How to Build a $24 Million Ecommerce Company in 2 Years

Today's hottest ecommerce companies are driving growth at a rate far faster than the industry standard. How are they doing it?

In this video, Ryan McIntyre, EVP of Marketing at Thrillist Media Group and ecommerce advisor at Lerer Ventures, joins Robert J. Moore, Founder and CEO at RJMetrics, to give you the inside scoop on how best-in-class ecommerce companies are growing from zero to millions.

You'll Learn:

  • The 3 things you can’t afford to get wrong (even on day one)
  • Why best-in-class companies make every marketing decision based on this one KPI
  • How to identify breakout success in the first 6 months of your business


Bob Moore: Hello everyone, and welcome to How to Build a $24 million e-commerce Company in Two Years. My name is Bob Moore, I'm the CEO and co-founder of R.J. Metrics, and I am really excited to be welcoming such a large and diverse group of attendees here today. We have people from around the world joining us, some places where it's day, some places where it's night, some places where the sun is shining and for Ryan, my co-presenter and I on the East Coast, some places where there is a lot of snow on the ground. And we thank everybody who is in the audience today for dedicating an hour of time to learning a little more about this really exciting subject.

Just to give everybody a sense of what we are going to be focusing on today, I'm going to be leading a Q & A session at the end of the session at the end of the presentation so if you have questions you can just tag them on Twitter with the hashtag ecomgrowth, and we will be accumulating those questions and getting to as many as we can at the end of the presentation. We're also recording the show today, so as a follow up you will all receive an email with the recording so that you can share it with your colleagues and review the content at any time. And of course, what's a webinar without some free cupcakes? We are going to make sure that at the end of the presentation here, we're actually randomly selecting from among the attendees and somebody's going to win some cupcakes for their office. So we are excited about that as well.

With that said, I am really excited to say that we are being joined today by Ryan McIntyre. He's the E.V.P. of marketing for Thrillist Media Group. I know that many if not all in the crowd are familiar with Thrillist, but one of the most exciting stories both in media and in e-commerce that has happened in the last several years and Ryan has been a very big part of that growth. We are really happy to have him here today and excited to hear what he has to say on the subject of growing an e-commerce company and doing it rapidly. We're going to cover subjects like the three things you can't afford to get wrong, even on day one. We're going to be talking about how to identify break out success in the first six months of your business, and we're going to be going through three drivers that fuel growth at the absolute top companies.

And this is my kind of webinar because we have a ton of data to back this up, so it should be a really exciting time. Just to introduce R.J. Metrics, we are your host of the webinar here today. If you're not familiar with us we are the complete analytics platform for online businesses. ...e-commerce companies in the crowd today. We specifically focus on e-commerce along with a few other verticals related to online transactional businesses, and what we really do is help companies measure and optimize things like marketing spend, merchandising, and other inputs to the kind of success we're going to be learning about today.

So if you're interested in learning a little bit more we offer a free two-week trial. You'll get some info in the follow-up email from this event or you can just go to and get launched right into a demo at any time. So with that said, Ryan, I'm going to hand it over to you and I want to say thank you for being here and I'm excited to learn a little bit about yourself and about Thrillist.

Ryan McIntyre: Very good, thanks Bob. And now it's time for my 15 second commercial for Thrillist Media Group. So Thrillist Media Group consists of three lifestyle brands focused on guys. So we've got the namesake Thrillist, which is focused on the best of food, drink and travel both in your local city and across the world. The newest edition to the brand list is Supercompressor, where tech meets lifestyle, and then hopefully you are familiar with the style destination Jack Threads, the e-commerce platform within the ecosystem.

So let's hop into a little bit of the state of the state of what's going on within e-commerce. So as a whole the e-commerce industry is growing, which is good news for all of us. It's expected to be a $2.5 trillion industry, trillion with a T, by 2018, and comprise close to 9% of total retail sales. So this is impressive industry wide growth. What I've seen from my time being an advisor at Lerer Ventures and from my work here at Thrillist Media Group working on Jack Threads, is that some companies can grow at a rate that dramatically outpaces industry growth. So I'm going to hand it over to Bob now and he's going to walk you through some of the stuff that he sees in some of the research they've done which makes certain companies stand out from the rest.

Bob Moore: Great. Thank you, Ryan. So I'm going to share some data here that comes directly from the latest R.J. Metrics e-commerce benchmark report. Now, we're really lucky here at R.J. that we get to work with hundreds and hundreds of really interesting e-commerce companies from all over the world in all different industries, and a side effect of that is that we have the ability to learn things about the e-commerce ecosystem that are far greater than just one company. So we've been able to pull together anonymized data from a very large universe of e-commerce businesses and really look at the profile of companies that stand out and that grow the fastest, and you'll see a series of charts over the course of this presentation that are basically breaking down this universe of e-commerce companies into four quartiles. And that's really the 25% of companies that are the best performers, the next 25, the next 25, and then the bottom 25.

