You don’t earn 220,889 Facebook fans overnight.You especially don’t get a full 62.48% of your fan base talking about you on the platform.Average Facebook engagement for brands as a percentage of their fan base (how many people like your brand page) is about 1%. And that’s when you have a good engagement rate.All online businesses know the Facebook engagement narrative well. Facebook’s algorithm has continued to promote brand pages in the newsfeed less and less. Organic reach is near impossible. Facebook has become pay-to-play. And it’s still rather unclear on if those clicks and likes turn into dollars down the road.It isn’t unclear for Spearmint Love, though, who have turned this formerly-maligned platform into a Facebook business success story.Founder Shari Lott spent three years as a mommy blogger, building a devoted audience on Instagram and Facebook –– where pictures rule. Her content was like that you might find on the Land of Nod’s blog. But note even Crate and Barrel’s baby subsidiary could compete with Shari.
The Success is in the DataShari’s the brains behind the Spearmint Love operation –– the trained eye that continues to build a dedicated following of new parents. Her husband John is the founder of an equity firm. He has years of online business experience behind him. In January 2016, he started helping Shari scale the business in the spare moments between his work as a principal in an investment firm based in New York City.I ask what he’s been focused on, what his number one metric of success is for the company.“Cost of acquisition,” says Lott. “That's easy.”
A Stroke of Facebook Advertising GeniusIn early spring of 2016, the data coming through Facebook advertising platform was dumbfounding.There was a stark ROI dropoff John just couldn’t explain.His initial inclination was that the ad was just going stale. It no longer resonated with the audience and, as a result, Facebook’s algorithm was showing it less and less. The ROI just disappeared. After months of monitoring individual ads and updating copy and photos –– the dropoff wasn’t improving.“I was wrong,” says John. “It took me six months to figure it out.”He was on a walk when the answer just came to him. It hit him out of the blue. It was so obvious. He’d been looking at the wrong thing for months.The ads weren’t stale. Not at all.The audience cohort had simply moved on.
Every Single Facebook Ad Targeting Option You HaveUse this chart to plan out your next Facebook ad target audience. And remember, your audience can –– and will –– change over time.
How to Measure Facebook Advertising SuccessToday, Spearmint Love’s Facebook advertising runs like clockwork, syncing with audience changes based on a full year of testing. The brand grows with a young family, providing always relevant product solutions at every stage of life.With the ROI dropoff solved, John’s attention focused back on customer acquisition costs.For him, it isn’t just ad effectiveness he measures. There are two benefits to Facebook advertising, and John wants his ads to accomplish both:
- Return on investment: “This is more discreet economics. Are we getting a good return on ad spend through this on a revenue basis or is my cost of acquisition from a customer's perspective good?”
- Grow the audience: “If a given ad is giving me followers to my Facebook page or followers to my Instagram page or an email address, that's a consideration factor for overall ROI.”
Get a Holistic View with BigCommerce AnalyticsFor individual channel ROI, Spearmint Love uses a channel’s own advertising platform data (i.e. Facebook Insights).Brands can use BigCommerce’s Marketing report for a more holistic view on how everything is playing together and which channels are producing the largest ROI overtime.
How to Measure Directional Business GrowthJohn tracks every ad for conversion rate. He even tracks different ad sets and types. For the most part, he uses the Facebook advertising platform itself for reporting. He also looks to Google Analytics.This is because beyond Facebook, Google AdWords provides another low customer acquisition channel for Spearmint Love.Measuring all of this takes serious know-how and the manipulation of various dashboards. To get a more holistic view of customer acquisitions costs across the company, John also uses Excel.He will export files from Facebook and Google’s platforms, and feed them into an Excel sheet he created. The formulas he’s added in populate once the data is updated.
- Measures net new customers acquired through aggregate ad spend
- Measures total net new customers
How Spearmint Forecasts Customer Lifetime ValueJohn’s focus on customer acquisition costs serves a larger purpose than an immediate sale and return on investment.He and wife Shari have set up a real-life customer lifetime value flowchart as mechanical in its accuracy as their Facebook ads.Coming from a financial background, John transferred his Vintage Report skills to the ecommerce world. A vintage analysis is a tool that allows for performance comparisons across portfolio segments. This type of analysis can help you to identify trends and forecast success of future additions to a portfolio (or in ecommerce, a new product line).
Example of vintage reports from CapitalSVSC.In ecommerce, this function is known as cohort analysis.
How to perform an ecommerce cohort analysis
- Build a custom table on every customer by pulling the customer order ID from BigCommerce, or your ecommerce platform.
- From there, cohort customers based on the month of their first purchase. A customer that was acquired in the month of January 2016, for instance, is forever associated with the January 2016 cohort.
- Tracks how various cohorts behave overtime, looking for patterns between acquisition time frame and next purchase.
How to implement insights from a cohort analysis to increase LTVBeyond prediction, deep knowledge of various customer cohorts should change the way you present your site to that cohort.For instance, John also uses a proprietary cohort to personalize the on-site shopping experience similar to how the company’s Facebook ads work.He calls these “custom windows.” The windows align to a change in behavior and mindset for new parents, particularly mothers.John’s goal is to capture the new mom when she finds out she is pregnant, or about three months into her pregnancy.“The window of time from six months before the baby is born and six months after the baby is born is the exact time we want to capture them. Ideally, we capture them as early in that window as possible. That’s window one.”The second window is six months to 18 months after the baby is born. In this window, John says there is still a lot of spending, but no where near as much as during window one.The third window goes from 18 months to 30 months, and the fourth captures everyone else past that.Each cohort receives different nurture streams, advertisements, up-sells and cross sells that align with their interests.
The Perfect Measuring FrequencyJohn is working with a lot of data, and we didn’t even dive into the UX, UI and SEO research he does.But exactly how often does he do this?The answer varies, John says. He has reports he looks at daily, others weekly and others still on a monthly basis.
- Daily analytics check in: Cost of acquisition on active campaigns
- Weekly analytics check in: Weekly audience growth across owned channels (i.e. Facebook, Instagram, emails, etc.)
- Monthly analytics check in: The aggregate return rate on customer acquisitions
Is our growth rate accelerating or decelerating? If so, why? What's driving that?It’s a question he asks himself multiple times a day. The answer is his day’s testing ground. Which levers can he pull? What’s not working? How can it be optimized?The measuring is what allows him to identify success, but it's the questioning that ultimately grew Spearmint Love’s revenue by 1,100% in 2016.“We opened up shop with BigCommerce in September 2013,” says Shari. “That was just the beginning. We still have that standard template you guys gave away for free, which in a lot of ways I’m proud of. We’ve been able to grow that big with something you guys gave us for free! It’s kind of cool to say that September 2013 was our launch date and we’ve just been plugging away ever since.”Spearmint Love is a tried-and-true success story of the “If you can’t measure it, you can’t improve it” mantra. One expert pair of eyes, an equity fund manager and analytics that make this baby clothing company one of the most sophisticated online operations in business.And it all started with quality content the bigger brands just didn’t have the eye to do.
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