These three metrics has TRANSFORMED our business

I just noticed something AWESOME.

Since Kleio was good enough to use day-to-day in our own business, which was around March 1st, our new customer margin has TRANSFORMED.

We went from a lot of unprofitable days (red), to almost exclusively profitable ones (green). In other words: we’re printing money on getting new customers.

In other words: we’re printing money while acquiring getting new customers.

So, I figured I’d share how I use Kleio, day-to-day, and the three metrics I track:

1: New Customer Margin

It all starts with the contribution margin per new customer metric. It’s basically just what’s left pew new customer after COGS, all variable costs, and ad spend. It’s a lot easier to track than ROAS where you have to know what ROAS is profitable for each of your products.

Every day, I look at the actual value (black) and the forecasted value after returns (gray). The latter is important for apparel stores like ours. If we don’t forecast returns, we’re often in for a bad surprise when the returns hit.

If the margin pew new customers is negative for more than a few days, something's wrong. I want 1st order profitability. And if it’s too high, it means we can spend more on ads and get more new customers, profitably.

Either way, I start digging, so I can make the necessary changes.

2: New Customer AOV

Either way, the first thing I check is our new customer AOV. If it's changing (the blue trend line), it's often a sign that a shift has happened: new customers are either buying more or less than they used to, or they buy something else.

To figure that out, I look at what products new customers buy (1 in the screenshot) and their AOV when buying that product (2).

In either case, I make sure that the new buying pattern matches our bids. If new customers suddenly buy less of an item, I move the ad to a different ad set with a lower bid. If they buy more, I move it to an ad set with a higher bid, so it spends more while still being profitable.

(Or just change the bids, according to your account structure)

2b: Ad iterations

This is also a great time to note down what you should focus your new ad efforts on.

If a product suddenly pops, whether it’s in volume of orders or AOV, it’s a GREAT candidate for a product to test more ads on.

3: Blended CAC

Finally, I also take notice of our CACs, both our blended and in platform. But, as we use bid caps, I seldom do anything directly to affect CACs.

If both blended CAC and in-platform CPAs are high, it's likely just a small sample that will even out over time. Our in-platform CPA is more or less always below our bid over a reasonable data size.

But if our blended CAC is high and in-platform is fine, we're likely hitting existing customers more than we want. So, I look at exclusions and see whether our exclusions lists are syncing properly.

Bonus: What about when starting new ads?

When starting new ads, my biggest concern is making sure we're profitable. So I want the right bids.

Let's say I'm starting a new campaign for product X. Then, I use the lifetime-value tool to get the avg. first-order margin of new customers buying product X.

It might differ for your specific ad, but it's a great starting point for a bid cap that you can then adjust over time per the above process.

That’s it!

In my opinion, you don’t need to track more than this, day-to-day. The real work is in the ads, offer, and the rest of your business. Not in tracking 6000 different metrics.

You can Kleio out for yourself and track your acquisition here. You get a 7-day free trial, and after that most of you probably fits my $29/month plan.