I think a theme that you will see here, which is really incredible across a number of different dimensions, is that the top quartile performers outpace and outperform the other three quartiles by a drastic, drastic measure, by orders of magnitude in terms of size. And you can see it right here. This is just simply based on revenue over the course, the first three years of an e-commerce company's life and you can see that dotted blue line at the top really starts to run away from the pack and run away very aggressively relative to even the red dotted line there that is the next 25%. Those red dots are still in the top half of performers, but it's the blue dots, that top 25% that really, truly stand out, and we're going to talk today on this webinar about what's going on at those companies and how you can apply some of that to your own business.

That really falls into a couple of categories of growth drivers. Starting from number three and working our way up here, customer retention, making sure that the customers that you have are customers that are coming back and purchasing again and again and again and that's a major input to customer life time value, to having great margins because you're not paying to acquire those customers again, etc.

Number two is all about efficient acquisition and the revenue that's coming from new customers, new dollars in the door and what that looks like and how companies are doing that at scale in such a way that it continues to work even when you need to keep doubling year over year off of a really big base.

And then the number one thing on this list, which we're going to hop into first, is product market fit. It's this equation of do you have something that the market actually wants, and this is a really nebulous term to a lot of people, so we're going to jump in and define what that looks like. We really found four signs in our research that a company really, truly has it. So let's dive in now to growth driver number one and talk a little bit about product market fit specifically.

So we're going to go through four indicators here. The first one is revenue. This is the same chart that I just showed a moment ago, but really, out of the gate, just to talk about some of the actual numbers here, top-performing companies are just growing much faster. Not just in month 36, but if you were to zoom in even just up until that six month mark, in month six the top performing companies have already generated over $2 million in total revenue while the others are averaging just about half a million. So by the end of that six month period you're talking about a four X gap and that gap continues as the time you're at the end of year two these companies have accumulated over $26 million in revenue and are still about four X the size of the next largest ones.

The other indicator here is just around new customers, so this graph is slightly bumpier, but the same trend really applies where you can start to see that the absolute volume of brand new people who have never made a purchase before is just driving the growth in a really meaningful way that is not happening at the other companies at the same scale. By the end of year two top performers have about two and a half times the number of customers as those that are in the second quartile, and it's really pretty amazing. And obviously the other input here, you can talk about the number of people and you can talk about the number of dollars, the number of orders is obviously the other input. And all of these kind of feed into each other in a way that actually adds up or kind of multiplies against one another to create this giant gap between the first and second quartile.

In month 10 top performers process over 10,000 orders and 10,000 orders isn't even a line that gets crossed ever by people, at least in the first three years, who are in any of the other quartiles. This is where there's really just some runaway growth in terms of how those numbers are moving.

Now, obviously all of these things we're talking about are related to one another. If you have more new customers they're probably placing more orders, and the one stat that we really love to look at to understand the whole picture here is just customer lifetime value. I mean, this is really your true indicator of product market fit. This is a reflection of your ability to sell a customer, acquire them efficiently, and actually have them come back and buy more and buy a lot. And you can really see that there is a pretty clear breakdown from a C.L.V. perspective as well as all these other metrics that we've just been talking about, where that first quartile really, really stands out. The top performing customers have a one year spending in that top quartile of $249 where for other companies a single customer is only worth about $167, and that gap means you can spend more to acquire and it means that you can grow your business faster by selling back into the people that you've already got.

So Ryan, do you have any thoughts or commentary kind of around the product market fit universe?

Ryan McIntyre: Yeah. All the points you brought up are super important in making sure that you have the data locked down to be able to guide the business and making sure you're keeping an eye on these things very closely. It's one of those things that can't be underestimated. Aside form the data you have to remember that you're actually selling goods to humans, so the product and the problem you're trying to solve for these users has to have a real value to them. You can be super locked down on the data but if the product you're selling doesn't fulfill what the customer's expecting you're going to have retention problems, you're going to have a series of other issues.

So making sure you lock that down is really, really important. And in a world where everything is just a search away, making sure that you're speaking to your customers the right way and that the product itself is really, really tight. It's a way to stand away from Amazon, to keep them at an arm's length. So there are a couple different companies that come to mind immediately. So Casper. I don't know if you guys, if everybody knows about Casper but they differentiate themselves through not just with a great product but with a frictionless buying experience. They're disrupting the mattress industry. Not only are they making it a cool experience that people want to talk about, they're removing all the friction and the pain from that experience. So if you've bought a mattress in the last 10 years, remember how painful that was. They're really shaking that up so it's a very, very interesting use case there.

Bark Box, another example of a company that's super focused on their customer. They know exactly who their community of passionate dog lovers are. At Thrillist and Jack Threads we're betting big on differentiating our offering through the content, commerce blend. How can we keep people within the ecosystem, keep them coming back. And then there's companies like Warby Parker and Birch Box that built their ecosystems on a try before you buy, which is a great way to remove customer friction and kind of gives customers that warm hung that will keep them coming back.

Bob Moore: Awesome. Thank you, Ryan. And when we talk about e-commerce companies and we're in a spot where you've got that product market fit, you have a product that the market actually wants to buy and you've got a revenue model that works and makes sense, you've got the high class problem then of figuring out how to acquire customers and how to do that efficiently. And that's growth driver number two that we're going to talk about now.

