File Power

I go through phases where I spend a lot of time talking about File Power. Then I go through phases where I read marketers babbling about nonsense ("your customers simply aren't engaged in today's complex media ecosystem") and I'm inspired to reintroduce the topic.

Let's put this in the simplest terms possible.

Say you have 100 customers. In the next year, 30% will buy again, spending $200 each.

Meanwhile, you acquire 70 new/reactivated customers each year, each spending $100.

Here's how you generate business:

• 100 Customers * 0.30 Rebuy Rate * $200 per Repurchaser = $6,000.
• 70 New/Reactivated Customers Spending $100 Each = $7,000.
• Total Sales = $6,000 + $7,000 = $13,000.
• Next Year's 12-Month Buyer File = 100 * 0.30 + 70 = 100.

This business is at an equilibrium point. As long as Merchandise Productivity and/or Marketing Productivity and/or Creative Productivity don't change, the business will generally book $13,000 per year and 100 customers per year.

This is the point in the story where the company hires a new CFO, and the CFO thinks the brand is spending too much money on marketing ... "our ROAS is too low"! The CFO demands that the brand spend less. Most of the marketing spend aligns with new/reactivated customers, but some of it causes existing customers to repurchase. The marketing team carries out the wishes of the CFO. Here we go:

• 100 Customers * 0.28 Rebuy Rate * $200 per Repurchaser = $5,600.
• 50 New/Reactivated Customers Spending $100 Each = $5,000.
• Total Sales = $5,600 + $5,000 = $10,600.
• Next Year's 12-Month Buyer File = 100 * 0.28 + 50 = 78.

We've arrived at the penultimate moment in the discussion. The year prior, we could expect 100 customers to generate $6,000. This year, we can expect 78 customers to generate $4,680. The brand lost $1,320 of "File Power". If the brand elects to reverse the decision made by the CFO, sales do not return to prior levels.

• 78 Customers * 0.30 Rebuy Rate * $200 per Repurchaser = $4,680.
• 70 New/Reactivated Customers Spending $100 Each = $7,000.
• Total Sales = $4,680 + $7,000 = $11,680.
• Next Year's 12-Month Buyer File = 78 * 0.30 + 70 = 93.

Even when the brand reverses direction, sales do not get back to prior levels, and customer counts are short of where they used to be.

This is File Power.

The decisions you make today have a lasting impact. They don't just impact 2025, they impact 2026 and 2027.