Welcome to my quarterly review series, where I share my journey of growing Paire as Head of Growth.

I know how lonely it can be to grow a business without a community of peers.

That's why I want to share my ups and downs with you online, in the hopes that someone can learn from them or spark a discussion.

Q1 2023 was a huge success for Paire. We achieved our best results yet, and I had many personal breakthroughs in both soft and hard skills. In this review, I'll be sharing the details of our growth and the lessons I learned along the way.

By sharing my journey, I hope to contribute to the growth of the e-commerce industry as a whole. A net benefit for brand owners and marketers as I want to continue playing the long game.

And on a side note, if you're still looking for a Mother's Day gift, Paire is your perfect solution. 😉

1. Growth 🚀

What makes a successful DTC brand?

To build a successful DTC business, it is crucial to start with a great product.

By positioning your product differently in the market, you can ask for a premium price, which in turn allows you to afford great marketing.

A strong marketing strategy is essential for building a successful brand.

A good example of this is Koala, a mattress company that has a large profit margin on its first transaction. Allowing them to afford a high customer acquisition cost (CAC) and invest in effective marketing campaigns (billboards, activation offline campaigns, etc).

You can still dropship from Aliexpress or sell white labels but if you are wanting to build something meaningful, start by building a great product.

Marketing becomes much easier with it too.

New Product Development vs Existing Development

Scaling a one-product brand is no longer a sustainable strategy.

Customers are always looking for more (if they have a great brand experience), and new products offer a way to solidify your acquisition engine and increase the following:

• AOV

• ROAS

• CAC

• Repeat purchase frequency

For example, we decided to launch an underwear line (a completely different category from socks), which proved to be a successful decision and growth lever

CAC, AOV, ROAS were different. Soft metrics like (CPM, CPC) were different too.

It’s a similar concept of going ‘omnichannel’ but you are expanding your risks by launching new products.

Stock Inventory Management and Performance

Managing stock inventory is crucial to maintaining revenue growth.

It is still a work in progress for us. And it will always be. It’s just a matter of how efficient we can get.

Here what happens with our stocks:

When launching a new product, it is important to set aside cash for new product development, marketing, and content creation. (So don’t go all in your new product as you need cash to invest in marketing).

We launched a new product and saw great results immediately, I increased the campaign budget from $300 to $3,000 in just two weeks.

However, when the product sold out, our monthly recurring revenue (MER) decreased and halted our momentum.

Even our best-selling SKUs went out of stock.

It sucked.

So it was important for us to manage stock inventory carefully to avoid negative impacts on performance. One way we are dealing with this is “ABC grade method.”

It’s impossible to predict the exact sales velocity of a new product but with this method, we will be able to minimize the fluctuation in performance. (More on this later).

Growth isn’t just about acquisition, it's about retention too.

Recently, I had a productive conversation with the co-founders about retention.

We discussed the importance of customer experience for growth.

Here's what I Slack'd them:

"Okay guys, I've been listening to some podcasts about retention and I think we should start prioritizing our customer experience team.

Rather than viewing retention as solely an operational task, I believe it should be considered a brand and growth lever.

Retention is crucial for eCommerce success, and I now think that email marketing is not a reliable form of retention.

Email marketing is essentially 're-selling' to customers and does not necessarily increase their loyalty to our brand per se.

Instead, true retention comes from community building and developing relationships with individual customers.

It's about creating brand recall and building lasting connections.

For example, look at Apple's iPad art workshops, Nike's running clubs, and Lululemon's yoga clubs.

These campaigns increase retention through brand association without explicitly pushing for a sale.

Here's how an eCommerce brand typically progresses:

• $0-$3M brand: Customer service becomes operational, and leaders prioritize getting it done quickly and efficiently.

• $3M-$10M brand: As the company grows, customer service tickets naturally increase, resulting in outsourcing and the implementation of copy-and-paste processes to reduce costs and streamline operations.

  • Customers may feel less connected to the brand at this stage.

• $10M-$100M brand: At this point, brands begin to think differently and view CX as an opportunity to build relationships and differentiate themselves from competitors. More tickets mean more chances to connect with customers and create stickiness to the brand.

With retention, brands have full creative control and can respond through AI, automated replies, chatbots, etc. Retention becomes a key lever for growth.

For acquisition through platforms like Facebook and YouTube, we rely on TripleWhale to provide data for accurate analysis.

But with retention, we have full visibility on how our retention efforts are doing, allowing for faster and more accurate feedback for growth.

Providing a first-class experience should be a top value for our CX team, and we may need to relabel it as the brand/growth team. Unboxing has a 100% open rate, and I believe that's where retention starts.

Note that the percentage of return customers should not be the key metric for retention. It is flawed. If we stopped advertising tomorrow, this number would likely increase but our retention does not improve.

Stock Management: The A,B,C Method

Managing stock inventory can be challenging as your business grows and you start to carry hundreds of SKUs.

Not all stocks are created equal, and some may move more slowly than others, tying up your cash.

To simplify inventory management, you should grade your stocks as A, B, or C based on their sales velocity. When new stocks come in, set an ideal sales velocity and plan your second order in advance for timely replenishment.

For example:

You start with 1000 units at t = 0

Your forecast shows that you will have 0 units left at t = 6, you should monitor your daily sales rate and adjust accordingly to meet your target.