As we look at our own data, just again, on the total customer counts, top performers are frankly just acquiring customers much faster. So you can see this difference even more clearly when you look at this chart, and I'm going to ask Ryan to take the wheel for this section and really dig in a little bit and tell us about some of the acquisition strategies you are seeing these best in class companies adopting.

Ryan McIntyre: Thanks Bob, absolutely. So we live in a great time to be an e-commerce startup because the ad platforms that are coming out these days are becoming more and more powerful. So we've got a few examples up here. You've got Twitter, you've got Facebook, and of course the classic e-commerce driver of Google that continues to role out new ad products that are engaging to customers, that start to break away from just the typical S.D.M. methodology.

So Facebook in particular has been a real game changer for the industry because of their wealth of first party data that can be leveraged in a number of different ways to help grow your company. So we're going to dig into Facebook just a little bit more. There's a couple interesting things. First is the sheer size of the ad product. So why this is really interesting, it's one of the largest ad formats that you can actually buy on a mobile device, which is really important as the world continues to go mobile, and it allows you to tell a larger story. So news feeds, again, such a large format, the best way to grab someone's attention is to put a compelling image in their news feed, something that they would want to look into further, because people are going through at 100 miles an hour. So you need that really compelling image to draw them in, at least get them to pause, which is going to be the first step.

Again, it allows you to tell a larger lifestyle story. We've got an example up from Chubbies to set out to own the weekend and are successfully doing so. So they lead with images and copy that don't just push a single product, they promote the Chubbies lifestyle, and then tangentially making it product-centric. So there are people that want to invest in the lifestyle rather than just shorts on their own. It represents something larger than just shorts, which is a really smart way. Typically, this would cost you a fortune to tell this lifestyle story where you'd have to go and run T.V. ads to get that much information into an ad, but Facebook allows us to tell these larger stories in a very succinct way, and it's incredibly affordable.

The other big piece, and again this is talking about the wealth of first party data that Facebook has access to. So they've really leveled the playing field between big brands and the rest of us in the e-commerce realm. So you don't need to spend millions of dollars and then try to figure out if that's working or not. Because we live in the pace of the internet you can really test and learn very quickly. You can spend $1,000 on a campaign, figure out if it's working or not, and then test and iterate from there.

Using custom audiences, again, really, really critical to when you start your Facebook advertising. You'll hopefully by that point have a customer file. You can upload that customer file into Facebook, do look-a-like audience targeting off of it and segment and go after customers that are, that have a higher propensity to be your best customers. That really, really works well. And again, you can spend $1,000, $2,000 and then figure out if it's working very quickly. And going back to what Bob was talking about before about really locking down the metrics around customer acquisition. If you get that right and then start spending you'll be able to move at a really quick pace and learn very, very quickly.

Another big piece that a lot of people don't think about in the customer acquisition realm, but it certainly plays a large role boasting acquisition and retention, are the policy side of things. Just making sure that you have the baseline policies that customers are expecting in today's marketplace. It's not super glamorous and it can be expensive, so set yourselves up to be able to play the policy game early and often and make it kind of core to what you do from the start. Mod Cloth does a great job of this. Very customer-centric, they really know their audience so they keep all this policy information very much front and center.

Policy is what will cause people to abandon their shopping cart later it will also affect your retention rates, which we'll dive into later on in the webinar. Another great example is Warby Parker. I keep coming back to these guys just because they've been very, very smart. So from a policy standpoint they knew their customers would want to try multiple pairs of glasses. People do that when they go to the typical brick and mortar seller of glasses, they'll try on multiple pairs. It's a very personal experience, so they built that into their offering where you can get for five days get five pairs to try on at home, for free, in the comfort of your own home. It's really, really smart. It removes friction and ultimately it gives the customer a little bit of a warm fuzzy feeling that will get them talking about the brand.

That's a really important point to drive home, especially early on in making sure you've got all these things locked down. So you're early customers, your early adopters that you're going to want to use as evangelists for the brand are willing and ready to talk about you in a flattering way. So it kind of goes into, one thing that you can't get wrong, just make sure your policies are right, make sure, make sure they're super tight. And it plays both on the acquisition side and on the retention side, which we're going to pass back over to Bob.

Bob Moore: Awesome. Thanks Ryan. A lot of really great information there, and as we come into the home stretch on our growth driver list today, we are indeed going to be talking a little bit about retention. Before I dive in here, just a quick reminder, we're seeing a lot of really great questions come in through Twitter, you can all send your questions in with the hashtag ecomgrowth, that's E-C-O-M-M growth, and we look forward to answering as many of those as we can for you at the end of the presentation today.

So I hope to see you out there on Twitter and let's talk about this third growth driver on our list, which is retention. Now we start to get into some really interesting data here. So this is a new chart that really tells us something about these best in class companies, which is that they are much better at getting customers to come back. Check out what happens just in the first few months of the business for these companies.

