns
applies Return Rate to New
Orders and Returning Orders.
Next, enter the costs associated

with returns:
• Shipping
• Processing
• Net Product Unit Cost
Recovery
85
Shipping & Discounts
Last, plug in your …
• Forward Shipping Revenue (dollars per order)
• Returns Shipping Revenue (dollars per order)
• (-) Discounts & Markdowns (percentage per order)
By default, (-) Discounts &

Markdowns will be applied evenly
every month.
For a more accurate projection,

enter those numbers manually —
overwriting the formulas — to reflect
seasonal or peak-moment offers.
A Warning About Discounts &

Markdowns
What “revenue” are you tracking?
⚠ Only enter (-) Discounts & Markdowns if

the numbers you’ve previously pulled from
Statlas were set to Gross Sales under your
Revenue Definition.
⚠ If your Revenue Definition is Net Sales

or Total Sales, do not enter (-) Discounts
& Markdowns — those have already been
excluded.
86
That’s it! With three caveats …
First, filling in your 📊 Monthly Model requires you know your
YOU NEED numbers.
TO KNOW
Ecommerce marketing teams don’t always have immediate access
to business financials.
YOUR Thankfully, finding them will ally you with the very people whose
NUMBERS
buy-in to your plan matters. Namely, departments like finance
and product — along with their leadership.
Second, all the calculations are based on averages. While directionally

sound, you’ll get a clearer forecast by overwriting the MoM formulas with
real numbers. Particularly as COD’s components fluctuate. Once more, this
requires enlisting the help of other departments. Although it takes more
effort, you’ll create even stronger allies.
Third, at the bottom of 📊

Monthly Model are Total Operating Expenses. As
fixed costs, they’re not included in Contribution Margin. However, you can
include them to calculate Operating Income and Operating Margin.
If you add personnel, be sure to simultaneously add rows below Avg. Salary and No. of FTE; those two inputs culminate in
Total Personnel Costs
87
WHAT NEEDS TO CHANGE TO GET WHERE YOU WANT TO GO?
Step 3: Growth Inputs

to Outputs
Up to this point, your Growth Map only includes three projections:
1. AOV
2. nCAC
3. Customers: New & Returning
Everything else turns solely on historical assumptions.
With them, you can already see what the next 12 months will produce if you
do not alter any other inputs:
A Sign of the Times
Having undone the changes made to check

the Growth Map against last year’s actuals
at the end of Step 1, a higher AOV + nCAC =
slightly decreased Order Revenue compared
to the previous 12 months.
Tellingly, the very same scenario has played

out writ large across aggregate data
tracked in Statlas from over 200 ecommerce
brands with YTD revenue down (6.14%), AOV
up (3.72%), and nCAC also up (5.35%)
88
What needs to change?
To answer that question, let’s end with the final — and perhaps most
foundational principle — in this entire guide.
There are only three ways to grow any business …
1. Sell to more new people

2. Sell more to the people already buying
3. Increase your margins (i.e., reduce your costs)
Your Growth Map’s genius lies in forcing you to think in those three
categories, aligning new tactics to one or more of them, and holding every
dollar accountable for impact.
Let’s cover the five most-powerful strategies.
Begin by making a copy of your Growth Map in order to compare the original
with different inputs-to-outputs.
89
Increase New Customer Ad Spend
The first and most obvious strategy is to spend more on new-customer
acquisition. In the 📊
Projections (Cohort) Tab, two dropdowns allow you to
run various scenarios.
• Ad Spend: New Increase
Applies the selected %-increase to your MoM spend
• Ad Efficiency Reduction Relative to Scale

Decreases efficiency and increases nCAC
More spend to reach more new customers always results in decreased

efficiency; together, these two selectors let you estimate that impact across all
of your projections.
For instance, setting Ad Spend: New Increase to 25% lifts Aug’s spend from
$286,014 to $357,518. Setting Ad Efficiency Reduction Relative to Scale at 10%
bumps nCAC from $42.00 to $50.92. A 15% reduction yields $55.39.
90
As you adjust them, the entirety of your Growth Map will update excluding any months
in Projections (Cohort) you’ve hard entered into the dark cells with white text.
Ad Spend: Total will increase based on past allocation; if you’re planning to

alter that composition, edit L6 in Projections (Cohort) manually
91
Create a Four-Peak Calendar
Most retailers, whether online or offline, rely on a two-peak marketing calendar.
Twice a year, campaigns spike. These spikes center around the traditional Q4
season plus an additional gifting moment: usually, Father’s Day, Mother’s Day,
Valentine’s Day, etc.
Between those peaks lie valleys where ad spend, ROAS, and overall growth decline.
To fuel healthy, sustained, year-round growth, you must adopt a four-peak