• (if t= 0, Jan then t=6, June. ‘t’ is a unit of the month in this case)

Here's how to grade your stocks:

• A grade: This stock is selling way above your forecast velocity.

  • Slowly release it to the public in batches to maintain engagement and hype. People may forget about your product if they have to wait three months, so dripping it out in batches is crucial.

• B grade: This stock is moving slower than expected.

  • Consider giving it a discount or bundling it up to clear it out before it reaches its expiry date.

• C grade: This stock just doesn't move, and you should not restock it.

  • Discount it heavily.

  • Bundling it up with other C-grade stocks (this worked well for us).

It's important to keep in mind that the first batch of a new product usually struggles with stock. Then the second batch can include product iteration, and the third batch can be produced at a larger scale for higher profitability due to lower margins and sustained customer acquisition.

But your job is to sell your 1st batch as quickly as possible to gain product feedback. So it can be improved on the 2nd or 3rd batch.

Hey, if you got this far into this post…thank you. 🙏

Is this blog helpful? Any feedbacks? Please let me know in the comments below.

There is more juice coming I promise. So read on :)

AOV: A Metric That Needs Deeper Analysis

AOV (Average Order Value) is an elementary metric when you apply a blanket approach. Not all customers are created equal, and this is where AOV analysis can help you identify patterns and optimize your marketing efforts.

Segmenting your customers is essential in understanding their AOV behavior. There are whale customers who bring in significant revenue, lost customers who haven't purchased in a while, and newbies who have just discovered your brand.

Within these segments, there are median and mode AOVs that can help you spot trends and opportunities.

Digging deeper into AOV by analyzing first-time, second-time, and third-time purchases can reveal valuable insights.

Are your AOVs increasing with every order? Or at least consistent?

If not, you may not be building a great business.

Each repeat purchase should be a meaningful indicator that your LTV (Lifetime Value) is going up.

Keep exploring and digging deeper into your cohorts so you can build a solid acquisition and retention engine.

Repeat Purchase Frequency > Repeat Purchase Rate

Repeat customers are the lifeblood of your business.

They are more likely to make larger purchases, refer others to your brand, and become loyal advocates. But how do you measure customer loyalty and retention?

Here’s a snippet that I shared with the team👇

⚠️ Note: These are example numbers provided for privacy purposes.

I calculated the repeat purchase frequency for Paire to determine if we are moving in a healthy direction outside of net profit.

Repeat frequency indicates how often customers return to make a purchase, which can be a measure of customer loyalty and satisfaction. A higher repeat frequency can lead to increased revenue and customer lifetime value.

In contrast, repeat purchase rate % only shows the percentage of customers who have made more than one purchase, but it doesn't necessarily lead to higher LTV.

Therefore, repeat frequency is a better indicator of customer retention than repeat purchase rate %.

In the last 3 months (as of May 2023):

• x = 3000 orders placed (unique customers)

• n = 1700 orders more than once

This gives us a repeat purchase frequency per customer of 0.56

Last 6 months:

• x = 15,000

• n = 8100

→ Repeat Purchase Frequency (RPF) = 0.54

Last 12 months:

• x = 23,000

• n = 17,200

→ RPF = 0.75

When we look at Jan 2020 to October 2021, during which we only sold Product A, our repeat purchase frequency per customer was 0.17.

However, from Feb 2021 to Feb 2022, when we introduced Product M and Product P, our repeat purchase frequency per customer increased to 0.37.

This indicates that the introduction of new products is helping to increase our repeat purchase frequency, which is a positive sign.

Repeat frequency should be one of the key metrics for customer retention instead of repeat purchase rate %.

2. Hiring 🤓

Hiring was a keyword during our Q1.

We hired 3 people in-house after a long discussion with the co-founders. We pulled the trigger.

Here are my learnings as our marketing team became a 6 person team.

I learned that efficient operators know how long a task should take.

If a task takes longer than expected, there is something missing. It could be a process or training issue.

We experienced our biggest monthly revenue ever. Every month, we surpassed the revenue from the previous month. It was simply due to the team members that were onboarded. I can confidently say this.

I decided to hire three employees at once, which I thought was a great idea. However, it required a lot of hands-on work since they were learning a new skill. But it’s turning out to be a great move.

Now I am outside the hamster wheel of constantly launching new ads, analyzing, creating briefs, email briefs, etc. Focused more on managerial tasks.

One tip for my next hire is to provide them with a course and weekly podcasts to provide context before our 1-on-1 meetings. This way, they can learn at their own pace, and our meetings can be more productive. We have been somewhat aligned on what we need to identify, discuss and solve.

Oh, and use Loom videos often. Because of Loom, I have less burden executing daily tasks, and I can focus more on strategy and building processes.

And setting up this team was guided by a book called Making Of A Manager by Julie Zhou. Here are the snippets that I constantly refer back to:

• "If you want to be a successful manager, you have to learn how to prioritize your time and your team's time." (Chapter 3)

• "When you're a manager, your job is to make the people on your team successful." (Chapter 2)

• "As a manager, your goal is not to prevent mistakes or hide weaknesses. Your goal is to uncover and surface issues, help your team learn from them, and create a culture of continuous improvement." (Chapter 4)

• "To be an effective leader, you have to be able to communicate a vision that inspires people to act."(Chapter 8)