Now, on the left here you're seeing the new versus repeat revenue for the top quartile of performers, and then on the right you are seeing the new versus repeat revenue for everybody else. And what you see, even in the very first few time periods there for the top quartile, is that people are already coming back. Now, naturally when you are a new business and you're selling your very first customers they are by definition new customers, but the question is how quickly do you start maturing a base of people that are coming back and buying loyally? Even in the very first month top performing companies are generating a nice chunk of revenue from repeats, about 25%, whereas the other companies are only getting about 10% of their revenue from repeats in those early days.

This is really just another sign that these companies have something really special going on from day one and customers are coming back and purchasing again. And this trend really maintains over time. You can see for the bottom three quartiles, the chart on the right, it's almost amazing how the new and repeat revenue converge on one another right at 50%. So you kind of, within the time period of about a year and a half, get into this spot where half of your revenue is coming from new customers, half of your revenue is coming from your existing base. And the thing that we see happening with the top quartile of performers is the data is a little bit noisier but by the time a few years have gone by you really start to see some noteworthy divergence where the majority of revenue is actually coming from these repeat purchasers.

And you remember from the earlier charts we are talking about companies that are often growing at north of 100% a year, so it means that that existing base is really contributing a really meaningful percentage and a meaningful absolute dollar amount in terms of new value. So based on that we can talk about some of the companies that are really doing well in this regard, and Ryan's going to talk about them a bit.

Ryan McIntyre: Yeah, sure. And Bob, it's a really important point. It's one of those things that if you're early on in e-commerce you've likely got a forecasting model. Take any new customers out of there and the results will terrify you if you're not getting the repeat rates that you want, so this is something to be really focused on. And the rest of these companies, the [Inaudible 23:26] Meundee's, Bark Box, they've been focused on driving growth through repeat rates. They were really, really focused from the get go on who their customer was and really appealing to the specific needs of those audiences, and this is a strategy a lot of e-commerce companies use. You're going to solve a problem for a specific group of individuals.

Now, where you can run into problems down the road is that depending on the size of that market you're appealing to, you can quickly gobble them up and as you start to expand into the rest of the market opportunity, you have to be able to retain those core customers. You have to bring them along for the brand journey and maintain them because otherwise you're just going to have to acquire entire new cohorts of customers, which is both going to slow growth and starts to, one way to put it, the forces of gravity start to pull on your growth if you're not able to retain these core customers.

So Bob has a little bit more evidence of that on the next slide.

Bob Moore: Yeah. Really supporting the point, these are numbers from our benchmark report about growth rate by revenue size, and if you think about the math behind this it shouldn't be extremely surprising. It's a whole lot easier to grow by 100% a year if you have $1 million in revenue than if you have $10 million in revenue. The absolute amount of incremental dollars coming in just grows, obviously, in proportion to the size of the base that you're starting from.

So for these companies that are somehow able to maintain over the long-term these 100% plus growth rates, what is the secret sauce, and the answer really comes down to what we're talking about here, which is customer retention. That same quartile of companies that's performing the best from a growth perspective are the ones where they've actually been able to get their customers to come back and keep buying again, and if you have to drive that growth with mostly or at least 50% new customers coming in the door that's a really, really leaky bucket and it just makes it harder and harder for your company to kind of reach escape velocity.

Ryan McIntyre: Yeah. Again, super important point. The basic math at this scale, if you're losing 100,000 customers a month because you're not able to retain them, that means you have to add 100,000 new customers a month, which is very expensive, in order to even maintain that flat growth rate. So kind of a simple way to break down that math.

So there are a few tactics in the e-commerce world that you can use to keep customers engaged. So one great way is just to stay relevant and surprising. We have a real leg up on our brick and mortar counterparts because we can move at the speed of the Internet. It allows us to stay in the cultural conversation and therefore at the top of the customer's mind. Again, you have to remember that on the other side of every email or communication is a group of humans that have both emotional and impulsive responses, so to stay relevant and surprising, to keep them coming back, you're going to have to mix it up a little bit.

So here we've got a great example from Birch Box, having an honest, real world conversation with their customers about the dreaded Valentine's Day and discussing what you're going to do, are you going to be going out or staying in, and just again, it's a real world conversation with the customer, and an honest one. Another great example from Jack Threads so in less than 24 hours from when T.M.Z. released the video of Jay Z and Solange fighting in the elevator after a wedding or something like that we were able to turn around an epic gif recreation using our models. So it doesn't necessarily do it justice here, but it was moving all over the place. So this was released in email and social and we just giggled internally as we saw the clicks roll in. It's just a way for us to stay, to speak about the things that the customer is speaking about at the time and just a way to continue to build that emotional relationship with the customer. It's like, all right, they get me, they understand what I'm talking about and thinking about at this stage.

Another really big piece that gets into retention. Again, we talked about getting the policies right, but also customer service. Making sure that you have customer service early on in your evolution is really, really important. Invest in tools like or Zendesk, improve the ticket management system. Use them. They're really, really powerful. And you should always strive to make amazing customer service be the standard for your company. So an empowered customer service team is really critical to driving a successful organization. They represent the voice of the customers, they can bubble up issues that are impacting your customers very, very quickly and provide a voice to that rather than just reading individual data points to figure out something's wrong. When something's wrong your best customers will be the ones to reach out to you and let you know, you just need to be able to receive that and react to it very quickly.