approach centered on at least two additional moments. These can include
major or minor holidays, cultural events, and product releases.
We’ve already seen the difference a non-Q4 peak can make back in Step 1.
Reference our article on Building a Marketing Calendar with the Four-Peaks
Theory to evaluate and hone in on your own.
92
📊
Return to Projections (Cohort), check the box in the first column — Back to School
+ Back to College (on the previous page) correspond to Aug (below) — and adjust
accordingly. Include any discounts for that new peak in 📊 Monthly Model.
93
Merchandise Your Ad Account
Not all SKUs are created equal. Different products have different margins,
different fulfillment costs, and different LTV (reorder) outcomes.
For our skincare brand, Bambu Earth, 60-day and one-year LTV transformed
the business by allowing us to reasonably aim at an otherwise unprofitable
first-purchase AOV.
In the case of Slick Products — another brand we owned and operated — the
breakthrough came from putting an unexpected product front and center.
Slick specializes in off-road-vehicle care. Shipping heavy bottles of liquid

makes low-AOV purchases disastrous to margins. As a result, it exclusively
drove traffic to kit landers with product bundles.
Or rather … it used to.
Mining reviews and comments, we discovered customers loved the shine product.
So, instead of trying to sell the whole kit and explain everything about every
element, we launched a funnel focused on the final step in the cleaning process.
94
Results were nothing short of a revelation. The first version not only hit and held
a 3-to-1 prospecting ROAS at scale, it also led to a sizable increase in reorders
plus full-kit purchases.
The reason it worked? A fundamental change in the customer acquisition offer:

• Lower initial pricepoint that led to more new buyers
• Higher margin because it’s an aerosol and weighs less
• And better LTV by giving customers the best experience first
Slick transformed its account not by implementing better buying tactics or

making better creative. Instead, it chose the right product — one that was
easier to sell, easier to ship, and easier to turn first-time purchasers into
lasting customers.
That’s what merchandising the ad account calls for … isolating outsized

opportunities and pushing into them.
95
Move Customers Up AOV Buckets
The single greatest variable impacting your bottom line: AOV. An incremental
AOV increase of even a few dollars can result in millions in revenue.
From $50.46M in Order Revenue, a 2.5% lift in AOV across all months produces
$51.71M and another $402k in Contribution Margin
96
The problem? There isn’t a clear way to affect AOV unless you separate it from
the average.
To illustrate, let’s return to Slick. Last year’s AOV was $78.50: total revenue ÷
total orders. That number obscures an important point …
There were no actual $78.50 orders.
Slick has no specific product or combination of products that comes out to

$78.50. More importantly, most orders were significantly lower in value than
that mathematically true “AOV.”
The average is pulled up by the smaller cohort of customers who spent more
than $78.50.
AOV on the majority of Slick orders is between $33.99 and $48.99. To affect that
$78.50 AOV, the highest-impact action Slick can take is to move the $33.99-
$48.99 customer cohort into the next-highest AOV bucket.
Increasing AOV comes from identifying most-frequent order values and

strategizing how to increase them.
AOV Buckets
What actual order values represent the
greatest opportunities?
In Statlas, examine your most-frequent

order values and prioritize moving new and
returning customer up one bucket …
1. Report: Revenue
2. Dashboard: AOV Histogram
3. View by Timeframe: Dynamic Ranges
4. Timeframe Start: Last Year
5. Timeframe End: Last Year
Follow the same set-up to evaluate and

strategize your holiday & peak-moment AOVs.
97
Unlock Incremental LTV
If AOV is the single greatest variable, then LTV is the single most difficult
depending on two factors:
• Diversity of your product mix
• Maturity of your email and SMS programs
In many ways, LTV is a function of the products you sell. It’s baked into their
DNA. Consumable CPGs lend themselves naturally to subscriptions. Fashion,
outdoor equipment, and home furnishings call for more creative thinking,
product development, and rapid release cycles.
Thankfully — even for very large DTC brands — overindulgence on

acquisition in the past means much can be gained from implementing a
robust email and SMS marketing strategy.
On page 100, you’ll find a list of 15 automations ranked

by impact.
Evaluating the presence and performance of each should guide you back
into 📊
Projections (Cohort)’s Past Customer Retention Rate Change
and Retention Change.
98
Anchored in the opportunities you discover and tempered for seasonality,
even modest increases in retention create substantial overall value.
From $51.71M in Order Revenue to $52.85M and another $390k in

Contribution Margin:
99
15 ECOMMERCE AUTOMATIONS BY LTV IMPACT
100
Part 3 Recap
Every trip needs a good map. The road before you should be shaped by
three steps …
Step 1: Ecommerce Inputs

Getting where you want to go starts with a data-heavy examination of where
you’ve been and where you are.
Step 2: Financial Projections

