Built our D2C brand targeting premium urban buyers in Delhi and Mumbai. Instagram-heavy,
aspirational branding, higher price points. This was the strategy every D2C founder I knew was
running.
It worked, sort of. Acquired customers at a CAC that looked reasonable. But the return rate was
23%. And the repeat purchase rate was 11%. Premium customers bought once, sometimes
returned the product, and rarely came back.
Last year I ran the unit economics per customer segment instead of in aggregate. The premium
urban segment was our most expensive to acquire, most likely to return, and least likely to
repurchase.
The mid-market segment, a group I had been actively ignoring because they didn’t fit our brand
aesthetic, had completely different economics. Lower CAC. 8% return rate. 34% repeat
purchase rate.
These customers were not aspirational buyers. They were practical buyers. They bought our
product because it solved a specific problem, not because it looked good on Instagram. They
didn’t care about our branding. They cared about the product.
Shifted our acquisition focus in September. Reduced Instagram ad spend by 60%. Increased
spend on Google Shopping and marketplace listings where mid-market buyers actually discover
products. Changed our creative from aspirational lifestyle imagery to functional product
photography.
Revenue dipped 15% in the first month because we were acquiring fewer high-ticket orders. By
month four, revenue was 8% higher than pre-pivot, margins were better because of lower return
rates, and repeat purchase revenue was growing at a rate we had never seen.
The premium market gave us vanity metrics. The mid-market gave us a business.
I spent two years building a brand that attracted the wrong customers for the right reasons.
Should have spent that time finding the right customers for boring reasons.
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