Another great retention tactic is obviously retargeting, and again, back to Facebook and how they've really helped change or revolutionize that as a retargeting industry. Again, back to the example of using custom audiences is really, really important. You can upload a list of your best customers, segment that customer list any way you see fit, high valued customers, customers that have gone stale on you, customers that have signed up but potentially haven't purchased yet. You can segment all these audiences and then tap them on the shoulder within Facebook. It becomes a really, really powerful tool. And then there are a slew of other partners you can use out in the industry to follow them around on big web, to follow them around in mobile. And again, it's just really important to keep them coming back over and over again.

Another important one that we found particularly with Jack Threads is creating multiple touch points. The world is going mobile. It is now table stakes to have a highly functional mobile app and a highly functioning responsive web experience. So one of the things that we found is by having these multiple touch points out there between desktop, between the app, between mobile web, is that you're most engaged users are going to find all those different ways to shop and it's got to be a great experience for them, and when people do shop across those different experiences we see a lifetime value increase of over 64%. So again, it's table stakes at this point to have all these multiple touch points.

The next one is, again, create a personalized experience for your customers. One of the guys that really, really nailed this is Backcountry. So it's a really interesting use of their customer service force where they're not just taking them as receivers of problems and dealing with returns, but they've actually turned them into a profit center for the company. So you can get a personalized shopper, and again, we're talking about really high consideration purchases, you're looking to purchase a new snowboard or skis or whatever else online, which can be terrifying, so they've addressed that friction by having this personalized shopper experience, someone who is actually an expert in skiing or they can ask the right questions. Are you a mobile skier? Are you a powder skier? Where do you live? Like, how often do you ski and years of experience. They can have that one on one communication and then apply curation on top of the curation, if you will, and then go back into the inventory that they have at Backcountry and pull stuff forward that is going to suit the customer best.

Again, really, really powerful thing to do. And it's not necessarily going to apply to everybody out there, but certainly if you're playing in the high consideration purchase space it can become really important, and again, it's just another super interesting use case of how you continue to build retention experiences that keep customers coming back and remove friction from the flow.

Bob Moore: Awesome.

Ryan McIntyre: Take it away, Bob.

Bob Moore: Yeah. Here's the punch line, folks. We have covered three growth drivers: product market fit, efficient acquisition and customer retention, and we arrive at the one K.P.I. to rule them all. The final question here is how do you combine those three growth drivers? How do you measure all of them at once? And I talked earlier in this presentation, just very briefly, about customer lifetime value, and in the final section here today we want to double down on that because it is something that if we dig a little bit deeper we can realize how to use this metric to measure and improve the performance of your business through this one key indicator here.

So we talked about how top performers generate more total orders, but they also generate more orders per customer, and you can tease this out of the data we showed earlier, but here's the hard numbers on it. The orders per customer performance here in that top quartile, again, standing out amongst the rest of the pack.

Additionally, and I saw some questions earlier in the room chat about would we be talking about average order value, here it is. The data that we see amongst these quartiles, again, the top quartile, more customers, they come back more and lo and behold they are placing more orders and they are spending more in each order. So with a higher average order value top performers have that A.O.V. of about $102. The bottom quartile has an A.O.V. of $74. This combined with the number of orders actually placed really combine to tell you what we're looking at in terms of the overall impact of the existence of these customers.

If we want to dig into some examples here, Ryan, did you want to chat about Mr. Porter or would you like me to?

Ryan McIntyre: Sure. Mr. Porter's a great example of paying attention to the details. So there's a couple ways to build A.O.V., right? It's actually an output. Think of it as an output of your A.U.R., your average unit retail and your U.P.T., the units per transaction. You can only walk A.U.R., the average price of each item on your site so high before you start to actually alienate your customer. So you have to build up your A.O.V. over time through U.P.T. So how can you do that? Navigation is a really, really big way, and that's why we pulled the Mr. Porter example forward.

They don't have your very typical, hierarchy nav structure. They really tapped into the way that people shop. Are they shopping for trends? Are they looking to shop for an individual occasion? Do they have a wedding to go to or are they just looking to learn more about an individual designer? So I think they've really nailed the customer mindset when they come to the site, and again, you can build up the A.O.V. through the U.P.T. Get people to add those, get them to the item they're looking for very quickly and then have them fill out the rest of their basket with either recommendations or ways to quickly pivot onto the next item.

Bob Moore: Great. And when we pull that data together when we're looking at the people coming back and buying again, the people spending more and more, you can really multiply those together and start to get a sense of this metric that we call customer lifetime value. Now, everybody's got a definition of customer lifetime value that's best for their business. In a lot of e-commerce companies customer lifetime value is an extrapolation that estimates throughout the entire life of a customer how much will they spend. In a lot of e-commerce companies they chose to remove gross margin from this number or chose to remove acquisition spending from this number. A lot of different iterations on C.L.V. exist and all of them are helpful in their own ways.

