The Flywheel Of Doom (How To Fail At eCom Part 1)

This content was published in the No Best Practices newsletter on 3.13.2022.

Note: the “customer file” refers to all of the customers you have acquired, who you can market to. The most relevant slice of the customer file are buyers who shopped within the last 12 months.

ROAS stands for Return On Ad Spend, or the money generated by your advertising investment. You can learn more here.

I’ve received a few questions on Twitter along the lines of “how do I determine if my customer file is healthy?” My high level answer: a healthy customer file enables a business to succeed today, but it also sets a business up for success in the future.

That’s a bit abstract. To make it real, we’re going to use the next few newsletters to explore what not to do if you want to build a healthy customer file. A lot of these appear to pay off in the short term, but make it harder for the business to succeed in the long term.

First we’re going to cover what I call the “flywheel of doom”. When brands use ROAS as their source of truth for media planning, it often becomes harder to sell at full price as time goes on. The longer this goes on, the more expensive it becomes to break the cycle.

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