Supplement Industry Benchmarks: The Metrics That Mislead
As a direct-to-consumer (DTC) supplement brand, you are under constant pressure to perform. You are likely tracking a variety of marketing benchmarks, such as Customer Acquisition Cost (CAC) and Return on Ad Spend (ROAS), to gauge your success.
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By Joris van Huët, Founder & CEOUpdated 3 min read
The Supplement Industry's Misleading Metrics
As a direct-to-consumer (DTC) supplement brand, you are under constant pressure to perform. You are likely tracking a variety of marketing benchmarks, such as Customer Acquisition Cost (CAC) and Return on Ad Spend (ROAS), to gauge your success. The problem is, these metrics, as they are commonly calculated, are flawed. They are based on outdated, correlation-based marketing attribution models that don't tell the whole story.
Deconstructing Common Supplement Benchmarks
See also: Beauty Industry Attribution Benchmarks: Are You Measuring What Matters?
Let's take a closer look at the most common benchmarks in the supplement industry and why they are so problematic:
A low CAC is not necessarily a good thing if you are acquiring low-value customers who churn after their first purchase. The focus should be on acquiring customers with a high lifetime value (LTV), even if it means a higher initial CAC.
Return on Ad Spend (ROAS): A high ROAS is the holy grail for many marketers, but it can be a vanity metric. If you are generating a high ROAS from branded search campaigns, you are likely just harvesting demand that you created through other channels. The true, incremental ROAS of that campaign is likely much lower.
Conversion Rate: A high conversion rate is always a goal, but it's important to understand who you are converting. Are you converting new customers who are discovering your brand for the first time, or are you simply converting existing customers who are coming back for a repeat purchase? Both are important, but they need to be measured and understood separately.
The Danger of Averages
The supplement industry is incredibly diverse, with products ranging from vitamins and minerals to highly specialized nootropics and sports nutrition products. The 'average' benchmark is irrelevant to your specific brand, your specific product, and your specific customer.
The Only Benchmark That Matters: Incremental Lift
Instead of chasing misleading industry benchmarks, you should be focused on the only benchmark that truly matters: incremental lift. Incremental lift is the measure of the sales that you are generating that you would not have generated without a specific marketing activity. It is the true measure of your marketing's effectiveness.
Incremental Sales = (Total Sales with Marketing Activity) - (Baseline Sales without Marketing Activity)
Measuring incremental lift requires a causal understanding of your marketing, which is something that traditional attribution models simply cannot provide.
| Feature | Traditional Benchmarking | Causality Engine |
|---|---|---|
| Focus | Industry averages | Your brand's specific performance |
| Methodology | Correlation-based | Causal Inference |
Stop Guessing. Start Growing.
It's time to stop guessing and start growing. It's time to move beyond the misleading benchmarks that are holding your brand back and embrace a causal approach to marketing.
For more information, visit our resources or check out our pricing.
Related Resources
Free Attribution Model Comparison Worksheet (Download)
Offline to Online Attribution: Bridging the Data Gap
Go deeper: Causal attribution, explained.
Sixty-second versions of these ideas: Causality Engine on YouTube Shorts.
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Terms in this article
- Attribution ModelAn Attribution Model defines how credit for conversions is assigned to marketing touchpoints. It dictates how marketing channels receive credit for sales.
- Attribution SoftwareAttribution Software measures campaign impact by tracking customer interactions across touchpoints. It assigns value to each channel, showing what drives conversions.
- Causal InferenceCausal inference is the set of methods for estimating how much an outcome changes because of a cause, rather than alongside it. It works by comparing what happened with an estimate of what would have happened without the cause.
- Conversion rateConversion Rate is the percentage of website visitors who complete a desired action out of the total number of visitors.
- Customer acquisitionCustomer acquisition attracts new customers to a business. For e-commerce, this means driving the right traffic to the website.
- Marketing AttributionMarketing attribution assigns credit to marketing touchpoints that contribute to a conversion or sale. Causal inference enhances attribution models by identifying true cause-effect relationships.
- Online AttributionOnline Attribution connects sales and conversions to specific digital marketing touchpoints. It identifies which online channels contribute most to marketing goals.
- Return on Ad Spend (ROAS)Return On Ad Spend (ROAS) measures the total revenue generated for each dollar spent on advertising. It indicates campaign profitability and effectiveness.