If Contribution Margin is your North Star, then inputting all the variable costs
associated with delivery (COD) is a must.
Step 3: Growth Inputs

There are only three ways to grow a business …
1. Sell to more new people
2. Sell more to the people already buying
3. Sell with more margin (i.e., reduce costs or raise prices)
Every strategy and tactic you employ should have a direct impact on one or
more of those paths — changing inputs to match desired outputs.
101
The Real Purpose of a
Growth Map & This Guide
If there’s a secret to business success, it’s this:
Accepting short-term pain for the sake of long-term benefit.
Human beings, unfortunately, are incredibly bad at this. We’re wired to prioritize
now over later.
This may have worked for our ancestors 200,000 years ago.
BECAUSE LOSING
But in ecommerce, as in any modern pursuit, the future is
built in the present.
Why is accepting crumbling efficiency for the sake of long- CASH FEELS AWFUL,
EVEN IF YOUR
term profitability so hard? Why is a simplistic single-metric
target (like ROAS) difficult to abandon? Why is aiming at
REASONING BRAIN
delayed revenue, even within 60-day windows, such a
struggle?
Because losing cash feels awful, even if your reasoning

brain tells you it’s the right move. TELLS YOU IT’S THE
The point of the Growth Map is to give you the tools you RIGHT MOVE.
need to understand why difficult decisions now will lead to
desired outcomes later.
By setting exhaustively detailed goals and laddering them up into the Hierarchy
of Metrics, you’ll be able to spot missed targets, track them back to specific
inputs, and navigate through the storm of immediate concerns toward
big-picture success.
102

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The Ecommerce

But the instinctive part of our brains tells us something else:

Facing a hypercompetitive landscape and

“JUST KEEP DOING

WHAT YOU’VE BEEN

DOING. IT WORKED It works … until, somewhere around $50 million

BEFORE. WHY Having scaled through product-market fit,

WOULDN’T IT WORK conditions … the business plateaus.

Here’s the thing: That won’t work.

The solution to $50M+ growth is so counterintuitive

Exactly how that growth is supposed to happen seems like an afterthought.

Revenue goes up; ROAS looks better. Leadership, happy

RUN OUT OF EXISTING

But those numbers mask a terrible truth. Because you’re

Part 2. Model Cohorts to Multiply Customer Lifetime Value......................................................... 23

Part 3. Forecast Growth to Map Your Future & Stay on Track...................................................... 36

SET A FOUNDATION TO MEASURE &

A growth-oriented strategy anchored on three

1. Never Judge Performance By a Single Metric

These principles will help you achieve your fundamental goal

Taking the highest CAC possible while remaining

The Hierarchy of Metrics

SINGLE SOURCE OF iOS 14.5 shattered that illusion.

TRUTH, ESPECIALLY Of course, ROAS was never reliable as a single

FOR BUSINESSES whole.

The value of all data hinges on context; its role in a cast

The hierarchy we’ll follow breaks down into four tiers …

1. FINANCIAL 2. BUSINESS 3. CUSTOMER 4. CHANNEL

CM is measured as a number, not a percentage.

Contribution Margin (CM) = Net Sales - Cost of Delivery (COD) - Ad Spend

Why use Cost of Delivery rather

Your ability to scale ad spend depends on

COD includes post-purchase costs like

Contribution margin is a number, not a

As a marketer, CM is your closest proxy for profit. Because marketing efforts

CM is the scoreboard — the ultimate goal you’re pushing toward. If you’re

However, it is not enough to simply track CM month-over-month. Without

Tracking this number eliminates …

“The Business Metrics”

If CM is losing, this is where you look for the problem.

Taken together, these metrics give you a snapshot of marketing’s combined

“The Customer Metrics” New Customers, nCAC,

Stop squeezing the value out of your existing

The purpose of the third tier? Counteracting

“The Channel Metrics” New Customers, nCAC,

In-platform performance comprises the fourth and final

Ironically, most marketing teams treat them as their

It’s not because those numbers are accurate performance indicators.

It’s because they’re how the platform makes decisions

As such, restrict your measurement to click-only, in-platform ROAS.

WHY NOT? WHAT

HIERARCHY OF But if Principle 1 is “Never Judge Performance by

METRICS HELP YOU Why not? What dangers do the Hierarchy of

Still, there’s an even more complex and revealing answer …

The Growth Map you’ll eventually build in

Hence, “The Shrinking Sponge.”

In this metaphor, the “sponge” is active customers —

“The Shrinking Sponge”

In this metaphor, the “sponge” is active

Net Active Customers 1. Active Customers

1. Active 200 active customers in Jan.​​

lapsed in Jan. from

1. Active 200 active customers in Jan.