Now, this one that we're looking at here is probably one of the most simple but also one of the most powerful and striking visually, which is just looking at the median 365 day C.L.V. that's purely on a spending basis without expenses taken out. You can see, really, the leadership position that the top quartile is in, but interestingly also, just how far down that fourth quartile is. It's less than half the performance of the top quartile and it's really this C.L.V. where everything gets bundled up together and you get to clearly see the people who stand out and how they end up separated.

So there are a couple of ways that you can actually use this C.L.V. proactively and take action as a result of it, and I'm going to go through those. Number one is to track your cohorts through a cohort analysis, and number two is to make these big invest or kill decisions in terms of where you are investing your actual dollars and your opportunity costs in the customer acquisition channels that your business pursues.

So, talking about cohort analysis first, I have always been a huge fan of cohort analysis. Prior to R.J. Metrics I actually worked at a venture capital firm where this was probably one of the most fundamental driving metrics that influenced whether or not we would make an investment decision in an e-commerce company, was looking at the cohort analysis for that business. And if you're not familiar with cohort analysis, each one of the lines here represents a population of customers where, in this case, the populations are separated based on when they made their first purchase, and then over time you look at the cumulative spending that was made by the average member of that cohort.

What you can see in a cohort analysis is two things. Number one, you can generally look at, effectively, the C.L.V. value evolving and growing over time, and the slope of these lines, whether it is something that decays over time, increases over time or remains relatively linear is a really, really big indicator as to what's going on with repeat purchases, what's going on with customers spending more in average order value over time, etc., and actually is a very, very rich picture of what's going on inside of a business all wrapped up in one chart.

Now the other thing that you can extract from here is, since we've separated these out by the month in which the customer made their first purchase, you can actually compare these lines to one another and get a sense for whether the health of your C.L.V. evolution is actually getting better or worse over time. So one of the things that we always...the newer cohort lines sitting on top of or sitting below the older cohort lines. And if you see consistency in a trending downward or upward it can tell you a little bit about the quality of those incremental customers that are being added, and that is a very, very powerful thing for understanding not just how the business is performing today, but how it might perform tomorrow as a result of the behavior that we're seeing as early indicators from these customers.

Now, I talked a little bit before about the idea that customer lifetime value often incorporates the concept of how much money was spent to acquire the customer, and obviously, naturally, it should. People who spend $1,000 in their lifetime with your business aren't worth it if you have to spend $2,000 in order to acquire them, and that's where marketing R.O.I. really starts to come into play. There will be differences in lifetime value by the source that you acquire customers from. We often see very, very stark differences, in fact, by channel. There is a need to tie all this back to acquisition, and this is just a sample chart, this is not benchmark data, it's just an example of what an analysis might look like, but it's not uncommon to see marketing R.O.I.'s from particular channels that outperform R.O.I.'s from other channels.

And to be honest, it really depends a lot on your business, what you are selling and where your ideal customer lives, but by combining your spending data with your data on the transactions that are happening and what people are buying you can get this really beautiful picture of, what is my marketing R.O.I. by channel. And you can even break that out even further and do it by campaign, etc. When our customers are using R.J. Metrics it's very, very common that this is a thing that they're looking at on a very regular basis, because it's really driving those invest or kill decisions. Where should we be putting our money?

Ryan, maybe it would be interesting for you to talk a little bit about how this applies to the world of Jack Threads, which is a Thrillist property.

Ryan McIntyre: Yeah, it's core to how we run the performance based marketing part of the organization. Being able to make these very quick decisions based on early quality indicators and it's all tied back to the acquisition source. So we tie everything back to where did they come from, what was the campaign they clicked on, what was the creative, it's a pretty distinct and heavy hierarchy. So we can get down into pretty low levels of information and we make decisions on these day one, day seven buyer conversions. So what percent of that cohort that you just brought in the door is showing propensity to purchase? We find that has a stable relationship with people that are going to make a purchase in month one, month three, and continue. So we don't have to wait 30, 60, 90 days in order to figure out if a particular cohort of users are not purchasing at the rate that we want them to.

So we can pivot very quickly, pull back dollars on campaigns that are not working and double down on campaigns that are. Again, starting from day one, this is one of the things you have to nail before you start spending gobs of money in any of the wonderful platforms that are available to you these days, is making sure you've got this data set really nailed so you don't wake up one day and figure out that you've acquired a bunch of customers that are not purchasing.

Bob Moore: Awesome. Thank you, Ryan. And with that said we are ready for some Q & A. So here's what's going to happen. I've got a big pile of questions here that we're going to attempt to get through quite a few. It's not too late to send in questions. If you want to use that hashtag ecomgrowth, we will leave it up on the screen here and any questions we don't get to we'll try to cover on Twitter after the event. After we are done with the Q & A we will be announcing the lucky attendee who's going to be going home with some cupcakes, and then we'll call it a day.

