Managing cash flow through the lens of second purchase rate (SPR) and buying cadence is an important strategy for scaling any brand with Facebook ads. By improving the second purchase rate and cadence, we can increase cash flow. When a customer makes a second purchase, we generate additional revenue without having to spend as much money on acquiring a new customer. This is because the customer is already familiar with our brand and has made a purchase before, and even if we have to pay to make that sale, it is usually at a much better exchange rate on our investment (a lower CPA to Revenue ratio).
A cadence refers to the frequency of customer purchases and the timeline of those purchases. If our customers purchase more frequently, it’s more likely that we will generate more revenue from each customer.
We can track the second purchase rate and cadence, by product/offer, and by doing so we can identify the customer journeys that are more likely to drive additional purchases. This is crucial because it helps us to acquire future cash flow at a profit, which delivers us more money we can invest in growth.
In addition, by monitoring the cash flow, we can ensure that we have enough money to cover expenses and invest in growth. This could include things like hiring new employees, buying new inventory, expanding the product line, or increasing the marketing budget.
Overall, managing cash flow through a cycle of second purchase rate and cadence is an important strategy to ensure that the brand has the financial resources to grow and scale.