Key Financial Metrics for Dtc Brands

CMOs call marketing an engine for growth. CFOs call it a primary lever of enterprise value creation. One speaks in brand equity, customer acquisition, engagement, and monetization.  The other speaks in margins and profitability. When these departments don’t align,  ↳ Investments get slashed,  ↳ Performance stalls,  ↳ Growth suffers. But when marketing and finance work with UNIFIED language and data.   Companies make smarter investments. Here are four key metrics that help CMOs and CFOs speak the same language: 1. Customer Acquisition Cost (CAC) Formula: Total marketing spend ÷ New customers acquired CFOs ask, “How much are we spending per new customer? Can we lower it?” CMOs ask, “Which channels bring most efficiency, can we shift our budget?” CFOs want cost control, CMOs want better-performing channels.  ↳ Tracking CAC aligns both executives. 2. Customer Lifetime Value (LTV) Formula: (Avg. Purchase Value × Purchase Frequency × Margin Rate × Activity Rate) CFOs ask, “Are we making enough long-term revenue to justify CAC?” CMOs ask, “Should we increase LTV through engagement or monetization?” A CFO sees it as profitability over time, A CMO sees opportunities. ↳ Higher LTV justifies marketing investment. 3. Cash Payback Period Formula: CAC ÷ Gross Margin per Customer per Month CEOs ask, “How long before we earn back what we spent?” CMOs ask, “Which channels pay back fastest?” CFOs want liquidity, CMOs want reinvestment speed. ↳ A shorter payback period means faster growth cycles and less financial risk. 4. LTV:CAC Formula: Customer Lifetime Value ÷ Customer Acquisition Cost. CFOs ask: "Our financial plan requires a 3x ROI in 3 years-can you deliver?" CMOs ask: "Should I optimize for faster payback or a 3-year LTV:CAC target?" CFOs want financial justification, CMOs want strategic growth. ↳ A shared LTV:CAC view aligns investment decisions. CFOs and CMOs don’t need to agree on everything,  but they do need to align on the data that drives GROWTH. Start with blended performance, Then look at leading indicators for Paid. The last thing you want is debating attribution with a CEO or investor, When you're not even aligned on the core metrics above. Don't manage marketing as an expense,  Manage it as an investment. Track the right numbers, speak the same language, and watch your business grow. Which of these metrics does your company focus on the most? Drop a comment below. * * * I talk about the real mechanics of growth, data, and execution. If that’s what you care about, let’s connect.

A conversation with Jordan Nathan (CEO of Caraway Home) just changed how I think about scaling DTC brands. While most founders obsess over CAC, ROAS, and revenue milestones, Jordan shared something far more fundamental: Your cash conversion cycle is your BIGGEST growth lever. Let me explain why this matters so much 👇 Caraway's approach is fascinating in its simplicity: They negotiate minimum Net 30 terms with EVERY vendor. For factories? They push for Net 60+. They'll even pay 1-2% more just to get better payment terms. When I asked Jordan why, his answer was profound: "When you can turn $1 into $10 before you have to pay your first invoice, you've unlocked infinite scale potential." This hit home hard. At Obvi, we've seen firsthand how cash flow constraints can limit growth. But Caraway's systematic approach to cash management takes this to another level. Here's the practical playbook Jordan shared: 1. Negotiate payment terms BEFORE pricing 2. Consider paying slightly more for better terms 3. Track cash conversion cycle as a core daily KPI 4. Use strong terms to fuel marketing experiments 5. Build inventory ahead of demand curves But the most powerful insight wasn't in the tactics - it was in the mindset. As Jordan put it: "Cash flow is your most important KPI and growth lever." This might sound obvious, but think deeper: - Good unit economics can't save poor cash management - But great cash management can accelerate good unit economics For those scaling DTC brands - this isn't just about having more cash. It's about strategically using payment terms as a growth tool. Grateful to Jordan for sharing these insights. These are the kinds of conversations that help us all build better businesses. Want to more insights from our conversation? Check out the full podcast here: https://lnkd.in/eY2CdAWb

(8/10) 3.0 Journey - KPIs & Unit Economics The first thing I would build is a KPI dashboard to track what numbers that I want to see every day, every hour! I focused on unit economics from day1 in my previous startups, measuring what works and what doesn’t works quickly is one of the key reasons for survival. I've learned that flashy metrics can be deceiving. Sure, user growth looks great on paper, but it's the numbers from every aspect of business that truly defines success. From day one, I've made it a point to laser-focus on the metrics that matter. How much does it cost to acquire a customer? What's their lifetime value? Are we making or losing money on each transaction? This approach isn't just about being cautious - it's about survival. By keeping a close eye on unit economics, we can: Know if you're building a business or burning cash. Unit economics gives you a clear picture of your financial health at the most basic level. Grow where it makes sense. Understanding every KPIs helps you identify which areas of your business are truly profitable and worth scaling. Make data-driven decisions, not based on hearsay. Investors are more likely to back founders who demonstrate a solid grasp of their predictable metics. Understand what it takes to be profitable at scale and what indicators supporting your business model that can show the potential to be sustainable in the long run. Make tough calls quickly. When you're tracking your numbers, you can spot trouble areas early and pivot before it's too late. Remember, in the startup world, cash is oxygen. KPI Dashboard is your oxygen meter. I think, live, breathe on my KPIs, but I'm curious: What's your non-negotiable metric for startup success? Fellow founders, share your thoughts below. These are the KPIs I give high priority to track Financials: Total Revenue New Revenue Renewal Revenue MRR ARR NRR Burn Rate Runway KPIs: Total Customers New Customers Renewal Customers Churn Renewal % Renewal Revenue % ARPU New ARPU Renewal ARPU LTV Cost of Acquisition Cost of Acquisition/Channel Product: Usage Metrics #AIFirst #Startups #KPIs #UnitEconomics #My3.0Journey #FounderLessons #FutureOfWork