How To Use Benchmark Data

Welcome to the Ecom CFO Notebook, your weekly dose of straight-talk ecom finance and accounting.

Sam here, founder of Eco CFO (yes I write this) and this week we’re digging into a skill I find many founders struggle with – benchmarking.

But first, you probably notice – new look!

We were on HubSpot for the email before (do not recommend), and I finally got so pissed off that I spent this entire week migrating everything over to Beehiiv.

I wanted the look and functionality to match the quality of the content. It’s part of a larger initiative to level up our look & feel across the board - just vibe coded a new website I’m excited about

Anyway, thank you for reading.

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In This Week’s Edition…

📈 Featured Topic: Benchmarking for Founders

💼 DTC DealFlow + Talent Flow: Buy, Sell, Hire, Connect

🔗 Best Links + Resources: What’s working in Meta Ads in Q2… Marketing Emotions > SKUs… Behind the Scenes on a Brand Refresh

FEATURED TOPIC

(what got the most thinking time)

Benchmarking for Founders

A couple weeks ago, we shared a preview of our Q1 Benchmark Report, with specific data on how 7 to 9 figure private DTC brands performed.

If you missed that, you can read it here.

Full report will be published in the next couple weeks. 

But in talking to a few of you, I’m realizing a need to explain how to actually use this data and contextualize for your business.

Not just our report, but ANY report and how to think about benchmarking broadly. 

It ain’t a given.

The charts don’t create clarity. You do. But to do that, you need to understand:

• Who to benchmark against

• What to benchmark

• When

Who To Benchmark Against

Every ecom company is already benchmarking against something - conscious or not. 

DTC Twitter, their friend’s company, a past self, something their marketing agency said, etc.

Most of this isn’t good for our paranoia and mental health, but we do it anyway. 

We’re people.

From my perspective, ecommerce companies should benchmark across these three sources, listed IN ORDER OF PRIORITY: 

1. Your Past Performance: Compare yourself to who you were yesterday, not someone’s tomorrow

2. Other Private Peers: An ideal benchmark, but typically, the data is scattered among podcast interviews or kept under wraps (what we’re trying to change)

3. Public Companies: Even if you never plan to be publicly-traded company, there’s a lot you can learn from their SEC filings as you plan for growth

#1 is the priority by a mile. 

A good set of investor-ready financials helps with that. Our reports (and others like Taylor Holiday) help with No.’s 2 & 3. 

For #2, it’s not just about comparing yourself to other private brands. Ideally, you’d compare to brands that are at your size and in your vertical.

Close to apples to apples as possible.

Not only does this help you set goals, but it can also relieve anxiety by showing when you’re doing well.

For example, one client was pursuing 25% EBITDA, and felt like he was failing every time he didn’t hit it. But his brand was already out-performing 95% of others his size.

Once he saw our benchmark data, he said, “I didn’t realize we were at the top of the class.” 

Instant priority shift that freed him to invest in other areas of the business.

That’s why you benchmark.

In the future, we’d like to continue adding companies to our sample set so that we can show trends by industry too.  

But for now, you’ll see we break each metric out by company size, then show best, average, and worst performance.

What To Benchmark

It’s easy to talk about P&L metrics – revenue, gross margin, contribution margin, EBITDA, etc.

But the real mistakes I see are in the Definition of the metrics, the Dimension of the metrics, and the Data Literacy of the person viewing the metrics. 

Ah yes, 3 big Ds.

1. Definition: What goes into a metric?

Companies define metrics differently (contribution margin’s a good example). If you don’t know, you can set wildly unrealistic goals for yourself.

Like I’ve said, apples-to-apples.

In our report, we include a “Methods” chapter that describes exactly how we calculate key metrics. No matter where you’re finding benchmark data, ask yourself if they define things the same way you do. 

You may need to translate.

2. Dimension

Even if you’re calculating metrics the same way, ensure they have the same dimension

Time usually being the most important.

Profit benchmarks for a full year will be very different from profit benchmarks for Q1. 

And benchmarks from 2024 will look different than our annual report, which uses a trailing 12-month average (Dec. ‘23 through Nov. ‘24).