But without any further ado I want to jump right in because we have so many questions here. Ryan, the first one is directed at you. Everybody loved the Jack Threads example about the elevator campaign with the tie in to the Jay Z news. People are wondering if you could share just a little bit more about how that drove revenue in addition to clicks and attention, and actually if it translated into more sales in addition to just more eyeballs.

Ryan McIntyre: It did indeed because we timed it up with a promo of a 99 Problems but a Suit Ain't One, saying that you can actually get a suit from Jack Threads for $99, which was a big promo that we ran tied to this, so it had both of those elements. So yes, it not only drove eyeballs but using a kind of reinvention of the entry level suit we actually sold a bunch of suits in addition to that, so it was a win-win across the board, and fun to pull off so quickly.

Bob Moore: Awesome. That is fantastic. Follow up question, we talked a good amount about product market fit. We had someone who was curious to know if there are any tools on the market that you might recommend for trying to quantify or establish whether or not a company actually has that product market fit that we're describing. To me it feels like it may be all about the data but I'm curious if you've come across anything that might be helpful for people figuring out if they're on the right track.

Ryan McIntyre: It's a really interesting question because a lot of the companies out there that have the real wealth of research knowledge are typically companies that have been around for 50 years or so and they're still adjusting to the e-commerce realm. So at some point there's going to have to be kind of minimal comp score research around what demo you're trying to hit, and then it's about starting to test into it. It's kind of a wishy-washy answer but a lot of the data that exists out there that historic retailers especially, would rely on, hasn't necessarily caught up to e-com.

Bob Moore: Makes a lot of sense, makes a lot of sense. Question about refunds, we talk about policies and about how in a lot of cases you kind of need to exist in an environment where you're creating a lot of flexibility for your customers, you may actually be encouraging a lot of returns as kind of a way to drive revenue and get new users in the door. One of our attendees asked, they said that they typically just look at revenue after refunds, but they're wondering if there's actually some merit in those sales that get made that get returned and if there's any way that you adjust looking at your data or think about it differently to kind of appreciate those indirect effects of having an environment where a lot of refunds might be coming in.

Ryan McIntyre: Yeah. It's an interesting question and we look at it both ways at Jack Threads, so kind of before, the gross sales and then net of refunds, especially when you're making L.T.V. decisions because you have to make sure that the actual dollars hitting the bottom line make up for the actual investment, so that's one use case. But a really interesting look at the data, you should look very closely at the people that are actually driving refunds. We find that they are actually the most engaged customers. They're not just those that have an experience and give up. They're the ones that are willing to reach back out and try to make it right. So taking a look at the people that are actually driving refunds and what experience they go through, and as you tweak your policies keep a really close eye on how that impacts those customers. Refunds are painful for any e-commerce business but if you dig down just a little bit deeper you'll find they're actually some of your best customers.

Bob Moore: Excellent, excellent, thanks. I'm seeing a lot of questions come through from companies where they've got a model that is not necessarily totally conducive to some of the tactics that we're describing because either they have a low number of SKU's, or even using Casper as an example, they may not be in an industry where a very high degree of repeat purchases is happening. Sometimes when you buy a mattress it's probably not likely that you're coming back a month later to buy a replacement for that. So I wonder if maybe we can have a little discussion about if you can't quite win on all of those vectors, what are the things that you should be doubling down on to try and make up for that.

Ryan McIntyre: Sure, and I'll use Casper as an example. They've done a great job of keeping their marketing mix super, super diverse. They play a little bit in the direct response stuff that we were talking about on Facebook and Twitter and Google Ad Words, things like that, but they also play in the awareness realm, the awareness part of the funnel, and I think for companies like Casper that's really, really important because you want people to, when they're looking for a mattress, to know that Casper's a better way to get that mattress. You're playing in a different part of the funnel at that point. It can be a little bit more expensive but that's kind of the, depending on your margins, that's the place that you have to go where it's less impulse driven, it's less direct marketing sale, and then you just need to make sure that they know about you when they're coming upon that high consideration purchase.

Bob Moore: Excellent. I've got to compliment our audience for the smart questions coming through. I'm reading all these questions and saying, that is a really good question. One of the ones that just caught my eye is, it's noteworthy that in the data that we've shared here today and a lot of the talking that we've done, it has been in a part of the funnel around the time when the first purchase gets made or later, and we haven't talked too much about what's happening in the funnel above that point, and doing things like turning viewers or people that are just browsing but have never made a purchase on your site into customers. And I'm wondering if there are any particular key metrics that you look at over at Thrillist to understand the health of this, and in addition to that kind of any tactics that might tie in that you've found to be particularly successful for optimizing that conversion.

Ryan McIntyre: Absolutely, and I think it speaks to the last line, of when we're making those very early buyer conversion, buyer activation decisions, we're doing that based on new customers that have come in and the percent of those customers that are activating or becoming a buyer. So you can apply a lot of the same trend and cohort analysis and just focus on that first purchase. You'll find that the curves, if you have a sign up funnel and then a purchase funnel, you'll find that there's a pretty steep climb between when they sign up and when they purchase, and then it starts to level out as time goes on. So the further out from signup or first interaction it tends to flatten out the likelihood that they're actually going to become a buyer at that point.

