As the number of online CBD retailers grow, there appears to be a large and growing need for an understanding of the analytics that drive business.

Any online business is driven by a few numbers: Cost of Acquiring a Customer (CAC) and Lifetime Value (LTV).

The cost of customer acquisition is the amount of money you spend to acquire a single customer. And the lifetime value of a customer is the amount of money a client spends in your online store. If it takes more money to acquire a customer than you will profit from that customer, you need to STOP what you’re doing and will need to look at finding a different strategy.

In the CBD industry, you have some unique challenges. Traditional online paid advertising is off limits (for the most part). Paid advertising through Facebook or Google makes measuring CAC simple. You know how much you spent on ads and you know how those customers spent. If that makes money, you spend more. As a CBD company, you don’t get to do this. Additionally, you risk your social accounts constantly getting shut down.

With these goto avenues closed, many CBD companies try a bunch of other marketing tactics without the slightest effort to measure anything but the revenue generated. When revenue grows, you simply repeat the dance until at some point, you hit a wall. You then are left to wonder why the growth stopped and are left without insight as to why.

Here are some helpful strategies to generate data when you have none and to avoid vanity metrics.

1. Turn off the faucet

Occasionally, you should stop spending money on a particular form of advertising. Do you have a discount code for new customers? Do you spend money on influencers? Do you write blog articles?

Once in a while, even when business is going well, you should turn off your spend. The easiest way to see if a strategy has any impact on your business is to stop doing it. For example, with Plain Jane, we spend money on influencers only 2 weeks out of the month. We can then separate our organic social traffic from our paid influencers. Every two weeks, we reevaluate how we target influencers based on the previous spend and move forward. Having these cycles enables us to constantly learn and improve how we find and work with influencers.

2. Avoid vanity metrics

Your number of Instagram followers, the number of people that visit your site, the number of likes you get on a Facebook post. None of these numbers matter in isolation. Every number you measure should be helping you figure out either the CAC and LTV of a marketing strategy.

Here’s a simple formula for calculating LTV: Website traffic * Conversion Rate * (1 + Reorder Rate) * Average Order Value. If you cannot connect a measurement back to this formula, don’t measure it. Maybe save the information for later but don’t focus on it. It’s a distraction.

Remember, each channel will have distinct numbers in this formula. You need to understand your numbers for each thing you do. Whether blog posts, influencers, paid advertising, affiliate marketing or anything else, measure them separately.

3. Include all of your costs when calculating CAC

When you’re on your own and hustling by yourself, it’s easy to forget your time has value. As you grow and build a team, you have to include these costs in calculating your CAC. Your time has value. Even if you pay for ads or influencers, you have to include the management time as an expense. Writing a consistent and thoughtful blog isn’t free. Even if it’s just you writing the articles. Sales strategies often become more expensive over time as you have to introduce multiple layers of management to executive all strategies harmoniously.

In general, running an online CBD business mirrors other online businesses but with far more hurdles and constraints. We have found that using metrics can only improve your decision making. There are plenty of tools out there to help.

I’ve listed a few below to help.

Google Analytics: (Use the full e-commerce setup)
SEM Rush:
Sprout Social:

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