DTC was hailed as the next big thing a few years ago (and it still is, to be honest!), but recent headlines from DTC darlings have raised a few questions we would love to explore in this article! Nike, for example, invested heavily in DTC and it was a successful strategy, but has re-invested in B2B partnerships and even scaled back some DTC initiatives. While Allbirds has seen its stock plunge to near penny stock status and may be delisted from the NYSE. In Hong Kong, popular brands like CR Care and Garrett’s Popcorn have shuttered in the past month.

The mistake made by many DTC brands was focusing on revenue and not profit. Shopify’s loan service, Shopify Capital, which has dolled out billions in loans to Shopify merchants, currently has over $1 billion USD in outstanding loans that are being defaulted on by merchants. The issue here is the same, DTC brands were chasing quick cash and revenue without building a profitable brand. 

Wave Commerce is a leading Hong Kong based Shopify partner and ecommerce consultancy founded over 10 years ago. In this article, we would love to share our top strategies on what really matters when it comes to building a successful DTC brand and how you can achieve it too. 

Here’s how to transform your DTC brand into a profit-generating machine:

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1. Stop chasing revenue, focus on profit

Focusing on profit means streamlining your operations, reducing waste, and creating profit margins wherever possible. 

This starts with your tech stack. Too often we see DTC brands with a huge tech stack, with many features overlapping, brands paying for what they don't need, and selecting the wrong apps. 

Often we ask brands why they have a particular Shopify app, and the response is usually because they saw someone else had it, it looked good on the app store, had 5 stars etc. But they can’t explain whether it is delivering profits, or just costing them margins. Oftentimes there are other solutions available that will be better suited to the brand and designed in a way that will drive more revenue, rather than just positioned as a “nice to have”. We also see some brands pay big dollars to developers to create custom solutions, that already exist in the market at a higher quality and lower cost. 

Do you need to pay for a CRM system if you have Klaviyo? Probably not, depending on your size and brand goals. Take a step back and evaluate your tech stack and see if there are other solutions out there that can save costs and drive profits. Remember to always shop around and evaluate options, instead of going all-in too quick. If you don’t have the expertise to evaluate solutions, make sure you find someone who does. And always re-evaluate to stay up to date with the latest trends and advancements. ‍

2. Maximize Customer Lifetime Value (CLV)

What is CLV? CLV is Customer Lifetime Value, which means the total profits generated by your customers over time, net of all costs.  

The best way to boost profits is not by sheer volume and spreading your net as wide as possible, but by maximizing your CLV. 

Think about it, the brands that operate by “there’s always more fish in the sea”, such as your banks, telecom companies, big box retailers etc, are the brands people love the least. 

Many DTC brands obsess over metrics like gross margin, total number of customers, Customer Acquisition Cost (CAC), or high-level conversion rates. While these are important, they’re secondary to CLV. Why? Because max CLV = max profits. A customer with a high CLV provides compounding returns, allowing you to outlast and outspend competitors. 

Make CLV one of the top priorities of your business moving forward.

3. Focus on your best customers

Here’s a hard truth: Not all customers are created equal.

You have probably heard of the 80/20 rule. The rule is used everywhere from maths, to economics, computing, health, and social welfare etc. But it can also apply to your customers. 

In DTC, 20% of your customers can drive 80% of your profits. These high-value customers are your ticket to better profits. 

To maximize your CLV, identify, acquire, and nurture more of these top customers. Tailor your products, services, and messaging to their preferences. Build loyalty programs, products, and personalized experiences that cater directly to their needs.  

4. Identify your most valuable customers using RFM

To find your most valuable customers, lean on an RFM analysis. 

What is an RFM analysis: 

Recency (R): When was the last time a customer made a purchase?  

Frequency (F): How often do they purchase?  

Monetary (M): How much have they spent in total?  

The R and F metrics are especially critical — they predict monetary value and ultimately help you calculate CLV.  

RFM is the key to successful database marketing. It helps you segment your audience, focus your efforts, and direct your marketing dollars where they’ll have the most impact.  

OMNI Loyalty - Shopify loyalty program app for better CLV

OMNI Loyalty is a Shopify loyalty program app that can help DTC brands bridge Shopify, with offline POS, marketing tools (eg, Klaviyo), CRM, and other customer engagement tools.

Modern tech stacks are more advanced than ever before, yet still pretty fragmented. By integrating your tech stack with a loyalty program, DTC brands can unify customer data to better understand their customers, gain omnichannel customer data, and drive better personalization that ultimately enhances your CLV.

Think of OMNI Loyalty as the heart of your business. It flows through everything you do, holds everything together, and is essential to sustainable and profitable growth.

How OMNI Loyalty Increases CLV

• Bridges your tech stack with a unified and unique customer profile (no duplicates!) for better segmentation and analysis
• Incentivizes customers to sign up, even if they don’t purchase (later on convert site traffic into paying customers rather than losing them)
• Provides a VIP customer experience everywhere
• Ensures marketing and communications are personalized and relevant
• Designed to create new sales opportunities - OMNI provides time-sensitive and intent-based rewards that inspire a customer to purchase
• A high-quality and premium-designed loyalty experience akin to the world’s most trusted brands - accessible by just installing an app!

For each new merchant that signs on to OMNI Loyalty we will;

• Install the app on your store and integrate it with your tech stack
• Work with you on the best optimal setup, loyalty strategy, tiers etc for your brand and vertical
• Share insights from over 10+ years of building loyalty programs for the world’s most trusted brands
• Advise on the best flows, channels (eg; WhatsApp), tools, and more to reach your goals
• Advise on the best strategies to build your member database with on-site, in-store, and ad strategies

Sign up for a demo here.

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The Bottom Line  

Growing profits as a DTC brand boils down to mastering these five steps:  

1. Prioritize profits over revenue 

2. Make CLV your guiding star

3. Focus on your top loyal customers that drive the most sales  

4. Use RFM to identify, nurture, and scale your best customers

5. Unify your data with a Loyalty Program like OMNI Loyalty as the heart of your business - for better marketing, segmentation, personalization, and ultimately, CLV.   

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By doing so, you’ll not only ensure your brand survives—you’ll set it up to thrive. Cash is oxygen; use it wisely to grow profitably and sustainably.  

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Now, go get it!  

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Want to dive deeper into implementing these strategies? Let’s chat!