3. Data Literacy: What is the data telling you to do?

Our industry generally shits on MBAs, but one lesson I learned was how to setup and understand charts and graphs. 

So if you’re not data literate, let my $150,000 waste of two years investment work for you.

It doesn’t come naturally, and a good tailwind can cover up a lack of data literacy on your exec team… until it can’t.

Take customer lifetime value as an example. 

Wildly different definitions from company to company. Varying time dimensions. High data literacy required.

I spoke to an 8 figure company last week who had trouble reading this chart (may do an entire newsletter on this) and understand how this is an input to CLV.

Spending half a day learning this and what it means is 10x more important than learning the next AI tool.

Finally, When To Benchmark

There are both obvious and non-obvious aspects to this question.

The obvious question is, “When should we benchmark,” and my answer is…

• Against other companies at least once a year when setting your budget

• Against your own past performance monthly or at least quarterly to determine progress

On the less obvious side – it’s important to remember that whether you benchmark or not, others will benchmark you:

• Banks will do it when when you apply for a line of credit

• Investors will do it when you ask them for money

• Acquirers will do it when you exit

Benchmark is just a fancy term for “compare,” and we as humans are nothing if not powerful comparison machines. 

Don’t let the first time you do this be during the most important transactions of your business.

If you want help getting started, I always keep time open for readers. You can grab a spot on my calendar here.

🛠️ Work With Us

Ecom CFO is one of the only fractional finance and accounting firms that specializes exclusively in 7- to 9-figure DTC clients. This email is part of our effort to share industry-best insights with founders, for free.

But when you're ready for help with your business, here’s how to get in touch:

📊 Compare Your P&L To Other Private Brands

Our Q1 benchmark report drops soon. While you wait, check out our 2025 P&L Benchmark Report

We analyzed financials across 30+ companies to show you exactly what happened – including revenue growth, margins, ad spend, and more. The full report is free and un-gated. Use it to battle test your 2025 plans.

💼 DTC Dealflow + Talent Flow

As trusted advisors, specializing in 7- to 9-figure ecom brands, we get an early look at a lot of the most important financial and hiring decisions clients and colleagues make, and are always happy to help with introductions…

• Seeking Acquisition: A $2m skincare brand (mostly wholesale/retail) selling for inventory+
  

• Seeking Acquisition: A few of our larger clients are in the early stages of exploring acquisition. If you’re a buyer writing checks for more than $10M, message me privately.
  

• Seeking Role: End-to-end operator, currently running his own advisory firm, and interested in going in-house. Great fit for a company that needs a technical leader who can run with projects. Has worked with brands like Lush, Viberg, and Wondery Outdoors.

• Seeking Talent: BlockBlueLight is seeking an experienced CEO to help scale to $50M and beyond as the founders, Daniel Ebbett, is stepping into Head of Product Development

If you’re buying, selling, or hiring in this space, and want more visibility, reply to this email or grab a call with me here. Everything you say is fully confidential.

🔗 Best Links & Resources

My team reviews industry insights every week to stay current. We curate the best, so you don't have to...

1. Q2 Meta Ads: Peter Czepiga, from Flighted, dropped a chaotic roundup of everything that’s working for their clients right now. It’s refreshing. No fluff. Just straight talk landing challenger ASCs, ad formats, landing page styles, and more.

2. Thinking In Emotions, Not SKUs: Ramon Vela sat down for an excellent interview with Charles Brun of IZIPIZI (glasses) over on the Story of a Brand pod. They talk tariffs, lifecycle marketing, scaling retail to 80 countries, and more.

3. Refreshing A Brand: One of the big takeaways from our recent reports has been that you need more than CPC ads to thrive these days. You need to build a brand. But most hardcore DTC founders don’t know where to start. This video from Mathew Encida over at Mode, was a great look at their brand refresh (including the timeframe, which is longer than I think most people expect).

🧭 Footnotes

Other Resources Clients Find Helpful: Here are a few tools we've built for clients and find ourselves sharing over and over...

• Responsiblity Map

• Tariff Solution Calculator

• Our Ecom-Specific Chart of Accounts

If you missed last week, we talked about wholesale (which grew ~9-40% in our Q1 analysis) and whether it’s crucial to scaling top-line, and you can find it here.

Until next time,

-Sam