July 31, 2016

But Their LTV Isn't Very Good!!

Who cares?

I ran into this one recently. The Marketing Executive held a report from a noted catalog boutique agency. The report suggested that customers acquired from "digital" sources were worth much less than customers acquired from "catalogs".
  • Catalog Sourced Buyer = $50.00 Lifetime Value.
  • Digital Sourced Buyer = $20.00 Lifetime Value.
The Marketing Executive said, earnestly ...
  • "We don't want the Digital buyer ... they're worth less."

You know what this is?

Yup ... it's Lizard Logic!!

Old school catalog leaders are notorious for turning away "digital" buyers because LTV is not as good.

Who cares?

Do you think your CFO, if you told her that you could acquire 100,000 customers who would each generate $20 profit in the next five years, would say ... "nah, I don't want an additional $2,000,000 profit"?

Your CFO would flog you if you didn't generate $2,000,000 additional profit.

Here's the next line of reasoning I hear.
  • "But the digital buyer doesn't like buying from the catalog, so that's a bad thing."
Who cares?

You know what? If the digital customer doesn't like buying from the catalog ... don't send the digital customer catalogs!!

Here's the next line of reasoning I hear:
  • "But we are a catalog brand. It's our job to mail catalogs."

You are a merchant. It is your job to sell things.

You want every dollar of profit you can find. Period. It is SO HARD to generate profit. Why would you turn profit away simply because the customer is worth less than another customer?