Profitable CACs, Lifetime Value, and "Red Zones": How Dr. Squatch uses Northbeam

Founder and CEO Jack Haldrup started Dr. Squatch with a simple goal: create natural soap bars for men that didn’t have the synthetic ingredients found in most big brands. Jack suffered from a common skin condition and frequently shopped at farmer’s markets and health food stores to find soap that wouldn’t irritate his skin. 

“But the average guy… isn’t going to hunt down these products and buy them from a farmer’s market,” Haldrup said, speaking to the San Diego Union Tribune. “And they’re also not shopping at health stores where these bars are widely sold.”

Jack began experimenting with making handmade soap and started selling bars out of his apartment. After getting rave reviews, Jack realized he had found a huge underserved market; men’s personal care was an afterthought compared to women’s products, and the space was long dominated by multi-national conglomerates such as P&G and Unilever.

It was ripe for disruption. Dr. Squatch combined this insight with savvy marketing that used tongue-in-cheek humor, most famously in their 2021 Super Bowl LV commercial, and the rest is history. 

What started as a small batch DTC handmade soap store is now a $100M+ brand advertising across a dozen different channels. They’ve also expanded from DTC into retail: Dr. Squatch products fly off the shelves at Target, Walmart and other major retailers all over the nation.  

Even with their massive success, the marketing team at Dr. Squatch still had a problem: they wanted to improve the performance of their sizable marketing spend. Before Northbeam, Dr. Squatch relied on flawed solutions like Google Analytics and in-platform reporting to make allocation decisions on their omnichannel ad spend – even though they knew data from those platforms were limited and biased. As the end of third-party cookies loomed ahead, the Dr. Squatch team decided it was the right time to upgrade their marketing attribution.

Dr. Squatch then turned to Northbeam as their top source of truth for marketing attribution.

We sat down with April Lonchar, Manager of Growth Strategy at Dr. Squatch, to discuss how they use Northbeam for everything from creative testing to performance benchmarking.

Northbeam's data as the centerpiece

“We’ve been with Northbeam since early 2023, so we’re probably a bit further along than most folks with embedding the platform into our ongoing routines,” April said. 

“We actively advertise across most major channels so our media buyers rely heavily on Northbeam to gauge performance. They’re looking at metrics regularly in the Sales Page to decide whether to continue investing or not. Our Head of Creative also checks Northbeam frequently because that team is constantly experimenting with new concepts and making tweaks based on what we’re seeing. My job is to be the main conduit and basically translate what these Northbeam numbers mean for our teams.” 

Because both paid and organic efforts flow into revenue from new customers, Dr. Squatch uses Northbeam as a single source of truth when making paid media decisions. The company relies on the platform to analyze the interaction between channels and identify root causes of growth. 

“For example, when we saw a dip in new customers on our online storefronts, Northbeam helped us identify that organic acquisition was the primary driver. We just wouldn’t have been able to get that level of insight before Northbeam.”

Going further with Custom Metrics

Dr. Squatch started by selling bar soap but has since expanded into deodorant, lotion, hair care, and cologne. As the brand grew, the team shifted their focus from simply acquiring customers to evaluating the entire lifecycle, encouraging customers to purchase subscriptions and bundled products. These repeat buyers are valuable because they can increase customer lifetime value and allow for promotional pricing to get people in the door. 

This strategy gives Dr. Squatch more flexibility with CAC targets and new customer offers because the brand is confident they can make up for it over the average customer’s lifetime by using lifecycle retargeting to expand across product categories.

April described how she was chatting with her Northbeam success manager about tracking subscription performance when they recommended trying Northbeam’s Custom Metrics. Instead of having to export Northbeam data into another spreadsheet, Custom Metrics allows April to create bespoke metrics to see how many customers were actually signing up for subscriptions. 

“I created two new Custom Metrics in Northbeam: Take Rate and Upsell Rate,” April said. “Take Rate looks at the percentage of new customers who immediately convert to subscribers while Upsell Rate tracks the percentage of returning customers who then decide to sign up for a subscription.” 

“Between the two, I’m able to quickly decipher which campaigns are the most successful at finding and converting subscribers.”

As part of her daily routine with Northbeam, April will sometimes give “red zone” ads another chance if they’ve shown promise at driving subscriptions. These campaigns get a longer leash than they otherwise would because the brand can stomach a higher CAC in exchange for the higher LTV gains. New channels also get judged on their ability to drive subscribers in addition to the team’s normal KPIs on efficiency and conversions.

Dr. Squatch uses two other Custom Metrics to help track subscription performance: Discount Rate and Return Rate. Like many popular DTC brands, Dr. Squatch uses discounts to entice customers in the door to try their products. Generally, customers love their soaps and other products so much that they stick around and buy more, but the team still wanted to track discount activity and have visibility into how many dollars were being spent to keep CAC at healthy levels. 

April defines Discount Rate as the percentage of revenue that wouldn’t occur without promotions, and splits that out into new and returning customers. She’s able to look at each channel and decide if the discounts are worth the squeeze as an additional data point. April also layers Return Rate on top of that analysis, defined here as the amount of refunds coming from any given marketing channel. 

“It’s important for us to offer a great customer experience, but getting too many returns can really eat into our margins,” April said. “I keep an eye on whether certain channels or cohorts are over-indexing on the amount of discounts and returns we would expect from an average campaign. If they’re already in the ‘red zone’ then it’s a pretty simple decision to cut those ads because returns can quickly inflate CAC beyond where we’d like to see it.”

Improving marketing ROI while staying future-proof

“I’m not really sure how I would do my job without Northbeam,” April said. “A big part of my role is allocating resources every week to all of our channels. Our finance team sets overall targets, and I’ll then tweak their recommendations based on my experience seeing the numbers every day. Our media buyers take it from there to divvy up that spend within their own platforms.”

“None of that would be possible without the trust we have in Northbeam’s data and modeling.” 

Northbeam has become a key tool in Dr. Squatch’s tech stack, but more importantly, insights from the platform have proven invaluable in improving their commercial and topline performance. 

In the first full year of using Northbeam, AOV improved +3% across the board – no small feat for a company of Dr. Squatch’s size – and the team has continued to build on that momentum by experimenting and innovating their marketing strategies; the company just closed an impressive BFCM and holiday season with revenue growing +31.8% and ROAS up +3.8% in Q4 ‘23 compared to the previous quarter.

Not only did Dr. Squatch effectively build and capture demand, they even managed to lower CAC -2.9% during a period with elevated CPMs and competition. 

“We’re really excited to continue partnering with Northbeam as privacy changes - such as Google Chrome deprecating cookies - make our jobs just that much harder,” April said. “We initially picked Northbeam because we thought it would be a future-proof solution for our analytics needs and we look forward to pushing our capabilities with new features and releases.”
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