15 Three Letter Acronyms Every DTC Should Know

In our last blog post we set out to dispel some of the myths around direct-to-consumer brands. Giving you a no-nonsense guide to what makes DTC’s different, and why you should really care. If you missed it, you can check it out here. This time we’ve delved and deliberated to give you a guide to the top 15 every DTC should know and be actively tracking.

CAC – Customer Acquisition Cost

  • What it costs you to acquire a new customer. Simply calculated by dividing your sales and marketing costs associated with a particular campaign (or timeframe) by the number of new customers acquired. Massively helpful to see what you’re spending and where you should be spending more or less.

CPI – Cost Per Impression

  • A traditional advertising measure, but one still relevant for the digital age. This is simply the cost you are paying for views of your google, facebook or other sponsored adverts.

CRO – Conversion Rate Optimisation

  • The process of trying to increase the number of customers who take a particular action on your website. Typically, how many complete a purchase, but can also be extended to new subscribers etc.

CRR – Customer Retention Rate

  • How loyal your customers are. For a given timeframe divide your still loyal customers at the end of the timeframe by the number of existing customers you had at the start. You may also hear CCR (Customer Churn Rate), which is simply the number of customers you lost in a given timeframe.

CTR – Click Through Rate

  • A favourite from the marketing world. The percentage of viewers that click on a particular link, be it clicking on a google ad, email or Instagram post. In essence measuring your success at converting users to perform a particular action.

IDP – Ideal Customer Profile

  • Simply put what your best customers look like. This can include demographic profiles (age, gender etc), geographic factors, economic measures and even their buying behaviour. A key factor to ensure your sales and marketing spend is always targeted at these customer groups.

IPO – Initial Public Offering

  • The process by which a private company goes public on the stock-market. Often viewed as long term goal and sign of success for DTC unicorns.

KPI – Key Performance Indicator

  • A general performance measure used to gauge your efficiency at achieving key business objectives. KPI’s can be day-to-day targets or high level business goals. KPI’s should always be clear, measurable and achievable to ensure organisational success.

LTV – Lifetime Value

  • The total amount of money that a customer spends with you over their lifetime. This is a great metric to identify your most valuable customers. On first glance a new customer may only make a small purchase, but if they constantly make repeat purchases during their time with you – they are probably one of your best.

LTV:CAC – Lifetime Value : Customer Acquisition Cost Ratio

  • We’re going for a double three letter acronym here! This measure helps you determine how much you should be spending to acquire new customers. A great metric to track sustainable growth.

NPS – Net Promoter Score

  • A favourite of the corporate world. This measurement shows you how many of your customers are likely to refer you to one of their friends or colleagues. You can find out exactly how to calculate the measure here

ROI – Return on Investment

  • A performance measure used to calculate the uplift versus the cost of investment in new technology, services or materials. This could be a cost saving, sales uplift, or efficiency improvement. A good way to calculate the value of several possible investment options.

SLA – Service Level Agreement

  • Essentially a contract that you have to provide a service, or a service provider has with you. For example: your fulfilment partner agrees to put away all your new stock within 1 business day. Or the promise that you have with your customers to deliver their order in 2 days.

UGC – User Generated Content

  • Any form of content generated by your customers and social followers. We all know how important influencers and customer referrals are to DTC success. User generated content should always be encouraged!

USP – Unique Selling Proposition

  • What is it that makes you better than your competition? Be it your products, price, customer service or community. Sounds simple, but it’s easy to lose sight of. Should be a key mantra that you continually refer back to.

We hope you find this list useful. Are there any other three letter acronyms that you routinely track that are invaluable to your business? We’d love to hear.

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