Recently the consumer-facing CEOs of our CEO|Circle got together to share strategies and tactics for optimizing growth during these unprecedented times.
Some leaders are seeing triple-digit increases in core metrics during these times and provided a few helpful insights into how they are taking advantage of areas where there is “Room to Grow.”
Where do companies have data pointing to macro trends or micro pockets of opportunity for growth?
A CEO for a Marketplace company and others noted that they haven’t yet seen a fundamental change in consumer purchasing habits. This is essential because it leaves open the question of whether to keep spending on user acquisition and how the LTV of newly acquired customers during COVID might trend differently compared to other cohorts.
To truly optimize your business’ growth strategy, it’s important to have an accurate understanding of your actual cash-on-cash payback and what the returns on Customer Acquisition Cost (CAC) are, down to a daily basis. For example, CEOs should be asking themselves what percentage of user acquisition spend is returned seven days after acquisition, 14 days after acquisition, and so on. Day-to-day monitoring of these trends will allow leaders to find and pursue micro pockets for growth when they arise.
Though not consistent, many have noted that advertisement pricing has dropped to 2016 levels across most channels. So, if you have comfort around payback and it’s trending in the right direction, this might be an opportunity for growth worth pursuing.
Consumer CEOs must be prepared for manufacturing shutdowns and operate under the assumption that some of their employees will contract the disease. Hourly sanitation, worker distancing, and clear messaging to employees are key for those physically producing goods.
The silver lining here is that CPR is decreasing, and conversion rates are increasing, so many are taking this opportunity to gain market share cost-effectively.
What methods are being used to acquire new customers? Can spending be turned-off and still grow?
Facebook remains the primary form of digital acquisition spend. It is not uncommon for Facebook to make up 70-80% of user acquisition spend. Still, with increasing costs on the platform, many are looking to diversify spend to get the most out of user acquisition investments. Google spend, for example, generally leads to quicker time-to-conversion and might help diversify spend channels.
In light of COVID, several of our CEOs have chosen to cut growth spending significantly, often not entirely, but up to 75-80%. Many have even set the goal of becoming cash-flow positive so that they aren’t reliant on outside capital during these times.
It remains unclear for many what the optimal amount of growth spend is, though the consensus seems to be that flexibility is essential, at least until the new norm is better understood.
How are companies syncing fulfillment with demand?
The demand that’s coming for last-mile fulfillment and overall direct consumer sales has that channel strained, so it’s crucial to understand supply-side risk (e.g., there are only three cardboard manufacturers in the US).
In response, most of our CEOs are buying ahead to ensure no supply constraints through May, at least. This strategy anticipates the future consumer demand based on current trends and ensures that our CEOs’ companies are in an optimal position to meet those demands as they come to fruition.
How are companies ensuring retained/acquired customers are profitable in short order?
Right now, the approach is to be flexible. As noted earlier, the critical question is what the long-term impacts on consumer habits will be. This will determine whether newly acquired customers are profitable in the long-run or if spend is just putting money in an empty bucket.
Most are holding off on significant growth investments until they have a clearer picture of what the new norm is.