Introduction:
Conscious Chemist, a highly appreciated brand on Shark Tank India season 3, impressed the sharks with their branding, product, and experience. However, the major concern raised by the sharks was profitability. With a limited runway, the brand needed to find a way to become cashflow positive. Let's dive into the performance marketing strategy that can help Conscious Chemist scale while achieving profitability.
The sharks pointed out that expanding into new categories and penetrating offline markets, as suggested by the brand, might not be the right solution due to the capital-intensive nature of these approaches.
Problem Statement:
Conscious Chemist needs a proper distribution and marketing strategy that will help them scale while making them PNL positive at the same time.
First Step towards Profitability:
The first step is to break down the PNL and understand the breakeven point - the volume at which the brand would become profitable.
Product Selection:
Instead of promoting all products for acquisition, focus on 2-3 superstar products that can help the brand reach 2-3 CR MRR.
Use the Lifetimely App to find products with the highest CLTV (M3, M6 & M9) and use them for acquisition.
Provide the best available product experience on the first touchpoint to encourage repeat purchases.
Lowering RTO & Cancellations:
Check for common pin codes resulting in RTO and exclude them from ads.
Run post-purchase flows in retention to keep customers excited about the product.
Ensure delivery partners are reaching out to customers during delivery.
If a product is getting higher returns, consider not promoting it at all.
First Time & Repeat Buyers:
Track first-time and repeat customers separately.
Check Shopify for revenue breakdown and segregate spends on Meta & Google.
Why Segregate the Spends?
Use Meta & Google as pure acquisition channels, while retention is for repeat buyers.
Google Ads: Create separate Pmax campaigns for New and Existing customers.
Meta Ads: In all prospecting ads, exclude 180-day purchasers, entire customer list, BOF & MOF audiences.
Optimize for nCAC:
Create custom pixel events on Meta to track new and repeat customers.
Optimize based on nCAC (New Customer Acquisition Cost).
Offer Tests:
Analyze order numbers for all AOV ranges to find the AOV with maximum orders.
Position offers at places where people are more likely to bump up their cart value.
Calculate this separately for New and Repeat buyers.
Focus on Cohorts:
As an FMCG brand, profitability on the first touchpoint is challenging after paying CAC, OPEX & COGS.
Ensure CLTV is high enough to recover expenses and generate profit from each cohort.
Aim to break even at M3 by segregating monthly cohorts and focusing on them separately until expenses are recovered.
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