So tactics that we use internally, and just kind of being very mindful of that curve, is that we know when somebody's signed up, we know if they haven't made a purchase yet, so magically in their email will start to appear activation offers that tend to escalate as you get further and further out from the time of sign up. So you can treat them in the same way you treat your buyer cohorts, look at it almost through the same lens, but you're just trying to get them over that first purchase, and a lot of the same tactics can apply. Create a custom audience in Facebook on customers that signed up but have not made a purchase. You can even put an offer in front of them if that's something you're comfortable with, to try to juice that activation because the first part of L.T.V. is actually getting somebody to buy at least one thing, and then the rest of the battle is on keeping them around and getting on to two purchases, three, etc.

Bob Moore: Great, great, seeing some questions come in around the benchmark report that I can answer for folks. If you're curious about where to actually get that report, my recommendation is you should check out the R.J. Metrics blog, just at You will find all of the information on where to find all of our benchmarking reports. If you just go to, also there's a resources page where you can find all of that.

Some people are asking about benchmarks for B-to-B companies or companies that sell to e-commerce companies. That's definitely an area where we're focusing for future benchmark reports so if you go to our blog and just subscribe to our blog updates, there's a form right there that you can do it on, we will make sure that we get that in your inboxes as soon as we have them. Jumping back to questions around e-commerce specifically, one of the points that's been raised, I know we have a lot of earlier stage companies in the crowd and when you're talking about optimizing for shipping time, optimizing for price, it's obviously challenging as Ryan, you suggested before, to go toe to toe with Amazon on these things, or even with mid-size companies that are competing in these markets, and I'm wondering if you can chat just a little bit about the financial strategy of doing this successfully as a company that doesn't have access to a huge amount of liquidity or a huge amount of capital. Sometimes you need to pick your battles there and I'm wondering if there's a particular approach that you've got an affinity towards.

Ryan McIntyre: Yeah, shipping is expensive. Oh man, it's expensive, and trying to compete with the Amazons of the world, they don't have to make money, it turns out. The rest of us do. So that's one of those line items where you have to differentiate yourself in terms of really knowing your customer, in terms of having a unique mix that Amazon can't compete with. People will tend to wait for it in terms of shipping time. The thing that we found, and particularly, this is again men's apparel, guys are willing to wait a few days to get their order in and then it doesn't necessarily seem to be a problem for them. So I think you also have to understand your customer's mindset, really understand what you're selling. If it's very urgency based certainly the faster shipping times are going to benefit you. If it's something that is not as urgent to get you can probably get away with not competing in the big next day drone shipment that is free. It's a really difficult place for early stage companies to play.

Bob Moore: Right, great so last question here and one that I know a lot of people are interested in, and it's about raising V.C. funds as a e-commerce company and the metrics that really matter. And one thing that I should share about Ryan that I don't think I did earlier is that he's also a special advisor to Lerer Ventures, which is probably one of the most prolific and successful early stage investors operating today. They're based out of New York City. Ryan helps out with a lot of the Lerer investments including us, R.J. Metrics. We're one of them. So he probably has some unique perspectives on what it takes to really wow the V.C.'s and make a deal happen. So curious for your thoughts on what the V.C.'s really want to see in order to make an investment.

Ryan McIntyre: Yeah, there are two places that create real standout. Either someone is creating a marketplace model that is just going to be killer and can actually go toe to toe on the pure value part of it. That's interesting, but a lot of the L.V. investments have been around people who have really locked into knowing their customer and building a real brand experience. Casper's a great example. These are companies that are disrupting an industry or they've got a real clear idea of the group of customers that they're looking to appeal to, so they come prepared with not only data to say that you've got some traction, but also a vision for where the company is going and the problem you're trying to solve and who that group of customers is. Again, it can come from all over the place. We referenced an example of Meundees. Who'd have thunk a few years ago that you could actually carve out a segment of customers based on undergarments and create a great company around it?

So it comes from all different sides, but one of the clear things that I've seen is people that really stand out have a very, very clear vision of their brand and where they want to take their brand.

Bob Moore: Ryan McIntyre, a gentlemen, a scholar, the E.V.P. of marketing at Thrillist Media Group, I cannot thank you enough for the time that you've spent with us and our many attendees today. This has been a really valuable experience for me personally and hopefully for those in attendance. Those who want to learn more about Thrillist should go and check them out. If you're not a subscriber or a customer over at Jack Threads, it's definitely a place that you probably want to be.

So without further ado, it's cupcake time. Let me pull up the magical randomizer here, and we do indeed have a winner of the cupcakes. It is Karen Sinclair Kay. So Karen, congratulations. We will be reaching out to you directly, most likely over Twitter. We've got your handle here and we'll be sending some cupcakes your way. For everybody else we hope to see you at the next webinar when the cupcakes may be yours. But in the meantime I want to say thanks again to Ryan McIntyre for his great work with us here today and thank you so much to everyone who attended and we cannot wait to see you next time. From R.J. Metrics I am Bob Moore signing off. Thanks again.